CP26/20 – A review of the FCA’s new proposed rules for SIPP providers

On 22 June 2026, the FCA published consultation paper CP26/20 setting out proposed new rules for firms operating self-invested personal pensions (SIPPs). You can view the consultation paper “Adapting our rules for a changing market: self-invested personal pensions’ here.

The FCA is concerned that poor due diligence and record-keeping practices in some parts of the SIPP market have contributed to consumer losses. The aim of the FCA new proposed rules is to strengthen consumer protections, improve standards across the SIPP market and reduce the risk of harm to consumers.

What are the new proposed rules?

The FCA have published two new rules focusing on;

1. Due diligence requirements; and
2. Handling pension scheme money and assets.

Due diligence requirements

The changes that the FCA is looking to implement consider that the current due diligence rules are too high-level, leading to firms taking different interpretations, creating inconsistent and inadequate due diligence. There are proposed due diligence changes for SIPP operators. These include due diligence in relation to certain third parties, such as introducers, advisers, and discretionary investment managers, as well as certain SIPP investments. 

The FCA is proposing more explicit due diligence requirements within their Handbook to ‘secure better outcomes for consumers and create greater confidence in the SIPP market’.

The FCA recognises that due diligence should be proportionate. It is therefore proposing a tiered approach for both due diligence on relevant third parties and SIPP Investments. In relation to due diligence for SIPP investments, core due diligence requirements would apply to all SIPP investments, with additional checks for higher-risk investments. Some examples of the proposed obligations include:

Core due diligence:

• Check that investments are not taxable property for HMRC purposes.
• Confirm that proper custody arrangements are in place and that good title to the investment can be established.
• Obtain a reliable valuation of the investment.

Additional due diligence:

• Verify the legitimacy and credibility of the companies and other parties involved.
• Assess whether the investment is realistically capable of performing as described.
• Check whether investors’ contractual rights are reliable and enforceable.
• Review any history of investor issues, such as missed income payments.

In line with their obligations under the Senior Management Arrangements, Systems and Controls sourcebook (SYSC), all SIPP operators will be required to maintain documentation demonstrating their compliance with the due diligence requirements. 

Handling pension scheme money and assets 

There are currently no detailed Handbook requirements governing the handling of pension scheme money and assets by firms that are not subject to the Client Assets Sourcebook (CASS).

To address this, the FCA is proposing to introduce a new Pension Scheme Money and Assets (PSM&A) regime within COBS 19B to protect SIPPs that are not currently covered by the CASS rules. 

The PSM&A aims to ensure that pension scheme money and assets are securely held, improve the quality of firms’ books and records, require firms to complete regular checks that records are accurate, and enhance monitoring to allow more effective supervisory engagement. The regime would not apply to money or assets that are held by a SIPP operator and that are already subject to CASS. 

Examples of the proposed PSM&A requirements include:

• Maintaining complete and accurate records of pension scheme money and assets.
• Regularly checking internal records to confirm that the correct amount of money is being held.
• Promptly investigating and resolving any discrepancies or shortfalls.
• Keeping sufficient information and oversight where assets are held by third parties.
• Checking that data received from third parties has been processed accurately.

What impact will these new rules have?

Greater clarity around the FCA's expectations should help drive more consistent standards across the SIPP market and reduce any risk of loss to consumers. For those firms that operate SIPPs, they will need to ready themselves for implementation. 

The proposals are likely to result in additional compliance and operational work for firms, which will have associated operational cost in implementing the changes. Some operators may decide that the additional regulatory burden leads them to exit the market, with the consequent consolidation of SIPP books.

This creates an interesting balancing act. While the FCA is looking to improve consumer protection, increased compliance requirements could ultimately limit the range of options available to some SIPP investors. 

The FCA is proposing a 12-month implementation period for the due diligence requirements and a two-year implementation period for the proposed introduction of the new PSM&A rules allowing firms to put in place systems, policies and procedures to comply with the requirements. 

Next steps

The consultation period ends today, 24 August 2026, with the FCA anticipating issuing a Policy Statement and their final updated Handbook changes to be published in H1 2027. 

If you would like to discuss what these proposals could mean for your business, or would like assistance reviewing your due diligence processes, please get in touch with Alice Honeywill, Suzanne Padmore, Heather Musk, Jessica Reed or your usual Burges Salmon contact.

This article has been co-authored by Emma Mitchell, Apprentice Solicitor. 

These proposals support our priorities of strengthening trust and securing good consumer outcomes, as set out in our Consumer Investments Regulatory Priorities Report. We also consider them consistent with our secondary objective to advance the international competitiveness and growth of the UK financial sector.

https://www.fca.org.uk/publications/consultation-papers/cp26-20-adapting-our-rules-changing-market-self-invested-personal-pensions