Following a scathing paper telling poorer providers to get their act together, the FSA’s latest consultation proposes huge changes to the backing the industry must provide.

While providers crunch the numbers and wonder whether they will be around in five years’ time, advisers must simply do the same as always – what is best for their clients.

But deciding how to go about that may not be so straightforward. Much more focus has previously been placed on the suitability of the investments advisers recommend for clients’ Sipps.

The FSA’s scrutiny is a stark reminder that due diligence must also be performed on the Sipp operator. Those providers with a solid balance sheet, good reputation and high levels of service will come through the other side. They may not agree with the FSA’s proposals, but they can comply if they have to.

Smaller providers may struggle. Many have argued that the capital adequacy changes disproportionately affect those with lower numbers of Sipps, who wait with baited breath for the regulator to have a rethink.

But the providers who will cause most concern are those who have been operating at the very edges of – or beyond – what a responsible Sipp provider should do.

There is nothing wrong with allowing access to more esoteric investments; indeed, many investors go down the Sipp route to access such assets.

However, operators who hold a hefty amount of questionable investments, but didn’t perform the necessary due diligence and who cannot produce the capital needed to comply with regulations, will struggle to survive.

They will also struggle to find a buyer – who would want to purchase such a firm?

Ultimately, the client must be safe. lf you are unsure, check again. If you are sure, still check again.