The Financial Conduct Authority has proposed a shake-up to investment advice compensation rules which will see firms set aside capital under a “polluter pays” framework.
The regulator set out its plans in a consultation paper, "Capital deduction for redress: personal investment firms", and a Dear CEO letter today (29 November). It said the proposals mean firms will be required to set aside capital so that they can cover compensation costs and "ensuring the polluter pays when consumers are harmed". It explained the plans would mean personal investment firms - otherwise known as investment advisers - would need to calculate their potential redress liabilities "at an early stage", then set aside enough capital to meet them and "report potential redress ...
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