FCA Further Extends Temporary Measures for Firms to Issue 10% Depreciation Notifications

Since March 2020 the FCA has adopted temporary measures on the requirement for firms to issue 10% depreciation notifications to investors.

The measures require firms providing portfolio management services or holding retail client accounts that include leveraged investments are currently required to inform investors where the value of their portfolio or leveraged position falls by 10% or more compared with its value in their last periodic statement, and for each subsequent 10% fall in value.

"The measures were put in place initially to help firms support consumers during market volatility linked to coronavirus (Covid-19) and the Brexit transitional period. We said we would show supervisory flexibility to firms' ongoing compliance with the requirement so long as certain criteria were met," the FCA said.

In 2021, the authority has extended the temporary measures until 31 December 2022 while the Treasury carried out policy work on the future of the requirement as part of its Wholesale Markets Review (WMR).

The Treasury has now laid before Parliament a statutory instrument (1297/2022) revoking Article 62 of the UK version of the MiFID Org Regulation. This legislative amendment is expected to come into force in January 2023.

The FCA decided to extend the temporary measures for firms during the interim period, pending the revocation of Article 62.