New Prudential Regime for Investment Firms (IFPR) - Key Focus Areas

On 14 December 2020, the Financial Conduct Authority (FCA) published the first of three Consultation Papers (CP1) following its June 2020 Discussion Paper covering the incoming Investment Firm Prudential Regime (IFPR).

The IFPR aims to provide a post-Brexit UK equivalent to the rules published under the 2019 EU Directive IFD/IFR. UK investment firms that are authorised under MiFID and regulated by the FCA, fall into scope via a new Handbook called 'MIFIDPRU'.

With a further two consultation papers due throughout 2021 and the implementation date being set out as 1st January 2022, FourthLine looks at four areas of the incoming regulation and suggests some proactive resourcing steps that can start to address the requirements on a ‘no regrets’ basis:

Project/programme definition and management
  • Stand up skilled Legal and Compliance professionals who possess the best current knowledge of the impact of regulatory change to assess the inherent impact to the business
  • Deploy a strong Change function, with a familiarity of how similar firms have navigated large regulatory change programmes, with a project/programme lead to deliver quicker firm-wide implementation efficiencies

Regulatory reporting
  • Aim to ringfence adequate regulatory reporting resource, including testers, to make the required changes to the new “appropriate and proportionate” reporting requirements under IFPR

Whilst not the most extensive set of returns, there is a need to ensure data and feeds for areas such as the new K-Factor requirements are aligned, tested and validated to existing (or new) reporting solutions

Risk Management & Governance

  • With a first cycle of the ICARA likely due by 1 January 2022, ensure a multi-disciplinary team across functions such as Business Strategy, Operations, Finance, and Risk is ready to respond from April 2021 onwards to develop the first iteration of the revised standards. This will include specialists around liquidity and wind-down planning
  • Where skill sets do not currently exist in the business or are significantly constrained by other high priority initiatives, identify where the gaps exist, when resource will need to be deployed to deliver against the deadline, and how these can be addressed via contract or external expertise
  • Identify and schedule time into the relevant committee agendas to ensure the process and document receives the appropriate visibility and challenge from senior leadership and Board
ESG
  •  With climate risk likely to be a significant part of any reporting, identify synergies with existing uplift projects in this space (e.g., FCA Climate Risk disclosure requirements aligned to TCFD good practice) where IFPR requirements can be addressed in tandem

 

For further insights on getting started on implementing the IFPR in your firm, please download our insights deck here 

To set up a call with our Risk Consulting Director, Ross Molyneux, please click here>

To set up a call with our Talent Director, Daniel Waltham, please click here>

 

Topics: Featured, Investment Management, Prudential regime

March 11, 2021
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Gareth Foulkes
Written by Gareth Foulkes

Gareth is the Head of Practice - CASS, Finance and Controls at FourthLine. He has over 9 years of recruiter experience, working both agency and in-house sides.