New research exposes extent of impact on UK investment firms under the FCA’s new Investment Firms’ Prudential Regime

FCA

Wheelhouse Advisors, an award-winning provider of prudential management, regulatory reporting, accounting, tax and payroll services to the financial services sector has released a new report detailing the findings of in-depth impact assessment work, undertaken with clients over the past 12 months.

The report explores each area of the Investment Firms’ Prudential Regime (IFPR), which is due to go live in January 2022, pinpointing the various implications that could be felt by different categories of investment firm and identifying the clear actions investment firms should take.

Covering key areas of the regime including capital, liquidity, reporting, remuneration, consolidation, public disclosure and the new internal capital and risk assessment process (the ICARA), the report is the result of joint working and close cooperation with Wheelhouse Advisors’ client base, that spans the investment management sector.

The results are significant in many areas. For example, without exception, clients will find reporting under the IFPR more complex, with 24 per cent finding reporting significantly more complex, and 57 per cent having to report more frequently than before.

The IFPR sets out new capital requirements, based, for the first time, on the risks an investment firm faces and poses. The new thresholds will be considerably higher for matched-principal brokers and advisor/arranger firms, classed as Exempt-CAD under the current regime, with firms facing increases ranging from 300 per cent to 2,300 per cent.

Matthew Crisp, CEO of Wheelhouse Advisors, says: “We are pleased to be able to share the results of this important and detailed work, which has been undertaken by our team of prudential specialists over the past year. We believe the findings indicate the scope and depth of the work that firms of all types will need to complete, if they are to be ready for January 2022.”

Michael Chambers, Head of Prudential at Wheelhouse Advisors, says: “The new regime is a real game changer for many firms. There are a whole range of issues facing the sector, depending on where they are starting from today. Some firms haven’t yet realised they’re in scope of the IFPR or aren’t aware that the impact of the rules could be materially. Then there are firms that have done some preliminary work and uncovered a raft of changes to be made. It may be difficult to deploy large amounts of additional capital in the relatively short timeframe between now and January 2022. For some types of firms., the results are startling, and those who have had a relatively light regulatory touch to date, will find it onerous.”

The report clearly sets out the different areas of the regime, alongside Wheelhouse Advisors’ findings across the population of firms assessed, and the level of impact each type of firm will need to address to comply with the new regime.

The report is available via the website: https://www.wheelhouse-advisors.com/ifpr-impact-assessment-report/ 

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