The FCA has extended its suspension of the requirement for firms to issue 10% depreciation notifications to investors.
The regulator has now extended the suspension until the new legislation comes into force, expected in January.
The 10% depreciation or ‘drop notices’ require investors to be informed by advisers every time their portfolio drops 10%.
The rules have been criticised for unnerving investors and increasing paperwork for Financial Planning firms.
Critics had been calling for the notices to be dropped following temporary suspension of the rules during the Coronavirus pandemic, saying that the pandemic proved that the notices were not fit for purpose.
The FCA had extended the temporary measures allowing firms to opt out of sending more than one 10% depreciation notice in each reporting period until the end of this year.
The rule had been due to come back into force at the start of 2023, following a temporary suspensions first introduced during the Coronavirus pandemic.
The FCA said the suspension of the 10% drop rule does not mean that firms providing portfolio management services do not have an obligation to keep retail clients informed.
It said: “Firms are reminded of their obligation to pay due regards to the interests of their customers and treat them fairly (Principle 6), pay due regard to the information needs of their clients, and communicate information to them in a way which is clear, fair and not misleading (Principle 7).”
The Government is in the process of making wide-ranging changes to financial services regulation following Brexit.
Earlier this month Chancellor Jeremy Hunt announced what he’s called the ‘Edinburgh Reforms’ – major plans to shake up financial services to improve competition and growth.
He is planning a sweeping series of reforms to make the UK, “the world’s most innovative and competitive global financial centre.”
