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One step closer to IFPR – the FCA publishes its second consultation paper on the new regime for investment firms

What does this mean for reporting requirements under the new regime?

In 2018, the European Commission and Council  set out to provide investment firms with a less burdensome prudential regime. As a result of many considerations circling around compliance and reporting issues, the Investment Firms Regulation and Directive was introduced: in short, the IFR/IFD package.

In the midst of Brexit, the UK stood in the face of a decision: should investment firms fall under a similar regime? As questions mounted, the Financial Conduct Authority made the decision that investment firms subject to the Markets in Financial Instruments Directive (MiFID) until Brexit, would fall under the UK’s new prudential regime for investment firms: the IFPR (Investment Firms Prudential Regime), which will become applicable starting January 2022.

The IFPR will in many ways, resemble the European Union’s IFR/IFD regime due to the UK’s role in drafting the EU regulations pre-Brexit. However, the IFPR is a more bespoke framework intended to precisely address the challenges and circumstances of the UK financial market.

The scope of the IFPR for investment firms

The IFPR will be applicable to all investment firms under the scope of MiFID, including those that fall under GENPRU, BIPRU, as well as investment firms that are referred to as Collective Portfolio Management Investment Firms (CPMI’s).

Next steps towards the IFPR regime

The IFPR will be applicable to all investment firms under the scope of MiFID, including those that fall under GENPRU, BIPRU, as well as investment firms that are referred to as Collective Portfolio Management Investment Firms (CPMI’s).

28 May
2021

Deadline for responses to the second consultation paper.

Spring / Summer
2021

Expected publication of a Policy Statement on IFPR.

III quarter
2021

Expected publication of a third consultation paper, including ESG and public disclosure requirements.

January
2022

Planned introduction of the IFPR, along with transitional arrangements.

Takeaways on the second IFPR consultation paper: what do we know?

On the 19th of April 2021, the FCA published CP 21/7: ‘A new UK prudential regime for MiFID investment firms, the second consultation paper on the upcoming regime. In the 13th chapter of the consultation paper, the FCA focuses on the aspects of the regulatory reporting framework within IFPR, and its intention is that the reporting process reflects on the principles of proportionality, requesting data adequately to the size and complexity of particular investment firms.

Importantly, the reporting templates have also been published and can be subject to further consultation. The FCA is also in the process of consulting on draft instructions as to completion of the templates to ensure that the data collected in the IFPR regime is not only proportional in terms of scope, but also consistent and comparable across various areas of reporting and categories of investment firms.

The shift to IFPR reporting is a process involving not only extensive changes in the overall governance of investment firms, but also an opportunity to scale-down on complexity of adhering to compliance regulations and procedures, whilst maintaining the high-quality and consistency of data reported by these firms. This is also reflected by the universal templates published in the course of IFPR consultations, limiting the reporting requirements to those data points that are relevant to investment firms’ business models.

Has your firm begun preparations ahead of January 2022? Learn more here.