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Prudential

Following a turbulent few years, financial resilience is a top priority for regulators. Accurately assessing an organisation’s financial resources is a fundamental step to ensuring financial resilience. There is an increasing demand on firms to comply with a host of different regimes and standards that require greater resources and expertise to calculate, report and ensure appropriate systems of control over their financial resources.

In the UK, attention from regulators is focused on preventing harm to consumers and markets. The FCA’s Principle 12 to ‘provide good outcomes to customers’ goes beyond managing services and products and requires firms to embed the principle into their strategy and processes – including calculating appropriate capital resources and liquidity to cover potential harm.We are seeing the gap widen between the systems, processes and controls that organisations have in place and the raised regulatory bar on organisations’ capacity to assess capital adequacy.

Our Approach

Our team has broad and deep expertise in all areas impacting a firm’s own assessment of their capital and liquidity requirements. Taking a prudential perspective to financial planning requires good governance, risk management and controls in addition to the technical expertise to calculate and adjust the numbers. We work with firms to meet the required standards in these areas and ensure that decision making supports prudent financial planning and delivers fair outcomes to customers.

Our Services

Regulatory Reporting

  • Review and reasonable assurance work in relation to both PRA and FCA regulatory reporting requirements.
  • Enhancement of regulatory reporting processes and remediation of regulatory reporting issues including backlogs or persistent late reporting. Reviews of source data integrity and suitability (e.g. structure of the underlying chart of accounts to support regulatory reporting data analysis / segmentation requirements without manual intervention).

Recovery and Resolution Plans ("RRPs")

Adequacy and key areas including appropriate scenarios, crisis management, integration with the broader risk management framework, recovery options, indicators of stress and material relationships.

Investment Firms Prudential Regime ("IFPR") Requirements and Expectations

Advice and guidance including modelling and model governance in relation to the UK prudential regime for MiFID investment firms. Effective 1 January 2022, the IFPR regime introduced more complex and onerous capital, liquidity, reporting, governance and remuneration requirements for affected firms, and are dependent on the firm's status as either small and non-interconnected ("SNI") or non-SNI.

Internal Capital and Risk Assessment ("ICARA")

MiFID firms are required to operate an internal risk management process on an ongoing basis, compliant with ICARA. In contrast to ICAAP, which defines a specific list of risk categories to assess against, ICARA focuses on the firm's business model. We can assist with ICARA process evaluation, specific issues (e.g. completeness of the market and client risks identified), and Model Risk Management ("MRM").