#6 Large number of small plans vs small number of large plans

Number 6 in a series of headscratchers about SIPP capital adequacy proposals

A SIPP operator that has 10 clients with an average fund size of £400,000 will have the same proposed Initial Capital Requirement as a SIPP operator with 100 clients with an average fund size of £40,000.

However the larger SIPP operator (with more plans) should arguably hold more financial resources as there are more individuals to communicate with in the event of a wind-down and the cost of transferring an asset is not-linked to the value of that asset.

Using AUA as a measure of risk of consumer harm is flawed as it does not distinguish between these two situations.

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