The Financial Conduct Authority (FCA) has published a consultation that outlines standards of due diligence for self-invested personal pensions (SIPPs).

The regulator is aiming to drive greater consistency of standards in SIPPs while maintaining their flexibility and wide range of investment choices.

It said that while most SIPP providers were providing a good service, the FCA had historically found cases of poor due diligence, weak record keeping, and gaps in how firms protect money and assets.

The standards outlined in the consultation intend to create better outcomes for SIPP investors by improving the consistency and adequacy of due diligence across all SIPP operators.

Additionally, the regulator proposed stronger requirements for the handling of pension scheme assets and money, seeking to reduce the risk of consumer harm when firms fail or wind down.

The FCA said the proposals would bring greater certainty to the industry, improve confidence in the SIPP market, and help ensure consumers can invest through SIPPs with greater confidence.

It also argued that the proposals would complement the Consumer Duty by providing clarity on what good practice looks like.

“SIPPs provide consumers with flexibility and choice,” commented FCA director of cross-cutting policy and strategy, Charlotte Clark.

“Many firms are doing the right thing, but we want to help consumers invest with greater confidence by ensuring standards are consistent.”

7IM head of strategy – wealth, public policy and investment, Ben Kumar, added: “We think that bringing SIPP due diligence and care of customer assets into a common framework is a brilliant idea.

“Pension saving is one of the most important investments people ever make, and more comfort that assets are properly looked after is a good thing – it would only take a couple of high-profile issues for people to stop trusting the pension system.”

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