The FCA has recently published its second policy statement on the new prudential regime which is due to come into effect on 1 January 2022. Its impact on UK sub-advisory firms and AIFMs with MiFID top-up permissions is outlined below.  Further details can also be found here.

The new regime applies to any UK MiFID investment firm authorised and regulated by the FCA including firms that are “full-scope”, “limited activity” and “limited licence” firms, as well as “exempt-CAD firms” among others. It will also apply to alternative investment fund managers (AIFMs) with MiFID top-up permissions (Collective Portfolio Management Investment firms or CPMIs).

Firms will fall into either the SNI (Small and Non-Interconnected firms) category or the Non-SNI category (i.e. all other investment firms). SNI firms will be subject to a lighter-touch regime and, for example, will not be required to consider certain K-factors - to reflect the various risks the firm poses to clients and to the market as well as risks to the firm itself - when calculating their capital requirements, nor will they need to publicly disclose remuneration information.

The criteria for falling within the SNI category depends on a number of factors including Assets under Management (including assets under ongoing advisory arrangements). The FCA has published further guidance on what ongoing advisory arrangements amount to.

For further details of the changes coming in at the start of 2022 please click here.