Monday 6 July 2015

Revised proposals - financial resources requirements for IFAs

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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