SIPP operators 'not responsible' for third party advice

SIPP operators are not responsible for providing sustainability reports or for vetting each application they receive for suitability of advice, the FSA's Small Firms and Contact Division has confirmed.

The Association of Member-Directed Pension Schemes (AMPS) is seeking to clear up recent misunderstandings which came to light following the FSA's recent publication of SIPP Operators: A Report on the findings of a thematic review, published in September 2009.

AMPS committee member, David Phillips says: "The FSA's report confirms that firms acting purely as SIPP operators are not responsible for the SIPP advice given by third parties. However, they are expected to have adequate systems and controls to identify possible instances of financial crime and consumer detriment such as unsuitable SIPPs."

"The practice of requesting copies of suitability reports was one example of measures that SIPP operators could consider to improve their systems and controls. It is AMPS' understanding that this is not a requirement but could provide further information where high level management information has identified trends or concerns."

In the September review, the FSA found SIPP operators lagged behind other regulated firms in Treating Customers Fairly (TCF).

The report also says there is a widespread misunderstanding among SIPP providers who believe they bear little or no responsibility for the quality of the business they administer, because advice is the responsibility of other parties, for example IFAs.

It also identified problems with firms' systems and controls, including training and competence processes, and concerns over the accuracy and transparency of illustrations and the disclosure of charges.