Following its 2011 Thematic Review into SIPP operators, FSA is proposing guidance on the business review it expects from all of them. FSA found that:
- there is a general poor misunderstanding amongst senior management of their oversight duties and the regulatory obligations of a SIPP operator;
- SIPP operators could not explain the application of the client assets regime (CASS) to their business, failing to segregate client moneys, produce adequate reconciliations or perform appropriate due diligence on custodian banks;
- management information is of insufficient quality to identify and mitigate risks;
- financial resources are inadequate to absorb liquidity risk emanating from unexpected liabilities (for example, tax receipts);
- SIPP operators over-rely on third parties to conduct due diligence on introducers and on the non-standard investments they hold for members, exposing them to risk of fraud.
Along with its conclusions to the Thematic Review and general Guidance, FSA has produced two guides on, respectively, SIPP operators' regulatory responsibilities and their compliance with CASS. Later in the year FSA will run a series of workshops to explain its expectations to firms, which by that time should have completed their own business review. FSA asks for comment by 20 November. (Source: SIPP Thematic Review Findings and Guidance)