All firms have a duty to meet and maintain required capital requirements according to their regulatory permissions.

Mis-interpreting the regulations or having inadequate processes can lead to costly errors. Firms may inadvertantly hold, or be forced by the regulators to hold, more capital or liquid assets than required, or the amount of business they do could be restricted.

Our team includes highly experienced accountants and compliance consultants, from industry and the regulator. They handle reporting for a large number of clients and have worked on s166 skilled persons reviews relating to capital and liquidity requirements.

Our Prudential team is led by Harpartap Singh, a recognised regulatory capital and liquidity specialist. He frequently speaks at conferences and industry seminars and regularly writes about the management of prudential risk”


OUR SERVICES

Capital requirement assessments, ICAAPs, ICARAs, ILAAs, ILAAPs, scenario and stress testing and wind down planning

PREPARE FOR IFPR

We can help firms prepare for the Investment Firms Prudential Regime (IFPR) which is due to come into effect in 2022

COMPLIANCE ASSURANCE

We provide the assurance that your firm is complying with capital and liquidity requirements

SUPPORTS GOVERNANCE

Our independent review is often required as part of governance processes and to satisfy senior management

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MAKE AN ENQUIRY

CAPITAL REQUIREMENTS

Firms have to hold sufficient regulatory capital based on formulaic requirements with the amounts varying according to firm type e.g. IFPRU, BIPRU, exempt CAD, CPMI (AIFM), E-Money Institution (EMI). The level of capital should be reassessed whenever there are changes to your firm’s activities, group structures, in the event of acquisitions or disposals and if regulatory permissions change. 

It is important to get the calculations right because the regulator will regard mistakes as evidence of governance failings, and that will expose you to additional scrutiny.

  • We can review your calculations at any stages, whether it is at initial authorisation or an ongoing requirement

  • We can help you with capital planning e.g. ahead of an acquisition

  • We provide a remediation service to manage any breaches or issues.

  • We can help you prepare for the Investment Firms Prudential Regime (IFPR) which is due to come into effect in 2022

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ICAAPs (ICARAs) AND STRESS AND SCENARIO TESTING

Regulators expect banks, IFPRU and BIPRU firms to carry out there own assessments of the risks that they face and the amounts of capital that they deem sufficient to meet those risks, if they were to arise.

The assessment, which is currently called an ICAAP, will then be reviewed by the regulator as part of a review process called SREP.  The new Investment Firm Prudential Regime (IFPR) will change the requirements for investment firms, with them having to carry out a similar exercise called an ICARA.

If your ICAAP/ICARA is found wanting, you may be forced to hold a substantial additional capital. 

  • Our team has experience at all regulatory stages, including FCA/PRA authorisations and remediation following a SREP

  • We offer three service options which can include the required stress testing, reverse stress testing and review of risk management arrangements: 1) Review; 2) Prepare; and 3) Help you with any remediation that is identified

  • Review - we provide a report identifying gaps in your assessment or any inaccuracies in the calculations

  • Prepare - we provide the ICAAP/ICARA, including your risk register, other elements of the risk framework and supporting calculations

  • We can help investment firms re-design their process so that it is compliant with the new ICARA requirements

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LIQUIDITY

ILAAs, ILAAPs, contingency funding, liquidity requirements and stress testing

Many firms have to carry out separate assessments of the risks to their liquidity from stress scenarios and possibly hold additional liquid assets

As with the ICAAP, the regulator may choose to review your assessment and can impose their own additional liquid assets add-on. As a result of the pandemic, and even before, regulators have started to pay a lot more attention to liquidity and a firm’s ability to pay bills as they fall due. Many firms have to file ad-hoc as well as regular reports on their position.

  • Our team has experience helping all different firm types, including banks, IFRU, BIPRU and Electronic Money Institutions which allows us to help you avoid common issues

  • We can review your assessment or manage the assessment for you. 

  • We can help with any remediation that is identified

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