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FSA reveals concerns about UK SIPP market

The Financial Services Authority (FSA) has today reiterated concerns regarding the UK SIPP market which has grown significantly over the last decade. Self invested personal pensions (SIPPs) have become very popular with investors looking to take control of their own pension schemes and invest in the stock market and elsewhere. However, this is still a very young regulatory market and SIPP providers have only been formally regulated by the FSA since April 2007.

A review of 60 SIPP providers by the FSA give raised significant concern regarding training, confidence, accuracy and transparency of charges. These concerns have now been relayed to the industry and while there will be significant changes in the short to medium term there are concerns that some customers may lose out. The FSA has formally advised UK SIPP providers to review their working practices and their training procedures as a matter of urgency.

If, and this is a very big if, the FSA were to close down one of the U.K.'s leading SIPP providers there are concerns about potential tax implications. If a SIPP provider were forcibly close down this could result in a potential 40% tax charge against a customer's pension assets held with that particular provider. While this is obviously a worst-case scenario, the UK Treasury has today confirmed that in this situation each case would be dealt with on its own merits.

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