Capital Adequacy Changes Delayed
For the second time since the changes were first proposed, the FCA has decided to postpone the increase in the Capital Adequacy requirements for IFA’s. The new rules will now commence implementation on 31 December 2015 instead of December this year.The FCA has provided a statement which reads as follows:
The new capital requirements for personal investment firms (PIFs), which were published by the Financial Services Authority (FSA) in 2009 and were due to start a phased implementation on 31 December 2013, are being deferred for a period of two years and instead will now commence on 31 December 2015.
Recent developments lead the FCA to question whether the approach in the new rules remains the most appropriate. In particular, many firms are still implementing changes to their business models as a result of the Retail Distribution Review (RDR) and the European Banking Authority (EBA) is undertaking work (under the Capital Requirements Directive) for non-PIFs, but which could be relevant to PIFs. Also, the FCA has a competition objective that was not present under the FSA and in their current format the new rules would not necessarily be consistent with that objective. Therefore the FCA have decided to defer implementation of these rules for a further two years in order to allow a more fundamental review of the proposed approach.
Although for some IFA’s firms this is good news and takes the financial pressure off we would recommend that IFA’s still strive to build up the reserves to meet the requirements well in advance, while you have the breathing space to do so.
