Operators are required to hold an amount of capital, which is the higher of £5,000, six weeks of expenditure or 13 weeks of expenditure if they hold client money. Deadline for comments is 22 February, 2013.
The SIPP market has grown substantially since we began regulating it in 2007, both in terms of assets under administration and the range of assets held. Since 2007, some operators have failed and several others have been close to failure. In many cases this has caused, or significantly increased the risk of, harm to consumers. This means the current prudential requirements are no longer sufficient to support the orderly wind-down of an operator.
The FSA identified two significant weaknesses in the current prudential framework for Self-Invested Personal Pension operators (‘operators’):
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the level of operators’ expenditure is not necessarily aligned to the size and nature of the assets they administer; and
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some asset types are significantly more difficult and costly to transfer during a wind-down scenario than others.
The FSA is proposing to update its current framework to address these weaknesses and to ensure that operators hold enough capital of sufficient quality to facilitate an orderly wind-down if they choose or need to exit the market (and to update its reporting requirements for operators to reflect this).
The consultation ends on 22 February 2013.
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