The Society of Pension Professionals (SPP) has backed the Financial Conduct Authority’s (FCA) plans to strengthen consumer protection in the self-invested personal pension (SIPP) market, but warned that the final regime must remain proportionate, risk-based and practical.

Responding to the FCA’s consultation, Adapting our rules for a changing market: self-invested personal pensions, the SPP supported enhanced due diligence on higher-risk, unregulated, overseas and unusual third-party arrangements, while arguing firms should not be required to duplicate supervision already carried out by the FCA.

The SPP also called for clearer definitions, worked examples and closer alignment with existing regulatory frameworks to help firms implement the new requirements consistently.

It supported the FCA’s proposed investment categorisation framework, but said SIPP operators should focus their due diligence on issues such as legitimacy, ownership, administration, custody and safeguarding rather than assessing whether an investment is suitable for an individual member.

The organisation also raised concerns over mandatory look-through reporting, warning that requiring firms to track through wrappers and platforms to the lowest underlying asset level could create a significant operational burden.

It argued that a more targeted approach should focus on higher-risk investments, particularly where assets are not already subject to robust regulation.

SPP Defined Contribution Committee deputy chair, Madalena Cain, said: “The SPP supports the FCA’s ambition to strengthen consumer protection and bring greater consistency to the SIPP market, but the new regime must be proportionate and risk-based.

“We support stronger scrutiny of higher-risk investments and third parties, while avoiding duplication of existing FCA supervision. Clearer rules, practical guidance and a sensible implementation timetable will be critical.”

Cain added that the proposed look-through requirements could place “significant and unnecessary burdens” on firms where assets were already subject to robust regulation.

The SPP also called for clearer expectations around valuations, audit requirements, reliance on third-party data, record-keeping, and monitoring.

It argued that firms should be able to use technology, exception reporting and risk-based sampling, while avoiding the need for manual review of large volumes of low-risk data.

Meanwhile, Aberdeen Adviser called for the FCA to use the reforms to improve data consistency and transparency across the SIPP market.

Aberdeen Adviser CEO, Rich Denning, said the FCA was right to address data challenges affecting SIPP records, reconciliations and oversight, particularly where pension money and assets were held through external providers.

“Consistent industry data standards would improve member-level information and reduce the need for bespoke data arrangements between SIPP operators and providers,” he stated.

Denning added that if the FCA introduces a new PSM&A regulatory return, it should work with the industry to establish common definitions, align the regime with existing CMAR reporting where appropriate and avoid duplication.

“Policymakers and industry would benefit from a clearer and more consistent picture of the market’s size and development, participation and contribution trends, and how consumers use SIPPs as part of their retirement planning,” he stressed.

Denning added that this was a broader policy issue extending beyond the proposed PSM&A return and warranted further consideration across the FCA, HMRC and Department for Work and Pensions.

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