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All FCA and PRA regulated firms in the UK are subject to prudential regulation under different regimes depending on the type of financial services they provide.
Whether your firm is a bank, brokerage house, fund manager, investment adviser, authorised payment services provider, e-money issuer, debt management firm or peer-to-peer lending platform, you are required to maintain suitable policies, processes, systems and controls to manage risk and hold appropriate capital and liquidity resources to meet financial adequacy.
Your firm's prudential category determines the level of obligation you have to comply with, including the documentation to be maintained and updated regularly and your reporting requirements.
Moore Stephens has the expertise and knowledge to help all types of firms with setting up, reviewing and testing the appropriate compliance infrastructure to meet all prudential obligations.
We provide regulatory support and advice on prudential regulation to help firms define and establish a solid risk management framework, the basis for the calculation and assessment of own funds and liquidity requirements and perform assurance reviews of your capital adequacy, liquidity risk and financial reporting.
We can assist new firms seeking authorisation or existing firms to determine and understand their prudential category and assess the appropriate level of financial resources that they should hold at all times. The most important step in every firm’s prudential challenge is establishing the right tools and appropriate methodology to meet the applicable rules and required standards. We can test the effectiveness of the systems and controls in place to ensure compliance with your capital adequacy and liquidity resources requirements whether these are based on the CRD, AIFMD, UCITS Directive or PSR and EMR.
An Internal Capital Adequacy Assessment Process (ICAAP) is the ongoing process through which a firm satisfies itself of the adequacy of its regulatory capital, having regard to its risk appetite and the quality of its risk management controls taking into account material risk events.
The FCA has put greater focus on firms’ ICAAPs and has also increased the number and level of its reviews through their Supervisory Review and Evaluation Process (SREP).
We can assist you with preparing a complete ICAAP tailored to your firm’s risk factors and capital requirements, including your risk management framework, capital calculations, pillar 2 requirements and stress and scenario testing. We can also help with the review of your existing ICAAP as a one-off check or through annual updates.
If you are subject to a SREP the Regulator will expect you to be able to explain the process and the workings of your capital adequacy assessment and also justify the final outcomes in great detail. We can help you prepare before a SREP or assist you in taking the appropriate remedial action to meet the highest standards.
Liquidity and contingency funding plan
Firms including BIPRU firms, CPMIs and IFPRU investment firms are required to be able to meet their liabilities as they fall due at all times. They must have in place robust strategies, policies, processes and systems that enable them to identify, measure, manage and monitor liquidity risk over an appropriate set of time horizons.
Liquidity risk includes potential failure or insolvency, and firms need to develop an effective Contingency Funding Plan to ensure that alternative resources can be made available if necessary. A firm must also be able to stress test its resilience to liquidity risk in different scenarios .
At Moore Stephens you will find an answer to your questions and all the assistance you may require in understanding how liquidity risk affects your firm, how to establish the right processes and systems to monitor liquidity risk at all times and most importantly how to respond to a regulatory review in this area.
We understand liquidity at all levels even where large firms are required to establish and maintain a fully documented Individual Liquidity Adequacy Assessment Process (ILAAP).
Whether you require assistance with drafting or just testing your ILAAP, we are there for you. Our expertise will help you find the appropriate format, method and processes to ensure that your ILAAP is tailored to your business and meets the expectations of the Regulator. .
The Recovery and Resolution Plan (RRP) is a requirement applicable to all IFPRU 730k investment firms and entities in a group that contains an IFPRU 730k investment firm (or credit institution).
Firms in scope must be able to prepare a recovery plan that allows them to Identify: core business lines and critical functions, recovery scenarios and options, early warning indicators, key risks, and also establish escalation procedures and governance.
The FCA have continued to stress the importance of firms having a fully documented and comprehensive analysis of the risks they are exposed to, particularly where those risks might push them into financial difficulties. We can help you draft or review or event test your Recovery Plan to ensure that you consider all the indicators of potential insolvency, build the right assumptions to your stress testing and determine effective recovery options to bring the business back on track. There has been a lot of attention on RRPs from the Regulator including broad thematic work and in-depth reviews, which has helped us establish helpful insight of what is expected of a firm that is subject to the requirements.
It is essential that firms have a 'living will' in place to ensure they are prepared for an orderly wind-down of their business in the event of failure. The FCA have provided extensive guidance on wind-down planning and Moore Stephens can help you translate that guidance into an effective plan that satisfies the Regulator's expectations. We can assist in assessing the systems and controls in place at your firm including an assessment of the costs, the available resources, the processes involved to wind-down your business in an orderly Fashion.
The synergy between our experienced Outsourcing team and our compliance professionals allows us to assist all types of firms with the completion and submission of all financial returns and with any regulatory reporting that is due to the regulator.
The FCA has conducted numerous COREP reviews and has increasingly focused on ensuring that firms understand their reporting requirements and apply a reliable methodology in transposing the financial information into their data items correctly.
We are able to assist with drafting, reviewing and submitting your financial data items including financial returns and COREP reports and will also assist you with your standard disclosure requirements including your Pillar 3 Statement.
Prudential health check
The regulatory expectations on compliance with prudential obligations are ever growing and evolving . We can complete a prudential health check and gap analysis for you to determine how well your systems and controls work and how effective your methodology for risk assessment and capital calculations is.
We are able to look at capital adequacy, liquidity risk and all relevant processes through a combined approach where our regulatory expertise meets our risk and financial skillset. This allows us to provide you with a comprehensive view and thorough analysis that will enable you to meet your prudential requirements in full.
Were an issue has been identified or you have a concern about the implementation of certain requirements we can work with you to build a tailored remediation programme in line with the regulator’s expectations and help you build a comprehensive action plan.
Whether this has resulted from a SREP, a s166 review, a review of your ILAAP, RRP or Wind down plan, we will provide you with all the support and insightful knowledge you require.
Training and workshops
It is essential that your employees and the staff responsible of your risk, finance and compliance functions are aware of your risk management framework, understand your prudential requirements and are able to apply the firm’s systems and controls in these areas effectively . It is essential that all training is tailored to your business and is structured in open sessions for general awareness, one-to-one sessions for detailed knowledge and workshops to help you translate theory into practical application.
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