Capital and liquidity requirements are about more than just numbers and calculations. These prudential requirements look at 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.
Ownership should ultimately rest at Board level. But it’s often shared across finance, risk and compliance teams, leaving firms exposed. Making sure your prudential policies and procedures are joined up and that everyone knows their roles and responsibilities is vital.
Getting this wrong can be very expensive. You may be forced by regulators to hold more capital or liquid assets. And in a worst-case scenario, the amount of business you are allowed to do could be restricted.
How we can help
Calculating and reviewing Pillar 1 capital requirements
We can review your capital requirements and help with any capital planning driven by changes in your business, for example restructuring. If you need to issue more capital, we can advise on the most appropriate capital composition in respect of regulatory requirements. We can also help with the application to the regulator. The European Commission is about to finalise new rules on investment firms’ Pillar 1 capital requirements. We can help you assess the impact of these changes on your business.
Preparing and reviewing regulatory reporting
Our team of experienced, qualified accountants have the skills and software to make reporting as painless as possible for you. In particular, we can prepare or review GABRIEL, COREP and Annex IV reports. Having carried out s166 skilled person reviews covering capital, liquidity and COREP reporting for the PRA, we know just what the regulator is expecting to see.
Reviewing ICARAs, stress and scenario testing
We can help you make sure 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 minimising, 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 specialist team’s 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 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. Many of our team have been PRA or FCA supervisors themselves, so 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. As firms get to grips delivering against the new requirements and expectations from the regulator, we've created a handy IFPR resource library.