The FCA will go ahead with its plans to double the capital requirements for advisers from June.
It will mean that the 5,000 directly authorised personal investment firms in the UK will have a new capital resources requirement of at least £20,000.
In its 88-page policy statement, called Capital resources requirements for Personal Investment Firms (PIFs): Feedback on CP15/17 and final rules, the FCA said a minimum of 5 per cent annual income would be set if this were higher than £20,000.
The FCA said: “The current minimum capital resources requirement of £10,000 has almost halved in real terms since it was set in 1994.
“As a result, it would now be insufficient to meet just one average pension or investment claim following unsuitable advice.”
A transitional arrangement for smaller firms is available, allowing them to build up £15,000 by 30 June 2016 and then £20,000 by 30 June 2017.
For larger firms the rules come into effect on 30 June 2016.
Adviser view
Clayton Cumming, partner at Glasgow-based Advice & Wealth Management Solutions, said: “I don’t have any objections to the FCA’s changes personally but it is a jump up though, so it might be an issue for smaller firms.”
