FSA could revisit IFA cap-ad deadline
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FSA chief executive Hector Sants has revealed the regulator could revisit the capital adequacy deadline firms were expected to meet by the end of 2013.
The FSA first published a review into the prudential rules for personal investment firms in 2007 and has been promising a consultation on expenditure-based requirements since 2009.
The regulator announced in November 2009 that all IFAs will have to hold capital worth at least three months of their annual fixed expenditure, with a minimum of £20,000.
The requirements will be phased in so firms will have to hold a minimum of one month’s fixed expenditure or £15,000 by December 31, 2011, going up to two months’ worth or £15,000 by December 31, 2012, and three months’ worth or £20,000 by the end of 2013.
Speaking at the FSA’s annual public meeting in London today, Sants (pictured) said: “We are carefully considering whether we should be revisiting the timelines on the capital issue and we will probably say more on that in due course.
“Capital is the one area where I think further thought is justified.”
The final deadline for increased capital adequacy requirements has already been pushed back from the end of 2012 to the end of 2013 as a result of industry lobbying.
The FSA originally planned a consultation on applying these rules fairly to all Pifs in 2010, but last November said the consultation would take place this year instead.
The industry has previously voiced concerns that because the rules are expenditure-based, they will end up being punitive for firms who have built up resources and set up employed adviser models as part of efforts to become more professional.
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Readers' comments (3)
Julian Stevens | 23 Jun 2011 2:50 pm
Hmmmm..........when was it that the FSA went £14m overdrawn as a result of paying £21m in unearned bonuses?
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Anonymous | 23 Jun 2011 4:55 pm
You don't need £20k to run a small IFA firm.
At one time, and maybe still, sole practitioners were allowed to include their home contents at the sum insured on their home insurance as part of the capital. So an IFA in a one bedroom flat with a sum insured of £50k (bedroom rated policy) would pass on that alone.
While we're at it, why don't we have some more silly rules about making silly rules? And then some more silly rules about making silly rules about making silly rules? (Apologies to Beachcomber and acknowledging the anti anti missile missile missile story.)
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Another Pissed Off IFA | 23 Jun 2011 5:03 pm
The idiots don't know what to do next.
Anyone with 1/2 a brain could have figured out that adviser firms with high staff costs would be hardest hit and they, by definition, are the firms making the biggest contribution to professionalism.
We should all be calling for a public enquiry into the FSA. Enough is enough.
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