FCA Second consultation on new prudential regime for UK investment firms

The Investment Firm Prudential Regime (IFPR) introduces a new prudential regime for MiFID investment firms regulated by the FCA. It will create a single, proportionate regime that reflects firms’ size and business.  The regime focuses prudential requirements on the potential harm to consumers, clients, and the market. It includes the amount of liquid assets and capital levels a firm should hold to enable it to wind down in an orderly way if required.  The regime should provide for better competition between firms and simplify requirements for new market entrants.

On 19 April 2021, the FCA published the second of the 3 consultations and the FCA is asking for views on:

  • remaining aspects on own funds requirements (such as the Fixed Overheads Requirement)
  • the basic liquid assets requirement
  • remuneration requirements
  • risk management – the Internal Capital and Risk Assessment (ICARA) process

The consultation is open until 28 May 2021.