SIFA 8.2 Financial Resources
In particular, your firm must have financial resources of at least £10,000 at all times (IPRU(INV) 13.10.1R). The method of calculating your firm's financial resources is set out in the following sections of IPRU(INV): 13.10.2R, 13.10.2AR, 13.10.3R and Table 13.10(2). We have included some worked examples of own funds calculations in Appendix B of the Guide.
Where personal investment firms also do mortgage or general insurance business, under PRU 9.3.24 R they should work out which is the higher financial resource requirement under the relevant parts or PRU and IPRU(INV). In the case of a low resource firm with a £10,000 financial resources requirement, the requirement is the higher of £10,000 and 2.5% of annual income from mortgage and general insurance activities (PRU 9.3.30R (1)). This means that a £10,000 requirement will apply unless a firm earns more than £400,000 in annual income from mortgage and general insurance activities. Annual income includes all brokerages, fees and commission earned by the firm for mortgage and general insurance business.
Where a low resource firm holds client money for general insurance mediation purposes with the money in a statutory trust account the resources requirement is 5% of annual income from its mortgage and general insurance activities (PRU 9.3.30R (2)). Firms that hold client money in a non-statutory trust account must maintain minimum capital of £50,000 or 5% of annual income which ever is the greater (CASS 5.4.4 R (4)).