Current account commission should affect firms' cap-ad requirements

Liberty Sipp believes a firm's dependency on current account commissions should be factored into the new capital adequacy regime. It said this would help to expose those firms which appear financially strong but are highly leveraged.Some Sipp providers rely on bank interest as a revenue stream and there have been issues over whether it is right for providers to keep interest and whether this should be disclosed to the customer.Matthew Rankine, technical sales and marketing manager at Liberty Sipp, said: "This will separate the wheat from the chaff and expose those Sipp providers that on the surface are financially strong but in reality are massively leveraged."We're urging the industry to adopt a 'clean price structure' that is sustainable rather than, in many cases, sustained at the expense of the customer."{desktop}{/desktop}{mobile}{/mobile}He criticised the practice of taking commission, even if it was done so transparently, and for firms to base their business models on the practice.Mr Rankine said: "How on earth could these commission be seen as insignificant when many Sipp providers' entire business models are based on them?"It does feel like many Sipp providers believe that if they say that they're doing nothing wrong enough times then they are doing nothing wrong."The Financial Conduct Authority capital adequacy rules will come into force in 2014 and will see the minimum capital a Sipp provider must hold increased from £5,000 to £20,000. There will also be additional increases if firms invest in 'risky' areas such as commercial property.• Want to receive a free weekly summary of the best news stories from our website? Just go to home page and submit your name and email address. If you are already logged in you will need to log out to see the e-newsletter sign up. You can then log in again.

Current account commission should affect firms' cap-ad requirements

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