Advisers will soon have to tell the FCA how many esoteric investments they have recommended as part of their regulatory returns.
The move comes as the FCA continues its review of Financial Services Compensation Scheme funding, and would allow the regulator to introduce risk-based levies if it chose to.
FCA analysis shows that around a third of all FSCS claims over the three years to 2016 were linked to the sale of so-called “non-mainstream pooled investments” by regulated advisers.
NMPIs are characterised by “unusual, speculative or complex assets”, and include unregulated collective investment schemes, traded life policy investments and some special purpose vehicle securities.
While the FCA did not consult on specific proposals to risk-rate FSCS contributions, where those selling higher risk products would pay more towards the compensation pot, it did say in its consultation that it was considering adding a section to advisers’ Gabriel returns to give it the data it would need to calculate a risk levy in the future.
In a board meeting on Thursday, the FCA approved additional reporting requirements. They will come into force on 1 April 2018.
The board also agreed other FSCS reforms, including extending coverage to structured deposit intermediation, making Lloyd’s of London contribute to the pool of funding that comes from retail firms, and amending payment arrangements so that some firms can be asked to pay a proportion of the levy on account or be prevented from paying by direct debit.
Full details of the FCA’s FSCS reform will be revealed a policy paper from the FCA in the coming weeks.
Other options on the table include providers having to pay more towards the FSCS. The FCA also floated the idea of introducing mandatory terms on professional indemnity insurance cover after FCA chief executive Andrew Bailey acknowledged the system was not working for IFAs.