From 31 December 2011, new rules come into force which require FSA authorised firms which are part of a multi-jurisdictional group to use the FSA rules for calculating their group capital requirements. This amendment will prevent UK groups from using non-EEA rules for the calculation of group capital requirements. This uniform approach will ensure full compliance with the capital adequacy obligations in the Capital Requirements Directive.
From 31 December 2011 non-EEA regulators will no longer be relied upon by the FSA to verify capital levels used to determine consolidated capital requirements for UK consolidated groups.
In practice, FSA authorised firms operating in foreign jurisdictions, currently using non-EEA rules for calculating capital requirements, will now have to use the FSA rules in calculating the capital requirements of non-EEA subsidiaries.
For more information on the FSA rules on calculation of group capital requirements please click here