Last week the Association of Member-Directed Pension Schemes published a reply to the FSA's proposals stating it was "not convinced" by the proposals and offering alternative options.
These included measuring firms by the amount of Sipps held instead of by assets under administration and applying a surcharge for firms running Sipps with low liquidity levels.
Julia Bassett, chief executive of Barnett Waddingham Sipp, said she felt the minimum capital adequacy requirements for Sipp providers of £20,000 could still put consumers at risk if a firm failed.
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She said: "Even though Barnett Waddingham can meet the FSA's proposed capital adequacy formula, we do not support the proposals as we believe they are not good for the industry, will be hard for the FSA to monitor and crucially could still leave consumers exposed to Sipp operators with low levels of financial reserves.
"A fall in markets, leading to a fall in assets, leads to a fall in the capital adequacy requirements. Operators would be able to release capital adequacy at a time when financial pressures had almost certainly increased. The level of consumer protection would fall precisely when it is most likely to be needed."
She also said she expected the proposals could mean firms leaving the Sipp industry.
Ms Bassett said: "The proposed formula for the capital surcharge will create an excess of capital within Sipp operators that will lead to unnecessary increases to Sipp fees and cause many well-run providers to leave the market. This will put consumers at harm as the best protection for consumers is to ensure that the provider does not fail."

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