The hostile regulatory environment will result in fewer than 40 SIPP providers still operating by 2015, Suffolk Life has predicted.

According to its head of marketing, Greg Kingston, there were ambiguous messages from the regulator in 2012 about its expected standards for SIPP providers, yet implementation of these standards start this year, with a greatly increased capital regime expected to follow in 2014.

“This regulatory environment will make it increasingly difficult for SIPP providers to survive if they do not already have sufficient scale, and if there’s insufficient money to meet the new capital requirements there’s also likely insufficient investment to buy that scale by acquiring other providers,” he explains.

Despite the reduction in providers, Kingston predicts that this will deliver better outcomes for investors and providers, as “some providers will continue to offer niche and specialist services as well as access to more esoteric investments, but advisers will ultimately have more confidence that the provider they choose is sufficiently strong and has the necessary processes and controls in place”.

There are approximately 160 SIPP providers in the UK and according to FSA data, 117 of these are currently ‘active’, having written business within the last six months.

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