Sipp provider Mattioli Woods has warned of "bloodshed" as the battleground develops between Sipp providers as new regulatory requirements are brought in.
Over the next few months, Sipps providers will need to consider their capital positions and deal with new regulatory requirements set out by the Financial Services Authority.
The firm expects the changes could lead to much consolidation of firms and lower cost providers needing to increase their scheme fees. It also forecast firms may have to turn away business if it meant higher capital adequacy would be needed due to assets such as commercial property being classed as risky.
The firms plans to respond to the FSA's consultation, particularly on what should be considered as non-standard assets.
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Chief executive Ian Mattioli said: "I believe we should not underestimate the issues that the market is going to face as a result as these proposals.
"We believe that many Sipp providers are already trading on thin margins and those with significant property and non-standard assets, will simply not be able to comply with capital adequacy requirements. The battleground is about to commence and I expect a bloodshed scenario with many not surviving."
Mark Smith, operations director and chief compliance officer, said: "The business model adopted by many low-cost Sipp providers, whereby they effectively write business as cheaply as possible and also accept the more esoteric type assets, is now coming back to bite them.
"Surely providers that administer significant Sipp assets which can run into billions, cannot realistically expect to carry just six weeks of operating expenses, and if they do, then 'titanic' and 'iceberg' are two words that spring to mind."