Asset Management

Financial Conduct Authority 

IFPR - FCA publishes findings of multi-firm review - 27 February 2023

The FCA has published a new webpage setting out the findings of its multi-firm review on firms’ implementation of the Investment Firms Prudential Regime (IFPR).

The review focuses on capital adequacy, liquidity adequacy and wind-down planning under the internal capital adequacy and risk assessment (ICARA process), as well as regulatory reporting. It has highlighted the following areas for improvement:

• for firms which are part of investment firm groups, most opted to complete a ‘group ICARA’ process. However, for most of these, there was insufficient consideration of firm-specific risk and harms in the assessment of threshold requirements of individual firms required by MIFIDPRU;
• among investment firm groups who completed an ICARA process on a consolidated basis, only a few firms also operated solo ICARA processes by independently assessing the financial resource requirements of individual firms in the group, as required by MIFIDPRU;
• assessments made as part of the ICARA process should be cohesive and fully integrated into the firm’s approach to managing financial resources to mitigate operational risk;
• wind-down planning assessments remain weak in terms of scope and quantification. This reflects an incomplete understanding of the purpose of the exercise and of FCA guidance previously provided; and
• the FCA notes an inconsistent and inaccurate approach to data submitted in regulatory reports. Firms should ensure that all data submitted is accurate and of high quality.

The FCA is continuing with the review and intends to publish a concluding report in due course. It may also publish further interim observations where appropriate.

FCA Webpage: IFPR implementation observations: quantifying threshold requirements and managing financial resources