2016 has been another year of consolidation in the Sipp industry, this can be seen as good or bad depending on who you are and more importantly, where the Sipps end up.

It seems to me that we may see further consolidation in the next twelve to eighteen months when the enormity of the amount of money Sipp providers have to continue to hold really hits home. Having the money available now won’t necessarily be the issue but if Sipps aren’t your core business, then having a large amount of ‘dead’ money may begin to make Sipps less attractive.

For those exiting the industry in an orderly fashion, because they don’t want to be in it any longer, will be the best consolidation exercises for the end Sipp investor. They will be moving from someone who may not see the business as core to what they do, to a specialist provider who may be able to offer more options and expertise.

In addition, because a decision has been made to sell the book it should give the member time to choose if they want to go to the new provider or move on to another of their, and their adviser’s choice. The ceding provider will also have looked for a provider that suits their business and the receiving provider will have done significant due diligence on the book to ensure they know what is in there and have the processes in place to deal with it well.

There are many reasons for consolidation of Sipp books, but the least favourable is likely to be because the provider is no longer willing or able to continue to run the business.

This kind of forced sale, usually with the involvement of the FCA, is likely to be the most disruptive with no real consideration given to the wishes of the Sipp investors and whether they want their Sipp to be administered by the new firm. That said, if their current provider is failing it is better to be administered by a company that is in it for the long term.

My biggest concern is that many of these distressed books are going to one or two big providers. I understand the FCA want them in a large safe pair of hands, but there is only so much those hands can hold before it starts falling though their fingers.

Many of these books will come with problems that will appear along the way, so there is really no telling what the impact on existing clients will be.

Consolidation is a minefield for providers, advisers and members alike, but we know there is more to come and I hope that the majority happen for the right reasons and are not at the detriment to the industry as a whole. The last thing anyone wants to see are failing providers.