View more on these topics

Zurich warns cap-ad and PI to soar unless advisers keep Mifid opt-out

IFAs will face significantly higher capital adequacy and professional indemnity insurance requirements if the UK fails to maintain an exclusion for advisers from Mifid, according to Zurich.

Currently the FSA requires personal investment firms to hold minimum capital adequacy of £10,000. New capital rules will increase this to three months of annual fixed expenditure, with a minimum of £20,000, from the end of 2015.

The Government secured an opt-out from Mifid for UK financial advisers in 2007 when the directive was introduced. The opt-out does not include UK firms that passport into other European countries for investment business, or that hold client money, which operate under Mifid.

Mifid firms not covered by the insurance mediation directive can choose to hold either £44,000 in capital resources or hold PI cover worth £1.3m. Firms covered by the IMD and Mifid must hold a further £22,000 or £655,000 in professional indemnity cover.

Zurich UK Life principal of government and industry affairs Matthew Connell has warned that if the regulator cannot convince Europe to maintain the opt-out, UK advisers will be subject to much tougher rules.

He says: “If there is any area where the FSA’s rules might be trumped by European rules it is capital adequacy. The FSA will have to fight its corner to make sure the European rules do not extend again the capital requirements for IFAs.”

Recommended

1

FSA agrees to sell reporting mechanism to LSE for £15m

The FSA has entered into a conditional agreement to sell its approved reporting mechanism to the London Stock Exchange for £15m. The transaction reporting system is an ARM established in the UK market for the reporting of transactions in regulated instruments by firms to the FSA in accordance with part of the FSA Handbook and […]

OBR: 2011 growth unlikely to hit 1.7% target

Office for Budget Responsibility chairman Robert Chote expects growth for 2011 to fall short of the 1.7 per cent target his organisation set out in March. In an interview with the Independent, Chote says the 0.7 per cent growth in the first half of 2011 was weaker than most observers expected. He says: “Back in […]

Putting the boot in

Chris Wyllie, chief investment officer of Iveagh Private Investment House, believes there is a solution to the European debt crisis but the second Greek stabilisation package is evidence that the EU is merely kicking the can down the road

The future of active management is now

Fees under pressure. Regulatory moves against closet indexers. Rapid advances in financial technology. Shifting sentiment among investors. Such mounting challenges have led to widespread speculation about active management’s shrinking future. But a closer look inside intelligent portfolio construction today tells a story of expanding roles, added value, and innovative risk-adjusted, lower-cost solutions. Four investment experts […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment