Capital Adequacy Changes for IFA's
After many years of putting back these planned proposals the FCA are finally proposing (CP15/17) to change the current capital resources rules. These proposals would also replace the rules in the FSA PS09/19 that are scheduled to come into force on 31 December 2015.
Generally, the FCA are proposing:
Ø A new minimum capital resources requirement of £20,000. This would replace the £10,000 minimum own funds currently required.
Ø The introduction of a new income-based requirement. For the majority of Personal Investment Firms (PIFs) this will be 5% of the annual investment business income earned in the previous year.
The new capital resources requirement will be the higher of the two requirements above. To get an idea of what your capital resources requirement would be under these proposals, try the FCA online calculator.
These requirements will not come into force until 30 June 2016. From this date onwards, there will be a 12-month transitional period when the new minimum capital resources requirement will be £15,000, which will switch to £20,000 from 30 June 2017 onwards.
For more information please use the following link:
http://www.fca.org.uk/firms/firm-types/financial-adviser/pifs
(Source: FCA)
