Complyport Specialises in providing governance, risk and compliance services


ICARA Support

The UK Investment Firm Prudential Regime (IFPR) applies to all investment firms authorised by the FCA under MiFID (the Markets in Financial Instruments Directive) as well as those firms undertaking additional MiFID activities such as Collective Portfolio Management Investment firms (CPMIs).

The implementation of the new Investment Firms Prudential Regime (IFPR) brings significant changes to the financial services sector. Specifically, all Investment Firms are now categorised either as SNI or non-SNI, depending on the regulatory activities they carry out and the threshold they meet as per the provisions of MIFIDPRU 1.2. In addition, depending on their classification, Investment Firms will be required to comply with new capital and liquidity requirements, internal governance and remuneration arrangements, disclosure requirements, concentration risk requirements and other prudential regulatory requirements.

One of the most significant changes is the replacement of the well-known ICAAP (Internal Capital Adequacy Assessment Process) within the new ICARA (Internal Capital Adequacy and Risk Assessment) process. The new process is applicable to all investment firms irrespective of their classification. As part of ICARA, firms are required to conduct business model analysis, stress testing, recovery, and wind-down planning as well as capital and liquidity allocation to ensure that they are in compliance with the prudential requirements as per the provisions of the MIFIDPRU 7. The ICARA results should be communicated to the FCA via the new MIF007 – ICARA Questionnaire return on an annual basis. All MIFIDPRU Investment Firms have been requested to decide their first submission date as part of the IFPR Set-up Questionnaire submitted to the FCA back in November 2021.

Complyport’s ICARA service offers firms two options. We can assist our clients either with the preparation of the ICARA process report and workings or with the provisions of the ICARA process report and workings templates.

Option 1: Preparation of the ICARA process report and workings

This service includes the preparation of the ICARA process report document and the ICARA workings file (in excel) by Complyport. More specifically, Complyport can:

  1. prepare the financial projections for the next three (3) years
  2. design and/or assess your firm’s Wind-down plan
  3. calculate the Overall Financial Adequacy Rule as per the provisions of MIFIDPRU 7
  4. assess the additional harms and the respective capital requirements allocation
  5. prepare the ICARA process report document
  6. complete the MIF007 ICARA questionnaire return.

Please note that the deliverables of this service are the ICARA Process report, ICARA Process workings file (including financial projections, stress testing, wind-down planning, additional harms identification etc.), and the MIF007 ICARA questionnaire.

Option 2: Provision of the ICARA process report and workings template

This service includes the provision of the ICARA process report template and ICARA workings file template. Both templates are provided along with comments as guidance on how to complete them. Upon completion of the templates from the client, we will review the workings file and ICARA document and provide our feedback for the purpose of finalisation of the ICARA process.

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