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.”
