UK Investment Firms Prudential Regime ('UK IFPR')

Overview:

The new UK prudential regime for MiFID investment firms (IFPR) is set to take effect on 1 January 2022. The new prudential rules introduce more complex and onerous capital, liquidity, reporting, governance and remuneration requirements for affected firms. The new remuneration requirements for UK MiFID investment firms are divided in basic, standard, and extended remuneration obligations and will depend on the investment firm’s classification as either a small and non-interconnected firm (SNI) or a non-SNI, and its on-and-off balance sheet.

Current work:

The final rules have now been published (FCA 2021/38 and FCA 2021/39) with the FCA's publication of the third and final Policy Statement (PS21/17).  In addition, the FCA has also published the IFPR's Remuneration Policy Statement, a template for firms to record their material risk takers (both are optional), and the updated General guidance on the application of ex-post risk adjustment.

AIMA has published a summary of the key amendments/clarifications made in Policy Statement 21/6. The second Policy Statement 21/9 provides final rules on, among others, the IFPR’s remuneration provisions in CP 21/07. AIMA has also published a summary of this Policy Statement. A summary will be drafted for the third Policy Statement shortly.

AIMA has worked with ACA Compliance and Travers Smith to develop an implementation guide to assist member firms that will be required to transition to the new regime. 

Upcoming actions:

1 January 2022, the IFPR remuneration requirements are effective and will apply to the remuneration earned after the start of the next performance year following implementation.

(Last updated: 26 November 2021)