Brokers' pension deficits must be reported to the regulator
The FSA has warned brokers of their duty to account for pension deficits in their regulatory returns and solvency calculations.
The warning came as experts separately voiced concerns over brokers' awareness of the amendment to the prudential requirement calculation in this area, which could result in a breach of the FSA regulatory requirements.
In April the FSA published a policy statement requiring brokers and other regulated firms to calculate the scale of any deficit in a defined benefit pension scheme, such as a final salary scheme, and make provisions for funding it over the next five years.
Brokers are required to include these calculations in their regulatory reports to the FSA, which they will begin to file this month.
The FSA's policy statement reflects changes to accounting standards, such as FRS17, which came fully into effect for accounting periods beginning on or after 1 January 2005.
Experts warned that some brokers, particularly those within groups, who have yet to prepare 2005 accounts are unlikely to have made the necessary calculations.
FSA Solutions director Alex Peterkin said: "The full impact of this policy statement and its implication for groups and business mergers and acquisitions is not widely recognised."
Another compliance expert also said he suspected the issue "wasn't on many brokers' radars".
But the FSA said that any firm falling foul of the rules would have no excuse.
An FSA spokesman said: "Companies have known about this for some time.
We have been quite explicit about what firms must do."
