FCA publishes webpage on 10% depreciation notifications

On 22nd December, the FCA published a website setting out is position on 10% depreciation notifications pending the revocation of this requirement from January 2023 (see our previous post on this here).

The FCA has decided to retain the requirement (COBS 16A.4.3UK) for firms to issue 10% drop notifications until the revocation becomes effective in January.  But, it has confirmed that it will not take action for breach of the requirement provided, in each case, firms meets the expectations below.

A firm providing portfolio management services to a retail client is expected to:

• Issue at least one notification in the current reporting period, indicating to the retail client that their portfolio or position has decreased in value by at least 10%.
• Inform the client that they may not receive similar notifications should their portfolio or position values decrease by a further 10% or more in the current reporting period.
• Direct the client to non-personalised communications providing general updates on market conditions. These updates, which may be provided via public channels such as the firm’s website, should aim to contextualise changes in portfolio or position value so as to help the consumer make a considered decision about their investments rather than act on impulse.
• Remind the client of how to check their portfolio value, and how to get in touch with the firm if they wish to obtain further information or seek advice.

The FCA also reminds firms 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).