Review of the Capital Rules for Personal Investment Firms

July 2007

The FSA has published a Discussion Paper (DP 07/4) (DP) setting out its initial thoughts and proposals for discussion on how it might revise the requirements covering the amount of capital that must be held by Personal Investment Firms (PIFs). The DP is closely related to the recent DP on the Retail Distribution Review (RDR).

The issues in this paper will affect retail firms who are outside the scope of the Markets in Financial Instruments Directive (MiFID) and thus the provisions of the related Capital Requirements Directive (CRD). This means firms who do not hold client assets (including money) and do not manage investments or deal in them as agent or principal. Such firms are also often known as Article 3 firms, as this is the relevant MiFID clause. Such firms mainly include, but are not limited to, financial advisers, but not mortgage brokers or general insurance brokers. The DP has a six month period (expiring on 7th January 2008) during which comments may be made.

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