City Trustees - part of Mattioli Woods

News and Media

07 September 2014

Concerns over FCA U-turn of commercial property as a standard asset

The Financial Conduct Authority (FCA) has announced new rules that will increase the amount of capital that self-invested personal pension operators must hold in reserve.

In the policy statement, the FCA noted that gold bullion, national saving, bank deposits, units in collective and commercial property will all be added to the definition of standard assets.

The latter is deemed as a U-turn from previous assertions that commercial property would stay as a non-standard asset.

With numerous SIPP providers already trading on thin margins, many may not be able to comply with these new requirements that will see operators having to hold a fixed minimum of £20,000 under finalised capital adequacy rules. The initial capital requirement factor will vary depending on portfolio size.

The rules will come into legislation on 1 September 2016.

Mark Smith, Group Operations Director and Compliance Officer, said:

"We believe that small providers will struggle to transfer commercial property to a SIPP within the 30 day limit set by the FCA, with many having to turn away business due to the capital surcharge.

We have concerns that SIPP providers will exit the market and leave people's pension savings at risk. With our experience of dealing with complicated schemes, we are able to provide a high-quality, robust and compliant service that leads to client satisfaction and peace of mind."

Other changes to the standard assets list include a removal of unit trusts and open ended investment companies (OEICs).

More information on these changes can be found in the FCA's policy statement.


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