We are proposing to change the current capital resources rules for PIFs.
Why are we consulting on this?
Alongside the Retail Distribution Review (RDR) to improve the standards in the retail investment market, the then regulator, the Financial Services Authority (FSA), proposed new prudential requirements for personal investment firms (PIFs). These rules were meant to ensure that PIFs are sufficiently able to deliver on their longer-term commitments. However, following subsequent feedback, we deferred implementation of these rules pending further review, which we are now doing in this consultation paper. As before, the aim remains to require a proportionate level of capital resources for PIFs to absorb routine losses and legitimate redress claims against them, as well as to provide time to make appropriate arrangements in the case of market exit.
CP15/17: Capital resources requirements for Personal Investment Firms (PIFs)[1] [PDF]
Who should read this paper?
This paper will be relevant to:
- firms that provide financial advice – both PIFs and competing firms subject to other prudential regimes - and potential new market entrants
- consumers and consumer organisations
- professional and trade bodies representing PIFs and other types of financial advisers
- providers of investment and protection products and services distributed through PIFs
- providers of professional indemnity insurance (PII) to PIFs
- providers of investment platform, professional and other services to PIFs
Next steps
We have published final rules in PS15/28[2].
To get an idea of what your capital resources requirement would be under these proposals, try our online calculator[3].