SIPPs: FSA proposes increased disclosure on SIPP bank accounts


The FSA has proposed that SIPP providers will in future have to disclose any commission or interest they receive from the funds of SIPP members.

SIPP bank accounts

Every SIPP has a bank account, which is used to hold cash, receive income in from investments and also make payments out.

The provider of the SIPP bank account is usually, although not always, mandated by the SIPP provider and interest rates are generally below Bank of England Base Rate, currently 0.5%. There are even some SIPP providers  mandating bank accounts paying zero interest.

Currently some SIPP providers receive interest from the banks operating these accounts, which would be otherwise given to the member of the scheme. These payments, which is of course interest on SIPP members own funds, can be large and often make up a significant source of income for some SIPP providers.

This goes some way to explaining why the interest rate on the mandated SIPP bank accounts is generally so poor, and to make matters worse current disclosure exemptions mean that at present SIPP providers do not have to tell members the amount of interest they receive.

Looking for better interest rates from SIPP deposit accounts?

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New proposals

Under new wide ranging proposals the FSA is suggesting that SIPP providers make increased  disclosure of a variety of information, including the interest and commissions they receive on members funds.

The FSA are proposing that SIPP providers will have to make key features illustrations, reduction in yield calculations and other charging information available to members, in much the same way Personal Pension providers give information to investors.

The FSA said: “There should be disclosure of all commissions (not just bank commissions) received by a pension scheme operator or pension scheme trustee for any personal pension scheme asset.

Other SIPP deposit account options

Although the mandated SIPP bank account is likely to pay little, if any interest, there are other options for SIPP investors.

A wide range of other SIPP deposit accounts are available, covering everything from instant access accounts to long term fixed rates.

Our best buy table for SIPP deposit accounts provides information on over 90 SIPP deposit accounts, all of which provide a better rate of interest than the bank accounts mandated by SIPP providers.

However, not every SIPP allows access to external or third party SIPP deposit accounts; a list of those which do can be found here.

As well as shopping around for the best savings accounts experts also recommend that SIPP investors leave as low a balance as possible in the mandated SIPP bank account, moving any surplus funds into accounts paying a higher rate of interest.