Updated: Jul 12
With implementation of the new IFPR still on track for January 2022, the FCA issued Policy Statement PS21/6 on the implementation of the IFPR yesterday. This statement specifically responds to the first consultation paper on the regime, CP20/24 from December 2020.
While the paper covers important areas such as own funds, certain K-factors, reporting and concentration risk, the value for existing BIPRU and IFPRU limited licence firms appears to primarily come from clarifications within the rules on prudential consolidation.
There seems to have been much confusion over the definitions and scope of the prudential consolidation and changes are being made to the rule book to clarify these issues. These include introducing AIFM’s to the definition of a financial institution and clarifying that the obligations under either prudential consolidation or the group capital test do not apply above the highest UK parent in the structure for example.
If you are currently a regulated firm within a group structure, we recommend reading this statement (alongside the original consultation paper) and considering as soon as possible how the new prudential rules will impact your existing regulatory consolidation group and its ongoing capital requirements.
The Policy Statement can be found here: https://www.fca.org.uk/publication/policy/ps21-6.pdf