Investment Firms Prudential Regime final rules published

We have today made final rules to streamline and simplify prudential requirements for solo-regulated UK firms authorised under the Markets in Financial Instruments Directive (MiFID). This is part of the Investment Firms Prudential Regime, a major change for FCA investment firms.  If you’re an FCA investment firm, it’s critical that you prepare for the regime which comes into force on 1 January 2022.

The IFPR will streamline and simplify our prudential requirements. It will refocus requirements and expectations away from the risks that firms face, to also consider and look to manage the potential harm firms can pose to consumers and markets.

We have converted the near-final rules from the first two policy statements of the Investment Firms Prudential Regime (IFPR) into final rules. 

The final rules are in the legal instruments – FCA 2021/38 and FCA 2021/39. You can read a summary of minor updates made since we published the near-final versions of the instruments in PS21/9.

We will publish a third policy statement by the end of 2021. 

Remuneration: guidance and templates

We have also published an updated version of our General guidance on the application of ex-post risk adjustment to variable remuneration, which brings FCA investment firms into scope of the guidance.

Also now available are:

About our consultations

The UK IFPR rules aim to streamline and simplify prudential requirements for solo-regulated UK firms, authorised under the UK Markets in Financial Instruments Directive (MiFID) regime.

The first consultation introduced the UK IFPR and focused on categorising investment firms, prudential consolidation and the group capital test, own funds, aspects of own funds requirements, concentration risk and reporting.

The second consultation focused on the remaining aspects of own funds requirements, liquidity, risk management, firms providing clearing services, governance, remuneration, applications and notifications. It also addressed the interaction between the UK IFPR and other existing prudential regimes.

The third consultation focused on disclosure, technical standards, additional aspects of own funds, depositories, our approach to the UK resolution regime, enforcement, applications and notifications and consequential changes to the Handbook.

The IFPR will apply to the following:

  • MiFID investment firms authorised and regulated by us
  • Collective Portfolio Management Investment Firms (CPMIs)
  • regulated and unregulated holding companies of groups that contain either of the above

The IFPR will not apply to PRA designated investment firms. They will remain subject to prudential supervision by the PRA.

Next steps

For more updates and information, sign up to our new IFPR newsletter by emailing [email protected] with ‘sign up’ in the subject line.