The Financial Conduct Authority (FCA) has extended temporary measures requiring firms to issue 10% drop notifications to investors, until the end of 2022.
The UK regulator said that it had issued the 12-month extension while HMT carried out policy work on the future of the requirement as part of its Wholesale Markets Review.
The temporary measures have been in place since the onset of the Covid-19 pandemic in March 2020, to support consumers during a period of market volatility triggered by the pandemic and Brexit.
In March 2021, the FCA announced that it would maintain the temporary measures until the end of this year.
The FCA said that “we would show supervisory flexibility to firms’ ongoing compliance with the requirement so long as certain criteria were met”.
The 10% depreciation notifications require financial advice firms to inform clients when their portfolio or position has decreased in value by at least 10%.
In a statement today (21 December), the FCA said that it will not take action for breach of COBS 16A.4.3 UK for services offered to retail investors provided that the firm has “issued at least one notification in the current reporting period, indicating to retail clients that their portfolio or position has decreased in value by at least 10%”, and that it has informed these clients that they may not receive similar notifications should their portfolio or position values further decrease by 10% in the current reporting period.
Firms also need to have referred these clients to “non-personalised communications” that outline general updates on market conditions and “reminded” clients how to check their portfolio value, and how to get in contact with the firm.
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