SIPP Capital Adequacy predictions

At the AMPS conference, Nick Pointz-Wright of FCA gave a short address during which he provided some snippets about the progress of the SIPP capital adeuacy rules, first proposed in November 2012 at which point final rules were expected in Summer 2013.

So, almost a year after we might have expected final rules, he commented that the FCA are mindful of the position regarding commerical property, that a 12 to 18 month transitional period would be normal but that a longer period could be appropriate and that the final rulesare now expected in Q3 of 2014, once the third thematic review into the SIPP industry has concluded.

Here is my summary then of what we might expect to see:

1. Final rules published late Sept 2014 (after summer holidays)
2. Implementation by 5 April 2016 (18 months)
3. Minimum will be 20k (to allow new entrants)
4. Initial Capital Requirement will be number of SIPPs (the AMPS way – using AUA doesn’t work)
5. Surcharge based on Non Standard Assets (this is a key component of their intial proposals)
6. Non Standard Assets will include directly held commerical property and non-breakable term deposits (as too complex to strip out)
7. The factors will be adjusted to make for a sensible surcharge amount (as the initial formula gave too high result)
8. To calibrate, they will target two years of running costs based on some hypothetical SIPP books

Anyway, I guess we are likely to know by “Q3”

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