Second consultation on new prudential regime for UK investment firms

UK investment firms asked for feedback on introducing the UK Investment Firm Prudential Regime (IFPR) for FCA prudentially-regulated investment firms.

The IFPR introduces a new prudential regime for MiFID investment firms regulated by the FCA. It will create a single, proportionate regime that reflects firms’ size and business.

The regime focuses prudential requirements on the potential harm to consumers, clients, and the market. It includes the amount of liquid assets and capital levels a firm should hold to enable it to wind down in an orderly way if required.

The regime should provide for better competition between firms and simplify requirements for new market entrants.

In the second of our 3 consultations we are asking for views on:

  • remaining aspects on own funds requirements (such as the Fixed Overheads Requirement)
  • the basic liquid assets requirement
  • remuneration requirements
  • risk management – the Internal Capital and Risk Assessment (ICARA) process

See more on our proposed new rules in CP21/7.

We’re asking for feedback on this consultation by 28 May 2021.

About this consultation process

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

The first consultation introduced the UK IFPR and focused on the categorisation of investment firms, prudential consolidation, own funds and own funds requirements, and new reporting requirements. We received constructive feedback from across the industry. We will publish the Policy Statement and near-final rules on the first consultation in Q2 2021.

Following this second consultation, we will issue a third consultation in Q3 2021. Policy Statements and rules for our second and third consultations will be published over the course of this year.

We are consulting earlier on more complex issues where possible to allow firms to prepare for the regime, which will be introduced in January 2022.