In this guide, I cover everything you need to know about SIPP regulations, including the FCA, FSCS, MiFID, and more, in an easy-to-understand manner. Let’s get started!

Are SIPPs regulated?

Yes, they are! SIPPs are regulated by the Financial Conduct Authority (FCA), which is the regulatory body responsible for ensuring that financial markets operate honestly, fairly, and effectively. 

This is important because it means that SIPP providers must adhere to a set of rules and guidelines to protect consumers and maintain a stable financial market. 

The FCA’s oversight helps to ensure that you can trust the companies managing your SIPP investments.

Who is the FCA?

The FCA, or Financial Conduct Authority, is the UK’s primary financial regulatory body

The FCA’s mission is to protect consumers, maintain the integrity of the market, and promote competition to benefit consumers.

To achieve this, the FCA sets standards for financial firms, supervises their activities, and enforces these standards when necessary. 

They also work closely with other regulatory bodies, both in the UK and internationally, to maintain a fair financial market.

Are SIPPs protected by the government?

While SIPPs aren’t directly protected by the government, they are covered by the Financial Services Compensation Scheme (FSCS)

The FSCS is an independent body funded by levies on authorised financial services firms. It provides protection for consumers when a financial services firm fails or is unable to meet its obligations, such as paying out pension benefits or returning investments.

MoneyHelper also have some good resources for SIPPs and Pensions to help consumers – they are a government service.

Are SIPPs covered by FSCS?

Yes, they are! 

SIPPs are covered by the FSCS, which offers compensation for eligible claims when a regulated firm becomes insolvent or is unable to pay claims against it. This means that if your SIPP provider goes bust or is otherwise unable to meet its obligations, you could be eligible for compensation.

It’s important to note that the FSCS compensation limits for SIPPs are £85,000 per person, per firm

This means that if your SIPP provider were to fail, you could potentially receive compensation up to this amount. But even if your provider goes bust, they aren’t legally allowed to use your funds to cover their creditors anyway – read more in my guide to what happens when your pension provider goes bust.

However, the FSCS doesn’t cover losses due to poor investment performance or market fluctuations.

What is the FSCS and how does it work?

The Financial Services Compensation Scheme (FSCS) is the UK’s compensation fund of last resort for customers of authorised financial services firms. 

When an authorised financial services firm fails or becomes unable to meet its obligations, the FSCS can step in and pay compensation to eligible claimants. 

The compensation limits depend on the type of financial product and the circumstances of the claim. For example, for deposits with banks and building societies, the FSCS covers up to £85,000 per person, per institution.

In the case of SIPPs, as mentioned earlier, the FSCS covers up to £85,000 per person, per firm.

To make a claim with the FSCS, you typically don’t need to do anything, as the process is often initiated automatically when a firm fails. 

The FSCS will contact you directly if you’re eligible for compensation.

How risky are SIPPs?

SIPPs, like any investment, carry a degree of risk. The level of risk largely depends on the investments you choose within your SIPP

SIPPs offer a wide range of investment options, from low-risk assets like government bonds to higher-risk investments such as individual stocks and shares.

Therefore, it’s essential to understand the risks associated with each type of investment and build a diversified portfolio that aligns with your risk tolerance and long-term financial goals.

That said, the FCA’s regulation of SIPPs helps to mitigate some of the risks associated with investing in them. 

By overseeing the conduct of SIPP providers and enforcing strict rules and guidelines, the FCA ensures that consumers are better protected and that providers maintain a high level of integrity.

Always remember to do thorough research and consider seeking advice from a financial advisor before making any investment decisions. 

A financial advisor can help you assess your risk tolerance, recommend suitable investments, and build a well-diversified portfolio to minimise risks.

When did SIPPs become regulated?

SIPPs have been regulated since April 2007, when the FCA (then known as the FSA) introduced new rules and guidelines to bring them under the regulatory umbrella. 

Before this date, SIPPs were considered unregulated, and investors had to rely on the SIPP provider’s reputation and track record for protection.

The introduction of SIPP regulation has provided consumers with greater confidence in the industry, knowing that providers must adhere to strict rules and guidelines to protect their pension investments.

Are SIPPs covered by MiFID?

SIPPs themselves aren’t directly covered by the Markets in Financial Instruments Directive (MiFID), but the firms providing and managing SIPPs may be subject to MiFID regulations

MiFID is a European Union law (implemented in the UK) that aims to create a more transparent and fair financial market, providing increased protection for investors.

MiFID sets out various requirements for financial services firms, such as disclosing information about investment products, ensuring that advice given to clients is suitable, and maintaining records of client communications. These regulations help to create a level playing field for investors and promote trust in the financial services industry.

Even though SIPPs themselves are not directly covered by MiFID, the firms managing your SIPP investments must adhere to these regulations, providing an additional layer of protection for your pension savings.

What are the rules for SIPPs?

There are several rules and regulations surrounding SIPPs, which aim to protect consumers and maintain a stable financial market. Some key rules include:

  • FCA regulation

    SIPP providers must be authorised and regulated by the FCA. This ensures that providers adhere to strict rules and guidelines to protect consumers and maintain a high level of integrity in the industry.
  • Investment limits

    SIPPs can invest in a wide range of assets, but some investments are restricted, such as residential property and certain types of loans. These restrictions help to prevent overly risky investments that could jeopardise your pension savings.
  • Contribution limits

    There are limits to how much you can contribute to your SIPP each tax year. For the 2021/2022 tax year, the annual allowance is £40,000 or 100% of your relevant UK earnings, whichever is lower. This limit helps to ensure that tax relief on pension contributions is targeted at the majority of savers.
  • Tax relief

    SIPP contributions receive tax relief, subject to certain limits and conditions. This means that the government effectively contributes to your pension by providing relief on the income tax you would have paid on your contributions.

    The amount of tax relief you receive depends on your income tax rate. Basic rate taxpayers receive 20% tax relief, while higher rate taxpayers receive 40% and additional rate taxpayers receive 45%. Tax relief on pension contributions encourages individuals to save for their retirement.

Do I need a financial advisor for my SIPP?

While it’s not mandatory, it’s often a good idea to seek advice from a financial advisor when considering a SIPP. 

They can help you understand the risks, benefits, and investment options suitable for your individual circumstances. 

Remember, SIPPs can be complex, and having professional guidance can be invaluable in making informed decisions about your retirement planning.

A financial advisor can also help you navigate the many rules and regulations surrounding SIPPs, ensuring that you remain compliant and maximise the tax benefits available to you. 

Additionally, they can provide ongoing support and advice as your financial situation and goals evolve over time.

Who are some safe SIPP providers?

Several well-established and reputable SIPP providers are known for their reliability and customer service. Some of these include:

  1. Hargreaves Lansdown: As one of the UK’s largest investment platforms, Hargreaves Lansdown offers a wide range of investment options and tools to help you manage your SIPP effectively.
  2. AJ Bell: With a strong focus on low-cost investing, AJ Bell provides a user-friendly platform and a range of investment choices for SIPP investors.
  3. Fidelity: Known for its extensive research tools and investment guidance, Fidelity offers a robust SIPP platform for both beginners and experienced investors.
  4. Vanguard: As one of the world’s largest investment management companies, Vanguard offers a selection of low-cost funds and a straightforward SIPP platform.
  5. Charles Stanley Direct: With a reputation for excellent customer service and a comprehensive investment platform, Charles Stanley Direct is a popular choice among SIPP investors.

Always remember to research and compare multiple providers to find the one that best suits your needs and risk tolerance. Look for providers that are regulated by the FCA and have a track record of reliability and transparency.


Who regulates SIPPs?

The Financial Conduct Authority (FCA) regulates SIPPs in the UK. They ensure that SIPP providers adhere to strict rules and regulations to protect consumers and maintain a stable financial market.

Does the FCA regulate SIPPs?

Yes, the FCA regulates SIPPs. SIPP providers must be authorised and regulated by the FCA to offer their services in the UK.

What are the risks of SIPPs?

SIPPs carry several risks, just like any other investment. The level of risk depends on the types of investments held within your SIPP. Some common risks include:

Market risk – The investments within your SIPP can fluctuate in value due to market conditions. This means that the value of your pension savings can go up or down, depending on how the investments perform.

Currency risk – If your SIPP invests in assets denominated in foreign currencies, fluctuations in exchange rates can impact your investment value. For example, if the value of the currency in which your investments are held decreases relative to your home currency, your investment’s value may also decrease.

Inflation risk: Inflation can erode the purchasing power of your money over time, impacting your long-term investment goals. If the return on your investments doesn’t keep pace with inflation, the real value of your pension savings could decrease over time.

Provider risk – While the FSCS offers compensation for eligible claims, it’s still essential to choose a reputable SIPP provider to minimise the risk of provider insolvency or other issues.

As with any investment decision, it’s crucial to understand the risks, do your research, and consider seeking advice from a financial advisor to help you navigate the world of SIPPs.