February 25, 2021

Volume XI, Number 56

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FCA Started First Consultation on the Implementation of Investment Firms Prudential Regime

On 14 December 2020, the Financial Conduct Authority (“FCA”) published the first out of three consultation papers on the implementation of the Investment Firms Prudential Regime (“IFPR”) (CP20/24)  in relation to a new UK prudential regime for investment firms authorised under the Markets in Financial Instruments Directive (EU/2014/65) (“MiFID”).

The UK government announced in July 2020 (please also refer to our article on these announcements) that it supported the intended outcomes of the new European prudential regime, but that it will not implement the new European prudential regime which will be introduced by the Investment Firms Regulation (EU/2019/2033) (“IFR”) and Investment Firms Directive (EU/ 2019/2034) (“IFD”).

Hence, the IFPR will be based on the European rules but will be adjusted to suit the UK regulatory environment after Brexit. The consultation paper presents a more simplified and streamlined approach to prudential requirements for solo-regulated investment firms in the UK and represents a major change for investment firms compared to the current UK regime. It is therefore critical that firms adequately prepare for the regime, even though the current implementation target for the IFPR is 1 January 2022.

The key proposals that are covered in this consultation paper include:

  • The categorisation of investment firms.

  • Prudential consolidation.

  • Own funds and own funds requirements.

  • Reporting requirements.

The FCA also intends to establish a new prudential sourcebook relating to the IFPR: the Prudential sourcebook for MiFID Investment Firms (“MIFIDPRU”).

UK firms within the scope of IFPR should monitor developments in relation to the FCA’s approach to the new regime closely as they will need to comply with the new requirements when they come into force in 2022.

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© 2020 Proskauer Rose LLP. National Law Review, Volume X, Number 351
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About this Author

Kirsten Lapham FInancial Services Attorney Proskauer Rose Law Firm, United Kingdom
Partner

Kirsten Lapham is a partner specialising in financial services regulation. She advises a broad range of both institutional and individual clients on a variety of financial services regulatory and compliance issues. Her practice has a specific emphasis on the regulatory issues arising under the AIFMD, and MiFID II for a range of EU and indirectly impacted firms outside of the EU.

Experience in this area includes advising multiple clients on the EU marketing and registration regimes and overlaying local regulatory considerations, such as the U.K. retail distribution...

+44.20.7280.2031
John Verwey, UK, European Level, Finance, Attorney, Proskauer Rose Law Firm
Special Regulatory Counsel

John Verwey is a special regulatory counsel in the Corporate Department and a member of the Private Investment Funds Group.

John advises on a wide number of regulatory issues at a national UK and European level, including firm authorisations, change in control, market abuse, Electronic Money Regulations, Payment Services Regulations and client money rules. He represents a variety of clients that range from private equity firms and insurance intermediaries to global investment banks and sovereign wealth funds. 

A particular area of focus for John is the implementation of...

+44.20.7280.2033
Amar Unadkat Corporate Lawyer Proskauer Rose Law Firm
Associate

Amar Unadkat is an associate in the Corporate Department and a member of the Private Funds Group.

Amar advises on a variety of regulatory issues including AIFMD, PSD II and MiFID II, both in the UK and at European level.

His clients include investment fund managers, FinTech companies, wealth management businesses, crowdfunding businesses (including P2P lending platforms), banks and funds seeking to market to investors

+44.20.7280.2144
Associate

Michael Singh is an associate in the Corporate Department and a member of the Private Funds Group. Mr. Singh graduated from the University of South Wales in 2012.

+44.20.7280.2269
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