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Plans for firms to hold £20,000 cash buffer on hold to 2017: FCA

The regulator made the announcement as advisers such as Carl Lamb, managing director of Norfolk-based Almary Green, claimed the capital adequacy requirements posed a “stark risk”. Mr Lamb said many advisers may have been unable to meet the FCA’s demands to maintain the cash buffer by the original deadline of December 2015.

The FCA also announced it would be carrying out a review of its approach to the capital adequacy requirements on advisers.

Mr Lamb said he welcomed the move, as he had calculated that if his firm did not expand it would need to hold a minimum of £500,000 by 2015.

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He said: “While we are fortunately in a position where we are well funded and can meet the requirement, it does give us cause for concern when we plan ahead for future expansion.

“One of the criterion in the calculation is the number of employees in the business, which will have serious implications for our growth in terms of jobs.”

Mr Lamb said if the firm struggled in the long term to meet the stringent requirements, it could move advisers on to a self-employed basis, offer overtime to existing administration staff or even make redundancies rather than take on new team members.


The FSA proposed the capital adequacy rules for financial advisers in 2009.

In 2011 the regulator agreed to push back the deadline for advisers from December 2013 to December 2015.

In September, the FCA announced the deadline would be delayed a further two years.

Under the proposals firms would need to hold at least £20,000 cash in reserve, or the equivalent of three months of expenditure.