Richard Mattison, director of SIPP and SSAS  provider Whitehall Group, reflects on the huge changes he's seen in his 35 years in the sector in this guest column for Financial Planning Today where he questions the direction of the pensions and advice sectors and decades of regulatory 'tinkering.'

I joined the SIPP and SSAS world in 1990 with an administration job at the original James Hay in Salisbury. Now, having completed 35 years in this market working for small and large firms and managing my own one, which I co-founded thirteen years ago, it's a good time to reflect on some key industry themes, events and trends that have emerged over time.

The pensions market seems to move in 20 and 25-year cycles.

The latest of these is the advice-guidance debate and the proposed introduction of “targeted support” by pension firms. I recall way back in the early 1990s where pension schemes were established as trusts. Then the trustees had a general duty to discuss the best way of managing pension scheme and to guide the members accordingly.

The fact that the trustees and members were basically the same people was not relevant. Guidance was given at trustee meetings and on telephone calls (how times have changed). Then along came the Financial Services and Markets Act in 2000, which ruled that anyone caught giving financial advice who was not authorised and regulated, would be hung drawn and quartered. Naturally pension providers ran off screaming and made sure at all costs that nothing they did could be construed as giving advice.

Now, we seem to have gone full circle with the proposed targeted support. How that’s really going to work remains to be seen but we will only need a couple of cases where support has suggested the wrong action and causes the wrong outcomes for the next cycle to begin.

Promoting economic growth through financial services is another one. Of course, the very point of SIPPs and SSAS is to grow a retirement fund through entrepreneurial conduct, for example commercial property purchases, letting, refurbishment, development and sale, through loans and borrowing and investment in higher risk/higher return opportunities such as private equity. But how well has that been viewed by various Governments and regulatory bodies over the years?

Activity that creates economic growth via pensions is now positively viewed. Frankly, this has been squeezed gradually by regulatory pressure throughout my career. Now, the current Labour Government has decided to change all that and on the 24 December 2024 it sent an early Christmas present to the FCA asking it for ideas on how to boost economic growth – the FCA? Really?

Pension A Day was a big deal back in 2006. The idea of re-setting the clock and simplifying everything sounded great. I was excited, a new dawn, a new opportunity. How wrong I was. Within a year of A Day the Government started changing it and successive Government’s they have not stopped.

The pace of regulatory tinkering has increased to a point where the pension industry has almost entirely run out of puff and there are signs it will simply grind to a halt altogether. Regulatory change at this rate and continued scale has had two negative impacts.

Firstly, as firms fall over themselves trying to implement the changes requested, a complete muddle has been created where no one knows quite what they are supposed to be doing (helping customers or creating barriers?) and secondly, the public’s lack of trust in pensions as a concept is only increasing. No one knows what a pound saved today is actually going to achieve in 30 or 40-years’ time. The latest plans to slap Inheritance Tax on pensions is a case in point. Everyone except those who make the regulations is begging, “stop now.”

The other failure of A Day, in our sector anyway, was the loosening of investment rules.

Having a broader investment range, with a more laissez faire approach to how investments were made, was great. We nearly had residential property included on that list. But when the SIPP market went potty with the investment choice and the scammers moved-in, no one was given the responsibility of asking anyone to stop and think. The result was that a lot of people lost a lot of money, but whose fault, was it?

In the end the SIPP companies got the blame, and the fallout continues to this day (the Hartley chaos for example). The scammers ran off with the cash and the regulators who permitted all this absolved themselves of all responsibility. Should pensions just come with a health warning like cigarettes and then everyone can get on with it?

All in all, it’s been a 35-year roller coaster that’s hard to summarise. If I had any concluding thoughts, it would be to say that nothing has improved, it’s just got a whole lot harder. And are pension savers now better placed to have a comfortable retirement? I don’t think so.

Richard Mattison is a director of SIPP and SSAS provider Whitehall Group with 35 years of experience in the sector.

https://www.whitehallgroup.co.uk/