The managing director of Montpelier Pension Administration Services Limited (MPAS) has been banned and censured from performing any significant influence function at any regulated firm as a result of a lack of understanding of the SIPP operator’s regulated activities and corresponding regulatory responsibilities whilst conducting a rapid expansion of the business.

Following investigation, the Financial Conduct Authority (FCA) concluded that Kevin Wells whilst leading an expansion of the business, led the SIPP operation away from standard investments towards a proportion of complex, esoteric and illiquid non-standard investments held in MPAS schemes. Wells however had not identified or mitigated the risks involved for the MPAS with regards to capital resources and compliance needs. In a statement, the FCA mentioned that Wells would have been fined £58,500 if he had not argued that it would cause serious financial hardship.

According to the final notice for Wells, non-standard investments “are more likely to be deemed liable to tax by HMRC and thereby incur significant additional tax charges”. In addition it stated that “they may be inappropriate investments for members to hold in their SIPPs on the basis that they are not readily realisable in the event of a member’s death, or if a member requires that they be sold at short notice”.

The FCA stated that client money was put at risk and that third parties such as IFAs and fund managers were not vetted before decisions were taken out.

FCA director of the enforcement and financial crime division Tracey McDermott commented: “Last October, as the Financial Services Authority, we published the findings of a thematic review on SIPP operators and outlined some of our key concerns in this sector; this case is a graphic illustration of the reasons for these concerns. Wells’ tenure as managing director should be seen as a ‘how-not-to’ guide of running a SIPP operator – he was out of his depth.”

Stephenson Harwood senior associate Noline Matemera stated that “busy and uncertain times lie ahead for the SIPP industry".

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