Regulation

FCA publishes consultation on prudential regime for investment firms

The Financial Conduct Authority (FCA) has published its first consultation report on its proposed rules to introduce the UK Investment Firm Prudential Regime (IFPR) for FCA prudentially-regulated investment firms.

This is the first of three consultations that the FCA will issue to introduce the regime in January 2022, with final rules set to be published over the course of next year.

The new regime will “streamline and simplify” the prudential requirements for solo-regulated investment firms in the UK, as currently, there are many different regimes which apply depending on size of firm and type of investment business.

Currently, there are approximately 3,200 FCA investment firms in the UK.

Commenting on the consultation, PwC partner David Croker said: “The FCA’s first consultation phase of the UK Investment Firm Prudential Regime (IFPR) illustrates the complexity of the planned rules, and the scale of work that firms and the regulator must undertake to ensure compliance.

“We welcome the recently announced delay to the implementation date to help with preparation, but firms should already be well underway with their implementation planning; today’s draft rules should allow them time to take further no-regrets actions as firms prepare for the new rules.”

The firm’s Asset and Wealth Management Risk Assurance leader added: “The IFPR represents a new chapter in regulation for investment firms, but having to digest three separate consultations on the implementation of these rules, plus two policy statements in less than 12 months is a big ask for any firm.

“These wholesale changes – and crucially the underlying approach to supervision and risk which the new ICARA process drives – will require careful and thorough consideration by all investment firms in 2021; this isn’t just a box-ticking compliance exercise, or the re-badging of existing processes.”

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