IFPR: Common Misconceptions about the ICARA

With its deadline in January earlier this year, the Investment Firms Prudential Regime (IFPR) has brought in a number of significant changes for FCA authorised firms.

The changes, which apply to all 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), has seen the need for firms to demonstrate compliance with the new regime.

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.

5 Common ICARA Misconceptions

Through our experience of working with a range of firms requiring ICARA preparation support, we have seen several common errors where the FCA is taking firms to task. Please find below five common issues we have identified whilst assisting firms in preparing their ICARA:

  1. Wind-down planning should include the minimum requirements as per the Wind Down Planning Guide issued by the FCA
  2. Recovery planning should be an integral part of the ICARA process and relate to the wind-down planning
  3. Harms identification should be tailored to the model, operations, size, and complexity of each investment firm
  4. Governance arrangements and responsibilities of each function involved should be described in the ICARA process report
  5. Short-term and long-term strategic plans should be the starting point of the forward-looking financial projections analysis

 

Has your firm missed these points? If so, our dedicated and expert team are available to assist you to ensure your firm’s ICARA has been completed to the highest standard, as well as for any more general IFPR support required.

As part of Complyport’s IFPR support services, our expert team help with the ICARA through preparation of the ICARA process report along with the workings file as well as ICARA process report and workings templates.

If this article has raised any questions please contact Jan Hagen via jan.hagen@complyport.co.uk.