Tenet has launched a capital adequacy calculator to help directly authorised members prepare for new capital rules due to come in at the end of the year.
The FSA announced in August 2011 it would be deferring the introduction of new capital rules which will eventually require adviser firms to hold capital worth at least three months of their annual fixed expenditure, with a minimum of £20,000.
The regulator had planned to require firms to hold the greater of one month’s fixed expenditure or £15,000 in capital by December 2011, two months’ worth or £15,000 by December 31, 2012 and three months or £20,000 by the end of 2013.
Firms must now start implementing the new rules on December 31, 2013, with the full requirements in place by the end of 2015.
With five months before firms have to start complying with the rules, Tenet has launched its capital adequacy 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.
The calculator is specifically for DA members as Tenet already holds capital on behalf of appointed representatives.
Tenet distribution and development director Helen Turner says: “Having been deferred for two years to allow firms to deal with the RDR, there are now only five months to go until the new rules and transitional arrangements come into force.
“This new tool will enable advisers to establish the minimum capital resource applicable to them. We envisage it will prove particularly useful for those firms who will be contending with the issue for the first time.
“Even though it is a staged implementation programme, we are recommending firms provision for the full amount as soon as possible.”