The FCA has published final guidance on its framework to help financial services firms ensure they have adequate financial resources and to take effective steps to minimize harm.
The guidance, FG20/1, applies to all FCA solo-regulated firms subject to threshold conditions and/or the Principles for Businesses.
In the guidance, the Regulator sets out its expectations of how firms should determine that they have adequate financial resources in place and aims to provide more clarity on:
- the role of adequate financial resources in minimising harm
- the practices firms can adopt when assessing adequate financial resources
- how the FCA assesses the adequacy of a firm’s financial resources
The FCA has stated that the guidance does not place specific additional requirements on firms due to COVID-19, but that the pandemic has served to highlight the need for all firms to have adequate resources in place and to assess how those needs may change going forward.
The Regulator’s objective with this initiative is to improve the way firms operate so they can take effective steps to prevent harm from occurring, by improving controls and/or reducing the risk in their activities and resolve things quickly and effectively when they do go wrong.
To read the guidance in full, click here.