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If you've been following our previous Thistle Initiatives IFPR blog, you're likely to be familiar with the latest developments in the Financial Conduct Authority's (FCA) ongoing assessments. In November 2023, the FCA released its final report following a comprehensive multi-firm review focused on firms' implementation progress regarding the Internal Capital Adequacy Assessment Process (ICARA) and reporting obligations under the Investment Firms Prudential Regime (IFPR). 

This review targeted MIFIDPRU investment firms and the UK parent entities of investment firm groups within the IFPR's scope. Among the notable findings, the FCA highlighted concerns regarding the application of guidance provided by MIFIDPRU during the assessment of liquid asset requirements. Some firms failed to adequately consider periods of financial stress and cashflows under stressed business conditions, potentially exposing vulnerabilities in their capital and liquid asset resource requirements.  

Additionally, certain firms struggled to differentiate between the analysis required for assessing their own funds resource and that needed for evaluating their liquid asset resources. Some even relied on identical analyses for both, raising questions about the robustness of their risk assessment processes. 

In terms of wind-down assessments, shortcomings were noted in the consideration of group membership impact, with individual firms within groups potentially lacking sufficient planning for potential failure scenarios. 

For Compliance Managers, here are some key takeaways: 

• Delve deeper into the observations highlighted by the FCA during your compliance monitoring reviews of ICARA and IFPR processes. 

• Take note of both exemplary practices and areas for improvement outlined in the FCA's observations on Wind-Down Planning. Ensure relevant risk and compliance committees are apprised of these insights to bolster organisational resilience. 

Stay tuned as we continue to dissect and analyse regulatory developments, equipping you with actionable insights to navigate the ever-evolving landscape of financial compliance. 

How can we help you? 

Thistle Initiatives has supported adviser firms for over 10 years as a trusted compliance and regulatory adviser. In addition to assisting firms as-and-when, our team of specialists can serve as your right hand in meeting and complying with FCA regulations. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to allow firms to do so.  

Are you looking for help with your assessment or implementation of IFPR or more general regulatory MIFIDPRU questions?  

If so, we can help in any of the following ways; 

• MIF regulatory returns 
• ICARA and wind-down plan 
• Investment firm group assessment subject to prudential consolidation 

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.