The FCA’s CP26/20 Consultation Paper has set out proposals for changes to the Self-Invested Personal Pensions market, aiming to address high-risk areas of the market and provide protection to consumers.
The FCA has published a consultation paper which sets out proposed changes to the Self-Invested Personal Pensions market. These reforms aim to address higher-risk areas of the market and ensure that appropriate protection is provided to consumers. This will be achieved by outlining clearer standards of due diligence, ensuring consistency across SIPP operators.
The consultation is open until 24th August 2026.
The report is relevant to investment platforms, firms offering discretionary investment services, stockbrokers, platforms, third-party custodians, trustees of defined contribution occupational pension schemes, auditors, insolvency practitioners and consumers and groups representing consumers’ interests.
1. Due Diligence
The FCA’s proposed rules aim to enhance the current due diligence controls by implementing consistent standards across SIPP operators. This will be achieved by ensuring the obligations and expectations of SIPP operators are clearly defined. The FCA will also ensure that measures are adequately enforced and supervised by introducing clearer regulatory requirements within the FCA handbook. This is intended to enhance the due diligence framework by reducing the risk that a customer’s pension savings are subject to scams and financial crime.
In addition, firms must set out clear terms of business and undertake risk-based due diligence before and during activities with a third party, ensuring that the third party’s senior management has not been involved in criminal activities. Firms should conduct verification, regulatory compliance, and conflict-of-interest checks. These third parties include introducers, advisors and discretionary investment managers.
2. Handling Pension Scheme Money and Assets
The current regulation does not sufficiently cover how pension scheme money and assets are handled. To address this, a Pension Scheme Money and Assets (PSM&A) regime will be implemented within COBS 19B to ensure clearer money and asset requirements are established for SIPP operators when handling money and assets on behalf of unauthorised trustees and third parties.
The proposed reforms are intended to increase clarity through enhancing regulatory requirements for due diligence and handling pension scheme money and assets. This is intended to improve confidence in the SIPP market and encourage consumers to invest in SIPPs. It supports the Consumer Duty by providing clearer expectations of good practice and strengthening regulatory frameworks to address harms in pensions. It is expected that the reforms will result in greater consistency and alignment of regulatory standards and requirements across SIPP operators.
Thistle works alongside advice firms to help them respond confidently to regulatory expectations, whether they are growing, restructuring or refining their proposition. We can help understand what the consultation and the proposed changes mean in practice. In addition, we can support the enhancement of a SIPP operator's due diligence framework, ensuring consistent standards are applied throughout the business and market.
Sophia recently joined Thistle as a Consultant in the Investment Wholesale team. She holds a Bachelor of Science in Psychology from the University of Nottingham and brings a strong foundation in investment compliance. Before joining Thistle, she worked at a hedge fund where she supported regulatory development projects and contributed to policy reviews, giving her practical insight into how firms adapt to emerging requirements. She has also completed the CISI Introduction to Securities and Investment and Global Financial Compliance modules, which further strengthened her technical knowledge.