A technical error on Friday morning saw 1,200 Quilter customers mistakenly notified that the value of their investments had fallen by more than 10%.
A spokesperson confirmed to Portfolio Adviser that the issue was fixed that same day and the customers affected account for less than 0.3% of platform users.
Quilter said: “A technical issue triggered 10% drop notification emails to a number of customers on Friday morning. This was identified the same morning and we’ve communicated with affected customers and advisers to confirm they were sent in error and can be ignored.
“We’re sorry for any concern this caused.”
See also: FCA relaxing 10% rule does not mean advisers can shirk duty to clients
‘Gov’t woken up to the illogical 10% drop rule’
The depreciation rule hasn’t been without its fair share of critics, with some arguing that the alerts trigger undue panic and could result in investors selling out at the bottom of the market and locking in losses.
One such detractor has been Steven Levin, chief executive of Quilter’s platform and Quilter Investors.
In July 2021, when the government said it was considering dropping the rule, he applauded the move.
“It’s been a long time coming, but it seems the government has finally woken up to the illogical 10% drop rule and will consult on scrapping it for retail clients. The fact the rule has been ‘paused’ for so long now shows that it really wasn’t working, and removing it for retail clients along with professional clients would be a victory for common sense regulation,” Levin said.
See also: Andy Bell says coronavirus makes 10% rule like flagging a leaking shower on the Titanic
Rule to remain on ice until the end of the year
The 10% rule was introduced in 2018 as part of the European Union’s Mifid II regulation and requires discretionary investment managers notify clients when the value of their portfolio, as evaluated at the beginning of each reporting period, drops by 10% and thereafter in multiples of 10%.
It was relaxed in March 2020 after global markets were shaken as Covid restrictions saw companies batten down the hatches.
Initially in place for six months, the depreciation rule will remain on ice until 31 December 2022.
On 21 January this year, the FCA confirmed that the “obligation to inform the client of 10% declines in the value of their portfolios no longer applies to professional clients”.
The watchdog’s wholesale markets review indicated that there is support for removing or further amending the rule.
