New Cash Warnings Requirements

The Financial Conduct Authority introduced the concept of Cash Warnings under FCA Policy Statement PS 22/15. 

This requires platforms, life insurers and self-invested personal pension operators to issue a ‘cash warning’ to consumers with significant and sustained levels of cash in their Non-Workplace Pension to warn them that their pension savings are at risk of being eroded by inflation.  The level of cash is deemed to be >25% of the pension value (a minimum of £1,000 applies).   The notification applies to advised, D2C and orphan clients, but not to clients who have a DFM model associated to the account or where a client is in within 5 years of their retirement date/protected retirement date. The assessment is to be carried out quarterly, but notifications will only be issued if conditions were met in the previous two quarterly assessments in the third assessment period.   

The quarterly assessment dates are:

1^st December – 28th February (29^th February in a leap year), 

1^st Mar – 31st May, 

1st June – 31st August,

1st Sep – 30th November

The rules come into effect on 1 December 2023.

Hubwise has therefore created a new internal report which will look at all ISINs that are deemed to be cash or “cash like” for the purpose of PS 22/15.  It will be run at the start of each quarter to assess any qualifying client accounts. It should also be noted that accounts that have entered drawdown will be excluded.

At the third assessment, when excess cash is determined to have been held at the previous two quarters, a document trigger will be generated to issue the required regulatory client notification. The notification time and date will be logged internally.   The notification letter will be sent via investor email, or if not held via post, with a copy to the adviser.  It will also be stored within the document area of the portal and available to view online.

Notifications are an annual event, if the client account continues to hold excess cash levels, additional notifications will be issued annually.