Sipp provider Intelligent Money has decided to stop accepting defined benefit (DB) transfers following the Financial Conduct Authority’s (FCA) 'Dear CEO' letter last week.
In a letter published on Friday, the FCA warned providers they must be able to show that advisers are 'responsibly and appropriately' recommending their products when accepting DB transfers. The regulator also warned providers they must check if advisers have the right permissions to carry out DB transfers.
Following this letter, Intelligent Money has decided to stop accepting new DB transfers into its Sipp products over concerns it could be held liable for recommendations by advisers, New Model Adviser® can reveal.
Julian Penniston-Hill (pictured), Intelligent Money’s chief executive, told New Model Adviser®:
‘We understand completely the FCA's intentions here, but cannot reconcile the logic in making providers responsible for the suitability of another firm's regulated advice.
‘Intelligent Money has never accepted Sipp business from anyone other than regulated advisers with all assets only being allowed to be placed with other regulated providers - and even then only in FCA-classed standard assets.’
He added if the FCA does hold providers liable for advice by IFAs then this could see a return to the days of tied agents.
‘No provider would ever accept any degree of liability for the advice given by unconnected regulated advisers, so I believe this direction of travel will lead to a vastly changed landscape in terms of the advice market,’ he said.
‘We are facing a return to providers employing tied advisers (in order to have full control of any advice liability). While I can understand this is advantageous from a regulatory perspective, with much smaller numbers of large firms controlling the process, it would spell the end of independent financial advice. I, for one, would not like to see that happening.’
Intelligent Money previously administered some Sipps for clients of Active Wealth – the advice firm at the centre of the British Steel Pension transfer saga.
Penniston-Hill said he insists on working with regulated advisers for Sipps and with regulated investment products and does not accept non-standard assets.
Overall the firm administers over £2 billion of assets.