Building Financial Armor: What You Need To Know About FIN073

The FCA will be replacing the Financial Resilience Survey with a new Financial Resilience Regulatory return – FIN073 ‘Baseline Financial Resilience Report’. Firms should expect to see this report in their RegData schedules very soon. Meanwhile, the FCA will continue with its information gathering via an online survey.

The purpose of the survey is to further understand the impact of the current financial climate on FCA solo-regulated firms, which of course includes all E-Money and Payment Services institutions, who will be included in the first Tranche of firms to complete the survey (between the 5^th – 9^th June 2023). As always, the survey is mandatory and follows on from the FCA’s Covid-19 Impact Survey, which was first issued to firms in 2020.

By introducing the FIN073 regulatory return, the FCA’s goal is to reduce harm of firm failure, ensuring firms that may be subject to financial or other stress can be quickly identified and the situation rectified by the firm, with effective wind-down or insolvency to minimise harm to consumers.

There will be 9 key questions that firms will have to respond to which are focused on the key areas that the FCA has identified, these are:

• Liquidity/Cash availability
• Recent financial performance
• Scale of business activity

Payment services firms will therefore need to be prepared to submit the return when it falls due, from January 2024. Firms should start preparing now to ensure readiness to respond to this information request. In doing so, firms should consider:

• Familiarising themselves with the expectations and requirements of FIN073, considering the guidelines provided by the regulator, and ensuring they understand the purpose, scope, and detail of the specific information required to complete the report.
• Assessing IT systems and operational capabilities. By evaluating existing IT systems and operational processes firms will be better placed to ensure they are capable of capturing and reporting the required data accurately, identifying any gaps or limitations that may hinder compliance, and making necessary updates or improvements.
• Reviewing and enhancing governance arrangements within the organisation to facilitate the smooth completion of the regulatory return. Assigning roles and responsibilities, establishing clear communication channels, and ensuring that relevant stakeholders are involved in the process.
• Enhancing data management capabilities by implementing robust data management practices to ensure the accuracy, integrity, and availability of the required data. This may involve developing data collection mechanisms, data validation processes, and data storage solutions that align with regulatory requirements.
• Allocating sufficient resources, both human and technological, to complete the FIN073 regulatory return accurately and on time. Ensuring that staff members responsible for data collection and reporting are adequately trained and have access to necessary tools and resources.
• Developing a timeline and action plan that outlines key milestones and deadlines for completing the return. and an action plan that breaks down the tasks, assigns responsibilities and sets realistic targets for each step of the process.
• Conducting internal reviews and testing to verify the accuracy and completeness of the data being reported.

In addition, firms should maintain thorough documentation of the process followed, data sources used, and any decisions made during the preparation of the regulatory return, which can serve as evidence of compliance and assist in future audits or inquiries.

By following these steps, firms can enhance their readiness and capability to respond to the FIN073 regulatory return, ensuring compliance with FCA requirements and contributing to a more resilient financial environment.

• Top of Form

The FCA is clearly taking proactive steps to enhance financial resilience and minimise harm to consumers. The replacement of the Financial Resilience Survey with the new Financial Resilience Regulatory return signifies a more focused approach in understanding the impact of the current financial climate on FCA solo-regulated firms. Ultimately, these measures aim to ensure a stronger and more resilient financial ecosystem for the benefit of both firms and consumers alike.

How can we help you?

Thistle Initiatives has supported firms for over 10 years as a trusted compliance and regulatory advisor in addition to assisting you as and when required, our team of specialists can provide ongoing guidance on how to meet the myriad of regulations. Our team will not only keep you up to date with new regulations on the horizon but ensure you are fully compliant today.

Firms should seek external expertise where needed, engaging an external consultant with the requisite expertise in regulatory compliance reporting to provide guidance and support throughout the process. Thistle is here to offer insights, help with interpreting requirements, and ensure payment services compliance with regulatory standards. Our dedicated Payment Services Regulatory Return Support Service is just one of the many ways in which we can support our payment services clients. 

Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 020 7436 0630 or sending an email to info@thistleinitiatives.co.uk.