FSA is consulting on a proposal to remove the rule that currently allows a UK banking or investment consolidation group to use the rules of a non-EEA regulator when calculating the standardised requirements of a non-EEA subsidiary. These figures are then aggregated into the group’s consolidated capital requirements. FSA introduced this rule so firms did not have to use two sets of rules in respect of any one company within the group. Firms may use the rules of any non-EEA regulator that FSA has deemed equivalent, or apply for a waiver to use the rules of a non-equivalent regulator. But now FSA feels it would be better to require all calculations to be made on the basis of its rules, and plans to remove the rules in BIPRU that allow for alternative calculations. It says it is no longer sure its original reasons for allowing the use of non-EEA standards are valid. It considered whether to make all requests for use of such standards subject to specific waiver applications but decided the slight reduction in information asymmetry that the current system allows would not justify the resource needed to implement it. It says other EU regulators are taking a similar stance. FSA wants to make the changes at the end of 2011 but will take account of responses to the consultation before deciding whether it can do this. It wants comments by 30 June. (Source: Consultation Paper - Use of non-EEA rules in calculating group capital requirements)