Tenet has launched a capital adequacy calculator to help directly authorised members prepare for new capital rules that are due to come in at the end of the year.
The FSA announced in August 2011 that it would be deferring the introduction of new capital rules which will eventually require adviser firms to hold capital equal to at least three months’ worth of their annual fixed expenditure, with a minimum figure of £20,000.
The regulator delayed plans to require firms to hold a minimum of the greater of one month’s fixed expenditure or £15,000 by December 2011, two months’ worth or £15,000 by 31 December 2012 and three months’ worth or £20,000 by the end of 2013.
Firms must start implementing the new rules on 31 December 2013 and have the full requirements in place by the end of 2015.
With five months to go before firms must start complying with the rules, Tenet has launched its capital adequacy calculator with guidance to help firms establish what is classed as fixed expenditure and whether they need to make a capital provision beyond the minimum £20,000 by the end of 2015.
The calculator is intended specifically for directly authorised Tenet members as the firm already holds capital on behalf of appointed representatives.
Tenet distribution and development director Helen Turner says: “This new tool will enable advisers to establish the minimum capital resource applicable to them.
“Even though it is a staged implementation programme, we are recommending firms’ provision for the full amount as soon as possible.”
Aurora Financial Planning chartered financial planner Aj Somal says: “There can be a tendency for firms to put their head in the sand about things like this.
“Companies need to be aware of the upcoming deadline and this tool should be useful in helping firms prepare for the new rules.