Under the new requirement, which comes into force from 30 June 2016, personal investment firms will need to hold £20,000 in capital adequacy, or 5% of annual income, whichever is higher.
The proposals will include a staged introduction for smaller firms by increasing the minimum capital resources requirement (from the current £10,000) to £15,000 from 30 June 2016, before reaching the required £20,000 from 30 June 2017.
The FCA said this will give firms time to secure any necessary additional financial resources.
The FCA's policy statement said:
"The current minimum capital resources requirement (£10,000) has almost halved in real terms since it was set in 1994. As a result, it would now be insufficient to meet just one average pension or investment claim following unsuitable advice. We do not want compliant PIFs to fail unexpectedly under normal operating conditions, resulting in claims on the Financial Services Compensation Scheme, which would then need to be funded by other firms in the sector."
