#9 Capital Requirement will be lower at times where there is a higher risk of consumer harm

Number 9 in a series of headscratchers about SIPP capital adequacy proposals

Financial pressure may cause a SIPP operator to exit the market.

This financial pressure may be as a result of external economic forces, such as the current credit crisis which could result in a SIPP operator’s line of credit with a bank may be withdrawn.

This could coincide with low market values (depressed equity markets, property voids, etc).

This would lead to a reduction in the capital requirement just when the risk of exit is at its highest.

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