IF EVER there was a scandal waiting to happen, it is the mass selling of self-invested personal pensions. And the new buy-what-you-please regulations, which were meant to spice up these well-established niche products, are not even due to come into effect for a further five months.

The stately Standard Life has attracted £1 billion in nine months into its new SIPP product, an inflow beyond its wildest dreams. More entrepreneurial firms, alongside property agents working via the internet, are manically touting profits from speculating in the housing market, as the main attraction of the new SIPPs.

Independent advisers and estate agents foresee traditional, wealthy SIPP holders piling at least £6 billion a year into UK homes and perhaps £1.5 billion a year abroad, adding up to 5 per cent to housing demand. Yet an ordinary saver could not hope to buy a property in a SIPP for many years, either outright or by mortgaging it for up to half the value of the fund.

The new SIPP regime has had a violently split personality from the start. It seems to have been spirited through the sieve that is Whitehall rationality at a time of desperation over pensions. Regulators and politicians had spent years rubbishing pension providers, convincing the public that they could not be trusted. Then share prices fell by half in three years, reducing the appeal of traditionally invested pension plans near to zero for those modest earners that ministers were keen to entice into retirement saving.

What a great idea it must have seemed to allow personal pensions to be invested in houses, fine wines, pictures, snuff boxes, pop memorabilia or whatever assets hard-working savers had more faith in than stocks and shares. But, since then, house prices have fallen and shares have staged a remarkable sustained recovery.

No matter, because it now seems that the real appeal of SIPPs is, as it always was, as a tax shelter for those wealthy enough to put up to £200,000 a year into a plan. For them, the great new attraction is a 40 per cent tax subsidy to buy a second home, and then a third, fourth and fifth. It is hard to conceive of a vehicle better tailored to the needs of City bankers wondering how to avoid tax on their juicy annual bonuses.

The vast sums that such folk are quite legitimately lining up to invest in extra houses may not be enough to reinflate a new price bubble across the country but they will surely do so in favoured inner-city properties, seaside retirement homes and country cottages.

That will cause social concern. From a financial point of view, the greater danger is that modest savers will be lured by a false prospectus of housing riches into risky assets in obscure, volatile markets generating no income. For many, owning a buy-to-let house will remain a distant hope; it would in any case be unwise to put all one’s eggs in the property basket.

Ministers have belatedly listened after insurance companies told them that SIPPs need to be regulated to avoid mis-selling. The Treasury is about to suggest its preferred options for regulation by the Financial Services Authority but even when this is settled in several months’ time, the FSA will not be able to set up a credible regime to license and monitor marketing by estate agents, auctioneers and vintners by April. In his Pre-Budget Report, Gordon Brown should use this delay to put off the start of the new SIPP regime again.

Regulation is, however, only a palliative. He should recast the rules to avoid exploitation of the less well off and exploitation by the rich. Both aims can best be met by insisting that the new permitted categories of assets can be held only through collective investment schemes. That way, SIPPs could still become a positive force.

One in the eye for Boots

PERHAPS Richard Baker, the newish chief executive of Boots, should have gone to Specsavers. If he had, he would not have been caught on the nasty side of the price war in optometry that is undermining profits at the healthcare retailer. He would also have side-stepped awkward questions about non-recovery across the company.

On the back of yet another downbeat trading update from Nottingham’s most famous corporate son, analysts reached for their red pens yesterday. Anything up to £50 million — 12 per cent — was wiped from current year profit forecasts. In the context of trading conditions up and down the high street, the 1.3 per cent decline in first-half sales was far from disastrous. It is also fair to point out that Mr Baker made it his mission to regenerate the core business of selling beauty and toiletries, and sales in these categories are respectable.

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