The new capital adequacy rules take effect today but Sipp experts say there are still grey areas that could be problematic.

Jeff Steedman head of Sipp/SSAS business development at Xafinity, and Elaine Turtle, director of DP Pensions, both had concerns that some aspects are not entirely crystal clear.

Mr Steedman said: “We are hopeful that further clarification will come from the FCA once they start to gather data and information from Sipp providers. There are some grey areas.”

He said these included how to classify the following:

1. 'Commercial property’ that is land without planning permission or a current use (but not landbanking)
2. Unbreakable term bank deposits and the 30-day rule on sale – Mr Steedman said his firm would suggest that bank deposits under £75k should automatically be classed as standard assets
3. Suspended investment funds – especially regulated investment funds.
4. Underlying investments in a Discretionary Fund Manager account – whilst the DFM account may be viewed as a ‘standard’ asset, it may contain a suspended fund.

He said: “The key task for the FCA staff who will engage with Sipp providers post 1 September rules is consistency on how the rules are applied.”

Elaine Turtle, Director, DP Pensions, said: “In terms of the new capital adequacy requirements, we are supportive of anything that improves standards but would have preferred the FCA to have made the rules clear. What we have are a number of grey areas and that isn’t ideal for providers, advisers or their clients.”

She said: “A great example of a teething problem has to be the open ended property funds that have closed to redemptions, with Aviva stating it will be the Spring that they may reopen.

“This is a much wider issue does this mean these funds will be viewed as “toxic funds” this can’t be good for the property sector, firms or the end clients. The 30 day rule for denoting if something is standard or non-standard also creates issues for these property funds.

“As a fund – it clearly should be a standard asset but as they cannot now be liquidated in 30 days –do they become non-standard – an issue in the calculation of capital.”