As a firm to be, or already, regulated, capital and liquidity requirements are a vital consideration both on the path to being authorized and once up and running. These requirements are, however, about more than just calculations. It is vital to consider governance and risk management, controls, your own assessment of capital and liquidity needs, how you’d cope in a crisis and, in the worst-case scenario how you would be wound down.
Consideration and ultimate responsibility should be at the Board level, notwithstanding the fact those considerations are often spread across multiple teams, including finance, risk and compliance teams. This means, unless the approach is entirely collegiate, it can leave firms exposed; so ensuring everyone knows their roles and responsibilities and, thereafter, each piece of the jigsaw fits, is crucial.
The simple fact is that if firms get this wrong, much like any part of their regulatory requirements, it can be very expensive and there are a number of different potential outcomes, such as being forced to hold more capital or liquid assets. In the worst-case scenario, the amount of business the firm is allowed to do could be restricted.
Pillar 1 capital requirements
We can review and advise you on your capital requirements. Perhaps more importantly, we can help with any capital planning driven by changes in your business; for example restructuring. They may be a situation where, for example, you need to issue more capital; we can advise on the most appropriate capital composition in respect of regulatory requirements. We can also advise and assist with an application to the regulator.
Preparing and reviewing regulatory reporting
We have a team of experienced professionals who can help you prepare or review GABRIEL, COREP and Annex IV reports. We have experience in conducting s166 skilled person reviews covering capital, liquidity and COREP reporting for the PRA, meaning we know just what the regulator is expecting to see.
Reviewing ICARAs, stress and scenario testing
We can assist and advise on ensuring your ICARA, stress testing and stress scenarios demonstrate sound risk management and control processes. Whether you’re a bank or an investment firm, this is key to avoiding the imposition of, or minimizing, capital add-ons.
Reviewing ILAAs, ILAAPs, liquidity requirements and stress and scenario testing
We can review and advise on your liquidity risk, ILAA or ILAAP documents, your contingency funding plan or liquidity contingency plan and ensure compliance with the relevant regulations. We can also help you prepare for supervisory reviews and any regulatory interventions.
Reviewing wind down plans, recovery plans and resolution packs
Our experience can help you make sure that your wind down plan (if you’re an investment firm), or Recovery Plan and Resolution Pack (RRP) (if you’re a bank), is compliant. This is an area that is of particular interest to the regulator and also helps you build robustness into your firm’s business planning activities.
Dealing with the regulators
We have been dealing with regulators for years and have extensive experience in conducting s166 reviews both as the skilled person and supporting clients who are undergoing a review. We can also help prepare for regulatory visits and exams and address any remediation needed. We know what they are looking for and how to speak their language
Delivering against expectations of IFPR
IFPR is the UK’s Investment Firm Prudential Regime. The FCA’s aim is to streamline and simplify prudential requirements for MiFID investment firms. But for many, it will present significant challenges, especially for smaller firms. We are here to help guide firms and ensure they comply with that regime in the most effective and efficient way possible.
