The pace at which the group self-invested personal pension (G-SIPP) market is growing could cause problems for the Financial Services Authority (FSA), according to Suffolk Life's director of sales and marketing, John Moret.

Moret says that issues surrounding clarity, risk and product understanding - which still need to be addressed by the watchdog - pose a threat to the reputation of the pensions industry.

Moret told Pensions Age that he doesn't think the FSA is "entirely comfortable with the growth in this market, particularly at a time when they haven't got control in a way that they are planning post-RDR".

The delivery of advice for G-SIPPs, Moret explained, is going to have to be different to that of individual SIPPs, an area that the FSA has been slow to get to grips with.

Moret said in terms of individual SIPPs, it is necessary to flag up the need for advisers to execute proper diligence. He revealed to Pensions Age that Suffolk Life is currently working on a reference booklet for advisers to use, which takes them through the Due Diligence process and addresses issues which may arise, such as system and controls, money laundering and conflict of interests. The publication will be available later in the year.

"It is an area that is increasingly important in this marketplace, given where the FSA is on this," he said. "Providers will have to come up with a ticking box."

In terms of where the watchdog will position itself on G-SIPPs, Moret believes that it will take a "much harder line" on ensuring that advice is properly administered. He cited the FSA's decision on the Freedom SIPP firm late last year, when, following a visit from the FSA, the company was told additional administrative procedures were needed to bring its flagship SIPP product up to the standard it expects. Freedom SIPP consequently opted to close its SIPP to new business.

Moret added that there could be a negative backlash about SIPPs in general, driving people back to a "stakeholder mentality" if the questions surrounding G-SIPPs were not tackled soon.

Dave White, managing director at Hornbuckle Mitchell, agreed that G-SIPPs pose a threat for the FSA, telling Pensions Age: "I think it is a concern that the FSA has had for a while, and is shown in the thematic review" of smaller SIPP providers. "We have seen increasing due diligence requests from bigger IFAs. As the FSA looks at IFAs recommending SIPPs, they will also have to carry out due diligence on the small providers that they are using."

White added that the company, which specialises in SIPPs, has had a "fabulous year, 20 per cent up in volume terms", and revealed to Pensions Age that a new product is on the cards. "Going forward, we are looking to bring a product to market more in line with a platform wrap offering. We are just starting that process now, for launch in 2010.

"We will position ourselves in 2010 to be across the board, but have the top end of the market covered, yet moving to mid-market as well."

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