SIPP administrator / FCS

chrismriley

Hi

My understanding, is that If a SIPP administrator goes bust , FCS only cover them for £85,500 as they are not a bank. If I have £120k uninvested cash in a SIPP, then the administrator goes bust, would I only be FCS covered for £85,500 or is there no impact to me as it is the administrator who goes bust and not the bank?

Thank you for any help

Albermarle

Normally SIPP administrators, hold client cash in ring fenced bank accounts. So you would only be affected if the bank went bust.

Most of them use more than one bank. You should be able to find the info on how they handle cash on the SIPP website.

One issue is that if you also have cash seperately with the bust bank, the compensation limit of £120K would include money held in Cash via your SIPP .

dunstonh

My understanding, is that If a SIPP administrator goes bust , FCS only cover them for £85,500 as they are not a bank.

You need to remember that with platform providers, which is what a SIPP would be in most cases, FSCS protection works differently. With the failed providers so far, the FSCS contribution has gone towards paying the administrators.

The assets held on the SIPP are a different matter. They would not be affected by a failure of the provider unless you're using providers' own branded investments. Even then, in most cases, it would not be an issue. The assets would only be used if the FSCS money could not cover the cost of the administrators.

This is why you will frequently see here that it's mentioned that you should look for profitable SIPP providers, not those run at a loss and providers that have low levels of illiquid assets. The ones that have been problems have been those that had high levels of illiquid assets.