The UK investment firms prudential regime (IFPR)

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • The UK investment firms prudential regime (IFPR)
  • Background and introduction to the IFPR
  • How has the IFPR been developed?
  • Who will the IFPR apply to?
  • What changes will there be to the FCA rules for investment firms?
  • Categorisation of investment firms
  • Prudential consolidation and the group capital test
  • Scope of application of prudential consolidation
  • Methods of prudential consolidation
  • Calculating the consolidated own funds requirements
  • More...

The UK investment firms prudential regime (IFPR)

This Practice Note considers the new UK prudential framework for investment firms, known as the Investment Firms Prudential Regime or IFPR, which was proposed by HM Treasury in its June 2020 policy statement on prudential standards in the Financial Services Bill. It discusses the background to and development of the IFPR, how it diverges from the EU prudential regime for investment firms, and the new rules that the Financial Conduct Authority (FCA) is planning to introduce to implement the regime.

Background and introduction to the IFPR

On 20 December 2017, the European Commission proposed an overhaul of the prudential regime for investment firms in the EU, with the intention of creating a framework that is more proportionate and risk-sensitive. Under the new EU measures, which are now set out in the Investment Firms Regulation (EU) 2019/2033 (EU IFR) and the Investment Firms Directive (EU) 2019/2034 (EU IFD), most EU investment firms are subject to new, simpler prudential rules, while large, systemic firms that carry out bank-like activities and pose risks similar to banks are regulated and supervised like banks. For more information on the EU IFR and IFD, see Practice Note: Review of the EU prudential framework for investment firms.

The UK played an instrumental role in the introduction of the EU regime and the government confirmed its support for its

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