Preparing your firm's wind-down plan

Wind-down plans help firms exit the market in an orderly manner if their business is no longer viable. Find out when and how to prepare one for your firm.

We ask some firms to submit a wind-down plan as part of their application for authorisation.

This is to ensure that, when a firm goes out of business, it stops its regulated activities and cancels its permissions with minimal adverse effect on its clients, counterparties, or the wider market.

A wind-down plan can also help a firm assess if it would have adequate resources (both financial and non-financial) to wind down in an orderly manner, especially under challenging circumstances.

When you need to prepare a wind-down plan

Firms applying for authorisation should consult the relevant page for their sector or business model to understand what information should be submitted as part of their application. For some types of firms, this will include a wind-down plan.

As set out in our finalised guidance on assessing adequate financial resources (PDF), the FCA expects firms to consider the scenarios leading to financial stress, explore recovery options and, as a last resort, wind down their business.

How to prepare a wind-down plan

Your wind-down plan should:

  • identify the steps and resources your firm needs to wind down its business, especially in a situation where resources are limited, and 
  • evaluate the risks and impact of a wind-down and consider how to mitigate these risks

A typical wind-down plan includes these components:

Planning for a wind-down

From our perspective, a wind-down period:

  • starts when a firm’s governing body makes the formal decision to wind down its regulated business, and notifies us 
  • ends when we cancel the firm’s authorisation or registration 

Wind-down can be triggered by a range of scenarios, so we expect firms to be prepared by identifying and monitoring key management information, relevant metrics and early warning indicators. This will support effective decision making, and help a firm invoke its wind-down plan in good time (if needed).  

Scenarios for your wind-down plan

Think about the various scenarios which could lead to a wind-down, and to a potential recovery.  

This could happen for a variety of reasons, including: 

  • significant financial losses with no signs of timely recovery 
  • loss of key clients without the realistic prospect of replacing them in good time 
  • loss of critical infrastructure (eg essential IT systems) with no signs of timely recovery 

When formulating your wind-down plan scenarios, remember to factor in your: 

  • business and operating models 
  • key revenue drivers, clients and functions 
  • vulnerable areas

Resources you'll need in a wind-down scenario

Your firm should have adequate financial and non-financial resources to wind down in an orderly manner.