The Financial Conduct Authority in
Consultation paper 15/17 are looking to change the capital resource requirements
for personal investment firms. The FCA are inviting comments from firms which
need to be in by the 7th September 2015.
The new proposals will initially be
introduced on the 30th June 2016 and full requirements will apply
from the 30th June 2017.
At present, personal investment firms
(article 3 exempt ) currently have a capital requirement of £10,000.
From 30th June 2016 the minimum
capital requirement will be the higher of £15,000 or 5% of gross income from
designated investment business.
From 30th June 2017 the minimum
capital requirement will be the higher of £20,000 or 5% of gross income from
designated investment business.
Firms that are exempt capital adequacy directive
firms i.e. those that have opted into mifid in order to passport into other EEA
states and which undertake insurance mediation business currently have a
capital 25,000 Euros.
From 30th June 2016 the minimum
capital requirement would move to 25,000 Euros, £15,000 or 5% of gross income
from designated investment business.
From the 30th June 2017 the
minimum capital requirement would be the higher of 25,00 Euros, £20,000 5% of
gross income from designated investment business.
The proposed changes will also place a restriction on the amount
of subordinated loan and preference shares that can be used as eligible
capital. This will be brought into line with insurance intermediaries with the
restriction to 400% of the firms other capital and reserves less intangible
assets. This change will take place 30th June 2017.
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