The notices require financial advisers to write to clients whenever their investment portfolios have depreciated by 10% or more.

The MiFID II requirement to send notices has been on hold for the past 12 months due to the pandemic.

The FCA said today it would extend the “temporary measure” until the end of 2021.

The FCA said in a statement: “For the last twelve months we have adopted temporary Coronavirus (Covid-19) measures on the requirement for firms to issue 10% depreciation notifications to investors (COBS 16A.4.3 UK).

“These measures were put in place to help firms support consumers during periods of actual/potential market volatility linked to the spread of Covid-19 and the Brexit transitional period. We said we would show supervisory flexibility on firms’ ongoing compliance with the requirement so long as certain criteria were met. This period of flexibility has given us the opportunity to consider the effectiveness of the 10% depreciation notification requirement.”

It added: “We are therefore extending the temporary measures for firms until the end of 2021 while we undertake policy work on the future of the requirement.”

The FCA said it would consult on changes to the requirement later in the spring. 

During the extension it will not take any action for breach of COBS 16A.4.3 UK for services offered to retail investors, provided that the firm meets a number of conditions including issuing at least one notification in the current reporting period, indicating to retail clients that their portfolio or position has decreased in value by at least 10% and informing these clients that they may not receive similar notifications should their portfolio or position values further decrease by 10% in the current reporting period.

Firms are also required to refer clients to non-personalised updates on market movements and remind clients how to check their portfolio value. 

The temporary freeze also applies to RTS 27 quarterly reports on the quality of trading execution. The FCA says it will also look at the RTS 27 reporting obligation, also a MiFID II requirement, with a view to abolishing it, given concerns that have been expressed around the value the reports bring to the market and to consumers and the burdens involved in producing them.

The FCA will not take action against firms who do not produce RTS 27 reports for the rest of 2021.