What's more, recent rulings by the Pensions Ombudsman as well as indications from the Department for Work and Pensions give a clear signal that plans could be afoot to clean up the rough edges of the SSAS market.
We believe the ultimate outcome could be a return to compulsory professional trustees for SSASs, which would wipe out the DIY and practitioner-only markets. A positive outcome.
On the same theme, the new HMRC pension scheme return requirements from April 2024 will force the need for quality professional firms to keep accurate and up-to-date records.
The level and granularity of data that will be required clearly shows HMRC will be on the hunt for wrongdoers and the current approach of some firms to try and stay below their radar will no longer be possible.
I predict a tsunami of HMRC scheme audits and who knows what they might find.
Market shifts
This year will also see the outcome of the recent DWP/TPR levy consultation announced.
The likely result will be a 6 per cent increase in the levy across the board, which seems fair to us but should the worst-case scenario occur and a £10,000 levy be imposed on each SSAS, the market will burst into life like an angry swarm of bees.
We expect switches into one-member schemes or Sipps ahead of the proposed levy imposition, due in 2026. But I feel confident at this stage that no one is going to pay a £10,000 levy unless it's absolutely necessary.
The effect of the Financial Conduct Authority's consumer duty on the Sipp market will also start to be felt this year.
Our view is this will lead to a return to the original purpose of Sipps, which was to purchase commercial property with a personal pension.
Everything else is catered for by low-cost platform products, which will mean many non-property Sipps will cease to be viable from a cost point of view.
If the consumer duty is followed to the letter of the law, this should also mean that all IFAs and financial planners should offer their clients whole of market solutions, including what some advisers view as niche solutions.
We are seeing some indications that the consumer duty may backfire spectacularly where advisers simply deem themselves unable to offer fair value to all but the most wealthy customers or only to customers wanting vanilla solutions.
The advice/guidance proposals, which are designed to offer solutions to lower value clients, all seem rather muddled at the moment.
Sipps and SSASs may suffer from this fallout, which could see a process of customers going direct.
We believe this is not what the FCA necessarily wants to see as it may lead to mis-selling or what is now called non-target market selling.
