FCA Key Topics – October-December 2021

Are You Ready for the FCA’s New Prudential Rules and the New ICARA Process Starting in January 2022?

Warren Radloff and Jane Stoakes

Firms will have to comply with MIFIDPRU, the FCA’s new prudential rulebook, from January 2022.
  
We remind firms that the Investment Firm Prudential Regime (IFPR) introduces an Overall Financial Adequacy Rule (OFAR) that requires a firm to hold adequate own funds and liquid assets to:

• Ensure it can remain viable throughout the economic cycle, with the ability to address any potential harm from its ongoing activities
• Allow its business to wind-down in an orderly way

The FCA will monitor the OFAR through the own funds threshold requirement and the liquid assets threshold requirement. Importantly, both are determined through a firm’s internal capital and risk assessment (ICARA) process.
 
Firms will need to report quarterly on their own funds threshold requirement in the report entitled MIF001 and their liquid assets threshold requirement in the MIF002 on RegData. The first reports will be due at the end of April 2022 (20 business days after 31 March 2022).
 
Please note that, even though it is possible for an ICARA questionnaire (MIF007) to be submitted to the FCA in 2023 after a firm’s accounts for 2022 have been audited, the ICARA process begins on 1 January 2022.
 
If you would like to discuss this or any other elements of the FCA’s new prudential rules or like to find out more about our IFPR Toolkit, which contains guidance and templates that help firms to implement IFPR, please contact your normal relationship manager.

Application of the Regulatory Technical Standards (RTS) Supporting the EU’s Sustainable Finance Disclosure Regulation (SFDR) Delayed Again

Jane Stoakes

The European Commission (EC) published a letter to say that the application date for the RTS supporting SFDR has been pushed back again to 1 January 2023.  It was due to apply from 1 July 2023, having already been postponed from 1 January 2022.

The reasons for the delay are:

• Length and technical detail of the RTS
• To bundle together the various amendments to the RTS  into a single delegated act and to adopt them 
• To facilitate the smooth implementation of the delegated act