The Financial Conduct Authority (FCA) published the final rules on the Investment Firms Prudential Regime (IFPR) to streamline and simplify the prudential requirements for solo-regulated UK firms authorized under the Markets in Financial Instruments Directive (MiFID). FCA has converted the near-final rules from the first two policy statements of the Investment Firms Prudential Regime into final rules. FCA has also published a summary of the minor changes made since it published the near-final versions of the instruments in the second policy statement in July 2021. FCA expects to publish a third policy statement by the end of 2021. The Investment Firms Prudential Regime shall come into force on January 01, 2022.
The published instruments include the Investment Firms Prudential Regime Instrument 2021 and the Investment Firms Prudential Regime (Consequential Amendments to Other Prudential Sourcebooks) Instrument 2021. In addition, FCA has published an updated version of general guidance on the application of ex-post risk adjustment to variable remuneration, which brings FCA investment firms into the scope of the guidance. The main purpose of this guidance is to set out the FCA expectations of the way in which firms comply with the requirements on ex-post risk adjustment. The guidance further details the FCA expectations on malus and clawback, including on how they should be invoked in an effective, timely, consistent, and transparent way. FCA also published a Remuneration Policy Statement template, which the FCA investment firms can use to document their remuneration policies and practices, along with a template, which FCA investment firms can use to record their material risk-takers. The Investment Firms Prudential Regime will apply to the MiFID investment firms authorized and regulated by FCA, the Collective Portfolio Management Investment Firms (CPMIs), and the regulated and unregulated holding companies of groups that contain either of the above. The Regime will not apply to PRA-designated investment firms and these firms will remain subject to prudential supervision by PRA.
- Press Release
- Investment Firms Prudential Regime Instrument 2021 (PDF)
- IFPR (Consequential Amendments to Other Prudential Sourcebooks) Instrument 2021 (PDF)
- Summary of Updates (PDF)
- Guidance on Application of Ex-Post Risk Adjustment (PDF)
- Remuneration Policy Statement Template (DOCX)
- Template to Record Material Risk-Takers (XLSX)
- Overview of Investment Firms Prudential Regime
Effective Date: January 01, 2022
Keywords: Europe, UK, Securities, IFPR, Investment Firms, Remuneration, Reporting, FCA
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
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