FCA Launches Consultation on New Prudential Regime for UK Investment Firms

​The UK Financial Conduct Authority (FCA) has recently published the first consultation to seek views on its proposed rules to introduce the UK Investment Firm Prudential Regime (IFPR) for FCA prudentially-regulated investment firms.

According to the regulator, the introduction of the new regime will streamline and simplify the prudential requirements for solo-regulated investment firms in the UK. At present, there are many different regimes which apply depending on size of firm and type of investment business.

Introducing the IFPR means that there will be a single prudential regime for all FCA investment firms. It should reduce barriers to entry and allow for better competition between investment firms.

Furthermore, the new rules will extend the framework for prudential requirements to consider the potential harm FCA investment firms pose to clients, consumers and the market. This includes the amount of capital and liquid assets the FCA investment firm should hold so that if it does have to wind down, it can do so in an orderly manner.

This is the first of 3 consultations that the FCA will issue to introduce the regime in January 2022. Final rules will be published over the course of next year.

The consultation period for this first consultation closes on Friday 5 February 2021.