The Sipps sector will shrink significantly and could reduce to as few as 30 ‘strong’ providers, Sipps professionals have predicted.

Financial Planning Today has been told there will be more consolidation to come after recent buy outs.

Rowanmoor was bought by Embark Group, the owner of rival business Hornbuckle, while EPML was acquired by Curtis Banks/Suffolk Life. STM Group has bought London & Colonial and Mattioli Woods acquired MC Trustees.

Matthew Rankine, director of sales and marketing at Liberty Sipp, said: “In my view, by this time next year there will be about 30 strong Sipp providers. I think this is a good number to create a healthy competitive market, and to provide customers with plenty of choice."

Read the Financial Planning Today magazine feature on the Sipp sector in full - see how below

Chris Jones, principal of Rock Consultancy and a former director at Suffolk Life provided data on the state of the sector at the recent AMPS conference.

He reported that 75 firms wrote new Sipps in Q2 2016 before capital adequacy reforms had kicked in, compared with 99 providers six quarters ago in 2015.

He cited an FCA report suggesting that the reforms would result in 14% to 18% of providers stopping writing new business and said that, in fact, there had already been a 24% drop so far.

There are now 236,000 full range Sipps, and 1.35million streamlined Sipps, his data showed.

Jeff Steedman, head of Sipp/SSAS business development at Xafinity, said: “There will certainly be further consolidation in the next 12 months and probably in all areas of the market.

“I’m guessing five to ten providers will have exited in one way or another in the next couple of years.”

Greg Kingston, head of communications, product & insight at Suffolk Life, said: “There are too many small specialist Sipp providers in the market today, and the recent review of in specie contributions shows how many are simply not up to the required standard.

“The original, smaller founder members of the Sipp market rightly remain a concern for the regulator, and they’re most likely to succumb to the regulatory and financial pressures of running a Sipp business to the expected standards.”

Elaine Turtle, director of DP Pensions, said: “I think we will see more consolidation and the super Sipp providers will just get bigger and bigger.”

Eddie McGuire, managing director of @SIPP, said: “We believe the shake up in the market will continue with fewer providers prevailing in the years to come. As this happens, the old adage of “buyer beware” will be increasingly appropriate.”

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