The FSA said that the review indicated some potential concerns with Sipp advice – it urged that advisers should be able to demonstrate that a client actually needs that potentially greater investment choice, flexibility and control offered by Sipps.

It said: ‘Our review highlighted the potential risk that Sipp recommendations may be based on access to a broader range of packaged investment funds than under their previous arrangements, rather than because the Sipp provides self-selection of actual investment assets. Under these circumstances, a stakeholder pension or personal pension may equally satisfy a customer’s needs, potentially at a lower cost. Sipp providers operate a variety of charging structures and advisers need to ensure that they carry out proper cost comparisons with the alternative personal pension and stakeholder arrangements.’