#7 Misalignment of interests between SIPP operators and consumers regarding asset valuations

Number 7 in a series of headscratchers about SIPP capital adequacy proposals

The AUA test introduces a conflict of interest between the SIPP operator (who would favour a lower value of assets) and the consumer (who would favour a higher value) and this will be particularly acute for non-standard assets which are by definition those assets that are open to subjective valuations.

For example, it is generally accepted that a property valuation could vary by 10%, which is significantly more than the cost of transferring the property should the SIPP operator need to exit.

As the SIPP operator determines its valuation policies, it would be the SIPP operator’s conservative valuation that would be adopted.

There are already reported discrepancies between SIPP operators in how they value assets.

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