The Financial Conduct Authority (FCA) has launched a consultation on new rules aimed at tightening governance standards across the self-invested personal pension (SIPP) market, introducing clearer due diligence requirements and stronger protections for pension assets.

The proposals include mandatory due diligence checks for investments held within SIPPs and a new pension scheme money and assets (PSM&A) regime that would extend client money protection rules currently applied under the client assets sourcebook (CASS) to all SIPP providers.

According to the FCA, the changes are intended to improve consistency across the market after identifying some firms with "inadequate due diligence processes, weak controls and poorly maintained records", which contributed to customer losses.

Charlotte Clark, director of cross-cutting policy and strategy at the FCA, said: "SIPPs provide consumers with flexibility and choice. Many firms are doing the right thing, but we want to help consumers invest with greater confidence by ensuring standards are consistent."

The consultation follows the FCA’s wider review of pensions regulation launched in late 2024 as defined contribution pensions become more prevalent.

Commenting on the consultation, Maurice Titley, commercial director of data & dashboards at Lumera, said: "The FCA’s proposals should help provide greater clarity and consistency across the SIPP market, reinforcing standards that support both consumer protection and confidence.

"Achieving this will require strong data governance, efficient operational processes and technology that enables firms to manage increasingly complex requirements without compromising service."

Rachel Vahey, head of public policy at AJ Bell, added: "The FCA is right to scrutinise SIPP governance, but it is disappointing to see it move so quickly towards new prescriptive rules when the existing regulatory framework already gives it strong powers to act. The FCA’s focus should therefore be on robust supervision of the minority of firms with repeated poor practice, rather than broad new rules that could add cost and complexity for well-run providers."

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