85% of advisers believe the SIPP market will ‘continue’ consolidation

Approximately 85% of advisers feel that the number of SIPP operators in the market will “continue” to contract, according to a survey conducted by Dentons Pension Management.

The firm reported that, as the SIPP market has been “thrust under the microscope” again with recent court cases, many advisers believe that the market will contract, a further 5 or more providers being consolidated.

However, the advisers also said that this was not a “significant concern”.

Dentons director of technical services Martin Tilley said: “The results of the survey show that there is a high expectation the SIPP market will change dramatically over the year, with the pending court case results having a huge impact on the whole industry. It is clear that not only are regulators cracking down on the use of non-regulated intermediaries, it is also being widely criticised by the industry.”

During the survey, advisers were asked in which situations they believe SIPP providers should take responsibility for investment choices, and 54% of them said when investments were introduced through a non-regulated intermediary. A further 18% said that SIPP providers should take responsibility for the choices when disclaimers were issued to the client by the SIPP provider where the investment was deemed ‘high risk’.

However, in contrast, only 13% said that the providers should take responsibility when investments were introduced through a regulated intermediary.

“There is a belief that SIPP providers will have to take more responsibility for the investments being made by clients, especially where they are deemed to be ‘high risk’. To support this, SIPP providers are going to need to invest in more resources, which will in turn increase costs and this is something not all providers will have the capability to absorb. Therefore, it is possible we could see more consolidation in the market or for those whom it is not core to their business, stepping away from SIPPs altogether,” Tilley added.

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