New rules requiring insurers, banks and other BIPRU firms to tell the FSA about proposed issues of shares or other capital instruments demonstrate the importance of participating in FSA consultations.

Key points

Our January briefing raised a number of concerns about FSA proposals to require at least one month's notice from firms of issues of capital instruments that would count towards regulatory capital. Final rules and feedback published on 3 November 2011 show that significant concessions have been made by the FSA following the consultation process. In particular, notice requirements are relaxed for:

  • ordinary share issues;
  • debt instruments issued under a pre-notified programme; and
  • capital issues that are not materially different from earlier issues made by a firm.

The one month requirement is also relaxed for issues of capital by other companies in the firm's group and where "exceptional circumstances" make it impracticable to give the full notice.

In feedback, the FSA notes that the key outcome from the consultation exercise has been "to make the scope of the policy more proportionate to the benefits envisaged". We agree that this has to a large extent been achieved. There are, however, some outstanding issues and drafting inconsistencies that should be addressed before the new rules take effect. The rules will apply to capital instruments intended to be issued on or after 1 March 2012.

Our briefing on the new rules can be found here.

Our 13 January briefing on the FSA's earlier proposals can be found here.