The FSA has mapped out various structures designed to help firms ensure they are compliant with new rules set out by depolarisation, which have to to be implemented over a six-month transitional period, starting 1 December.
According to the FSA, decisions will have to be made regarding the following areas:
In Chapter four of the Reforming Polarisation: Implementation - Feedback on CP04/3 (A menu for being open with consumers) and made textdocument, the FSA says it will provide industry training and workshops to help companies understand the new market structure and what they are required to do following implementation.
Workshops will run from 30 November 2004 and will target individuals developing their firm’s own menu and IDD, and people in charge of ensuring compliance with the COB requirements.
The FSA will provide what it calls a ‘maximum commission calculator’ to aid companies in identifying what their maximum commission levels for presentation on the menu will be, as calculations will be complex in each product area.
The tool will analyze the total value (in NPV terms) of commissions paid in a host of varying shapes, with some firms receiving commission in many different combinations.
The calculation tool assesses varying commission shapes identifying which one constitutes the maximum.
The application will also provide corresponding market average figures for each product group, with firms able to copy the results directly into their menu.
This will initially be distributed on the 36 PS04/27: Reforming Polarisation: Implementation (November 2004) latest edition of the Handbook CD-ROM.
The FSA will also have a similar application available on their website come the end of the transitional period.
An IFA fact sheet indicating minimum requirements will be available on the FSA website soon, to help smaller companies - who do not have access to substantial ‘compliance resources’ - analyze the new rules and develop strategies.
The FSA have also included a series of template disclosure documents on their website for companies to download and modify. Included are IDD, the combined IDD and the menu templates at http://www.fsa.gov.uk/disclosure.
Those firms not partaking in depolarisation proposals before 1 June 2005, there is not much required by them in the short-term to comply with the rules other than requirements laid out by the IMD from 14 January 2005.
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