The FCA released information yesterday showing that a quartet of un-named Sipp operators had failed to meet the requirements. Changes to the regulations were implemented last September.

Nigel Bennett, sales and marketing director at InvestAcc, said: "We are surprised that as many as 4 firms have failed given the timescales that providers have known about the new rules and had the opportunity to take appropriate action.

“If it transpires that the individual firms have significant exposure to non-standard assets this may make the businesses unattractive to potential suitors and it will be interesting to see what action the FCA now takes.

“Without knowing the identity of the providers involved it would be unfair to speculate as to why they have been unable to meet the requirement."

Greg Kingston, head of communications, product and insight, Suffolk Life said: “What we’re seeing now is normal regulatory supervision following a bedding in period of the new capital rules, and that will resolve the position of those operators who cannot meet the requirements today.

“The next evolution in the Sipp market will be just as important, as smaller firms attempt to recover sufficiently in order to thrive rather than merely survive. Few are sufficiently profitable to invest in driving efficiency and improved service. Consolidation activity may well be dialled down but it is by no means finished.”

Martin Tilley, director of technical services, Dentons Pension Management said: "It is sad to see that despite a lengthy consultation in which the likely benchmarks were outlined and an 18 month run in period after they were finalised and before they became effective, that several firms have still not met the minimum benchmarks. Many firms in similar positions have changed their proposition, closed to new business or sold out of the market so why have these four soldiered on and failed the benchmark tests?”

He said: "The FCA do have the powers to put these firms into special administration and potentially withdraw permissions to operate and while these sanctions are available, I’d hope that the Regulator would first assess real risk and work with the Sipp operator to resolve the issue.

“Is there genuine risk to the clients? If not, can things be salvaged? What we don’t want is the Sipp clients being disadvantaged in a wind up situation where they are forced to transfer assets across to a new provider potentially incurring costs to do so.

"The last thing the Sipp market needs is negative publicity now after the regulator enforced the cleansing of the industry through the last thematic review.

"Alternatively, we might see buyers start to circle sensing a potential forced sale of business, which again might not necessarily be in the interest of the client."

Some in the sector were not surprised by the fact some had failed but instead, that there were just four.

Eddie McGuire, managing director of @sipp, said: "I am not surprised to learn that a number of Sipp firms failed the FCA capital adequacy test. But I am shocked to hear its only 4 firms. For those firms who hold a high percentage of their book in non-standard assets the impact of the FCA’s formula can, in relative terms, be quite onerous. In the absence of significant shareholder or corporate backing, this can become a serious issue.

"It will be interesting to see how the FCA reacts to this. Firstly, they should make these firms known (so that IFAs advising on Sipp business are fully aware) and, secondly, they should ensure that these firms do not accept new business. What happens beyond that may depend on the ongoing viability of the businesses in question."

Andy Bowsher, director of self invested pensions at Xafinity, said: “Whilst we are not surprised a few have failed the requirements, and 4 is perhaps less than expected, it is positive that returns have been filed and hands honestly raised by these firms. The key concern, particularly for advisers, is for the clients, and the FCA will want to tread carefully to find a positive outcome.”

The FCA stated: “Of the 66 Sipp operator firms who have reported at least once under the new capital regime, 4 firms have reported that they do not hold sufficient capital and we are in contact with these firms in line with our Supervisory Framework.”