The Financial Conduct Authority (FCA) visited five Sipp firms in the weeks following a warning letter being sent to chief executives about potential compensation claims, New Model Adviser® understands.
In October last year, FCA chief executive Andrew Bailey warned Sipp providers to be prepared for claims after Berkeley Burke lost a long-running case against a Financial Ombudsman Service ruling against it.
'If the outcome of any of these cases calls into question your firm's ability, both now and in the future, to meet its financial commitments as they fall due, you must notify the FCA immediately,’ Bailey said.
After this letter was sent, the regulator visited five Sipp firms considered to be at a higher risk of not being able to deal with claims last December.
New Model Adviser® understands the FCA was concerned these firms did not have sufficient professional indemnity (PI) insurance cover for possible claims and in some cases the Sipp firms did not properly understand what their policies covered.
The FCA also wrote to Sipp firms last November asking for details about their business resilience, including their PI cover. The regulator then followed up this letter with targeted visits to Sipp providers.
The FCA declined to comment when approached.