FCA Consults on New SIPP Standards: What CP26/20 Means for Pension Holders and Operators

Background: why the FCA is reviewing SIPP standards

Self-invested personal pensions are the most flexible pension wrapper available to UK savers. Unlike workplace defined contribution pensions, which offer a limited menu of funds selected by the employer's scheme, SIPPs allow holders to choose from a much wider range of investments including listed equities, investment trusts, bonds, commercial property and, in some cases, unlisted assets. This flexibility has made SIPPs increasingly popular, particularly among self-employed workers, higher earners and those approaching retirement who want greater control over their investment strategy.

The FCA has been monitoring the SIPP market for a number of years. In previous market studies and thematic reviews, the regulator identified recurring concerns across a subset of operators. These concerns centred on inadequate due diligence on the investments that operators accepted into their schemes, particularly investments promoted by unregulated third parties that turned out to be high-risk or fraudulent. A number of SIPP operators became conduits for pension liberation fraud and high-risk unregulated investment schemes in the 2010s, resulting in significant consumer losses and FCA enforcement action.

More recently, the FCA has focused on a structural issue in how some SIPP operators hold pension assets. A significant proportion of SIPP operators have structured their businesses using unauthorised trustee companies that hold pension scheme money and assets rather than holding them directly. This structure means that the FCA's existing Client Assets Sourcebook rules, which set detailed requirements for how firms must hold and protect client money and assets, do not apply to those operators. The proposed PSM&A regime in CP26/20 is designed to address this gap.

The broader context for the consultation is the continued growth of defined contribution pensions, including SIPPs, as the primary retirement savings vehicle for UK workers. The shift from defined benefit to defined contribution over recent decades means that more pension savers are now personally responsible for investment decisions and more pension assets are held in arrangements where the firm rather than a government-backed scheme bears operational responsibility. The FCA views the existing rules as needing updating to reflect this changed landscape.

The due diligence proposals

The first major area of the consultation concerns due diligence. The FCA proposes to introduce clear minimum standards requiring all SIPP operators to carry out appropriate due diligence on investments before accepting them into schemes they operate. Under the proposed rules, operators would need to form a reasonable understanding of the nature and risks of any investment, enabling them to screen out investments that could expose consumers to harm from scams, fraud or investment propositions that lack commercial credibility.

The existing regulatory framework requires SIPP operators to act in the best interests of scheme members but does not set specific minimum standards for the due diligence process itself. This has resulted in significant variation in practice across the sector. Some operators conduct thorough checks before accepting new investment types; others have historically relied on customers self-certifying that they understand the investment. The FCA's proposed rules would establish a clear floor below which no operator could fall.

For investments managed by third parties within a SIPP, the proposals set proportionate and focused requirements. The FCA recognises that a significant number of SIPP structures involve third-party asset managers who acquire and manage assets within the scheme. The proposed rules require operators to carry out checks on such third parties before accepting them, distinguishing between those that are FCA-authorised and those that are not, with additional checks required for unauthorised or overseas parties.

Governance and monitoring requirements are also proposed. Operators would need to have processes to gather and analyse management information to identify potential risks or trends, including emerging patterns that might indicate fraud or unsuitable investment propositions. Documentation requirements would oblige operators to maintain records demonstrating compliance with the proposed due diligence rules. A 12-month implementation period is proposed for these requirements to allow firms to review existing processes and update their procedures.

The Pension Scheme Money and Assets regime

The proposed Pension Scheme Money and Assets regime is the more structurally significant element of the consultation. It addresses the gap in protection for pension assets held through SIPP structures that use unauthorised trustee companies.

Under the current regulatory framework, the FCA's Client Assets Sourcebook applies to SIPP operators that directly hold client money and assets. However, a large proportion of SIPP operators have legitimately structured their operations so that an unauthorised trustee company holds the pension scheme money and assets on behalf of members. Because the trustee company rather than the SIPP operator holds the assets, the CASS rules have not applied in these cases. The FCA has concerns that this leaves a significant body of pension assets with weaker protections than would apply under CASS.

The proposed PSM&A regime sets minimum standards that would apply to all SIPP operators regardless of whether they use an unauthorised trustee structure. The core requirements proposed are that pension scheme money and assets should be securely held, accurately recorded and subject to effective oversight by the operator. Operators would need to be able to identify all money and assets held for each individual SIPP or member arrangement promptly, and records would need to be complete and capable of accurate reconciliation.

The proposed rules also address what happens when clients transfer their assets between SIPP operators, or when an operator winds down its business. The FCA has seen cases where poorly structured wind-downs have left pension members without access to their assets for extended periods. The proposed rules aim to ensure that operators have plans in place that would facilitate an orderly transfer of assets if they need to exit the market.

A two-year implementation period is proposed for the PSM&A requirements, reflecting the operational significance of the changes required. SIPP operators that have existing third-party relationships where data dependencies would make compliance within two years difficult are proposed to have an additional 12-month extension available, provided they have identified those dependencies and have a plan in place to address them.

How CP26/20 fits within the broader FCA pensions agenda

The SIPP consultation is one element of a wider FCA programme of work on pensions. The regulator published its Regulatory Priorities: Pensions report in 2025, setting out the areas it intended to focus on across the pensions market. SIPP governance was identified as one of the priority areas, alongside pension transfer practices, the pensions dashboards programme, and value for money assessment in defined contribution schemes.

The FCA's work on SIPPs also sits alongside the Pension Schemes Act 2026, which the government has described as a framework for phased reform of the broader pensions system. The Act creates the basis for changes to consolidation, pooling and investment oversight that will unfold over a number of years. The SIPP consultation is focused on the conduct and operational standards of individual SIPP operators rather than on the structural consolidation questions addressed by the Act.

The consultation also builds on the Consumer Duty, which came into force in July 2023 and requires all FCA-regulated firms to deliver good outcomes for customers. The FCA has stated that the proposed SIPP rules are intended to complement the Consumer Duty by making clear what good practice looks like in the specific context of SIPP operation, rather than leaving firms to interpret the principle-based Duty in isolation.

Industry response to CP26/20

Initial responses from the pensions and investment platform industry have been broadly supportive of the direction of the proposals, with some reservations about the pace and scope of implementation. AJ Bell, one of the largest SIPP platforms in the UK, has welcomed the FCA's scrutiny of SIPP governance while questioning whether the proposed prescriptive rules add materially to the protections already in place under the Consumer Duty for firms already doing the right thing.

Trade body responses have emphasised the importance of proportionality, particularly for smaller SIPP operators. The concern is that compliance costs associated with the PSM&A regime and enhanced due diligence requirements could be disproportionate for smaller firms, potentially driving them out of the market. The FCA has acknowledged this risk in the consultation paper itself, noting that it expects some firms that cannot meet the minimum standards to exit the market during the implementation period, and that the two-year implementation window is intended to allow orderly exits rather than disorderly failures.

How to respond to the consultation

The consultation is open to SIPP operators, consumer groups, financial advisers, industry bodies, pension trustees and any other interested parties. The FCA is seeking responses on all aspects of the proposed rules, including the proposed due diligence standards, the PSM&A regime, the implementation periods, and the potential impact on different types of SIPP operator.

Responses should be submitted before 24 August 2026. The FCA's consultation paper CP26/20 is available to download from the publications section of fca.org.uk. Responses can be submitted online through the FCA's consultation response form or by email to the address set out in the consultation paper. The FCA has indicated that it expects to publish a Policy Statement setting out its final rules in 2027, following analysis of the responses received.

Frequently asked questions

Does CP26/20 affect my existing SIPP?

Not directly. The proposed rules are directed at SIPP operators. If adopted, they would require your SIPP provider to meet higher minimum standards of due diligence and asset protection, which benefits you as a pension holder. You do not need to take any action in response to the consultation.

When would the new SIPP rules take effect?

The FCA is proposing a two-year implementation period from the date final rules are published. Given the consultation closes in August 2026 and the FCA expects to publish final rules in 2027, the earliest the new requirements would take effect is likely 2029 for most operators, with a further year for those with complex third-party arrangements.

What is the PSM&A regime?

The Pension Scheme Money and Assets regime is the proposed new set of rules for how SIPP operators must hold, record and protect pension assets. It is designed to ensure consistent protection for pension money regardless of whether the operator uses a direct holding structure or an unauthorised trustee company.

Which SIPP operators are affected?

All FCA-authorised SIPP operators would be subject to the proposed rules. This includes large platforms such as Hargreaves Lansdown, AJ Bell and Vanguard as well as smaller specialist SIPP operators. The proposals are designed to raise minimum standards across the sector rather than to target specific firms.

How do I respond to the consultation?

Download CP26/20 from fca.org.uk and submit your response using the FCA's online response form or by email before 24 August 2026. Contact details are set out in the consultation paper.