FSA to review SIPP provider due diligence over UCIS concerns


The Financial Services Authority (FSA) is to conduct a review into the due diligence requirements of SIPP providers amid mounting concern over the sale of UCIS (Unregulated Collective Investment Schemes).

Unregulated investments

As the name suggests UCIS are investment schemes unregulated by the FSA, although Independent Financial Advisers, who may advise on UCIS investments and product providers, for example companies who run SIPPs which may accept UCIS investments, are regulated by the FSA.

Over the past few months UCIS have come increasingly under the spotlight, both because of how they are marketed and the actual products themselves.

There is mounting concern over the viability of many UCIS investments, which in some cases have seen investors lose significant amounts of money.

SIPP providers

The FSA seem to be gearing up to review the due diligence obligations of SIPP providers.

Many SIPP providers argue that they are simply responsible for ensuring that any investment complies with HMRC SIPP rules and that the IFA is responsible for advising on the suitability of an investment.

However, there is a growing trend of SIPP providers crossing an invisible line and declining to allow certain schemes into their SIPP despite the investment, on the face of it, being compliant with HMRC SIPP rules.

It seems now that the FSA want to take a closer look at this area and will review the due diligence requirements of SIPP providers in the New Year.

FSA manager of pensions investment policy, Milton Cartwright (pictured), said: “We will be publishing something next year on the responsibility of IFAs and SIPP providers and their due diligence.”

He continued “We have seen operators take business from unauthorised advisers, or advisers from overseas which do not have the permissions, selling UCIS to that scheme. A provider seeing a lot of business from one adviser that is all UCIS should ring alarm bells.


It has also been announced that the FSA will delay new rules on SIPP disclosure and hold another round of consultation as it tries to increase the disclosure requirements when a consumer takes out a SIPP.

The FSA want to bring the disclosure rules for SIPPs, which cover things such as commissions and interest from cash accounts, more in line with the rules covering personal pensions. The original proposals would have seen SIPP providers having to produce illustrations and projections for most forms of investments, which many experts believe would have significantly increased costs.

Milton Cartwright said: “We are not happy with disclosure information. We released a consultation that was not met with universal approval. However, we do want to make this work so we will consult again next year.”