Supervisory flexibility: RTS 27 reports & depreciation notification

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In this post we discuss the temporary measures for RTS 27 reports and 10% depreciation notifications.

On 19 March 2021 the FCA announced they are putting in place temporary measures with respect to RTS 27 reports and 10% depreciation notifications, which will remain in place until the end of 2021.

In the meantime, the regulator will consult on any changes to these requirements in the next few months.

The FCA are currently preparing a consultation to look into RTS 27 reporting, with a view to abolishing it, due to concerns around the value of these reports to the market and to consumers, and the burdens involved in producing them.

It has been decided that the FCA will not take action against firms who do not produce RTS 27 reports for the rest of 2021.

For the last twelve months there have been temporary Covid-19 measures on the requirement for firms to issue 10% depreciation notifications to investors (COBS 16A.4.3). These were put in place to help firms support consumers during periods of market volatility linked to the pandemic and the Brexit transitional period.

These temporary measures are being extended until the end of 2021 and during this period, there will be no action taken for breach of COBS 16A.4.3 for services offered to retail investors provided that the firm has:

  • issued 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%
  • informed these clients that they may not receive similar notifications should their portfolio or position values further decrease by 10% in the current reporting period
  • referred these clients to non-personalised communications, perhaps made available on public channels, that outline general updates on market conditions (these could contextualise potential drops in portfolio or position value to help consumers meet their objectives, rather than making impulse decisions about their investments) and
  • reminded clients how to check their portfolio value, and how to get in touch with the firm¬†

For services offered to professional investors, there will be no action taken for breach of COBS 16A.4.3 provided that firms have allowed these clients to opt-in to receiving notifications.

If you would like help understanding this or any other regulatory issues, please contact either Dan, Simon or one of the team.