The PFS said it was the first body to call for a temporary suspension of the MiFID II rules that require advisers to write to clients when their investments drop by more than 10%.
In a ‘Dear CEO’ letter sent yesterday evening the FCA said it would relax a number of rules to avoid over burdening advisers during the Coronavirus outbreak. The 10% drop letter rule will be relaxed until at least 1 October.
Keith Richards, chief executive of the Personal Finance Society, said: “Following member feedback passed onto the FCA two weeks ago, we welcome the FCA’s decision to temporarily remove the requirement under MiFID II to report a drop of 10 per cent or more of a client’s portfolio more than once, provided they have alternative, more general communications in place.”
“Repeated information about their investment falling, without the proper context, has in many cases only served to increase (client) anxiety during these unprecedented times.”
He added that this action from the FCA will help ease the “unnecessary additional administrative burden” on firms who found themselves issuing two notifications in the same week when restrictions were announced.
Mr Richards also welcomed clarification on flexibility around client identification requirements. He said members had raised this with the PFS as an issue.
The PFS is maintaining regular communication with the FCA on helping members cope with the Coronavirus outbreak, it said.
Wealth management trade body PIMFA has also welcome the FCA move on 10% drop letters.
PIMFA chief executive Liz Field said: “I am greatly encouraged by the response from the FCA in its ‘Dear CEO’ letter to firms, which many firms will no doubt be receiving today.
“It shows the constructive work that has been carried out by PIMFA on behalf of our members. It also shows the FCA has not only been in ‘listening mode’ but has taken the concerns of our members seriously and has been willing to act and show the regulatory forbearance I have said our members need to continue to serve their customers in these extraordinary times.”