The ICARA and wind down process

Our team will work with you to ensure that your ICARA meets the obligations under MIFIDPRU 7 and the FCA's expectations laid out through updates provided by the FCA throughout the past year.

Our focus is on preparing a bespoke ICARA for your business model to cover the following requirements:

• a clear description of your business model and strategy
• an explanation of the activities you carry out and connecting them to the MIFID permissions held and currently used by your firm
• an analysis of the effectiveness of your risk management processes and appetite for risk
• a detailed overview of the governance structure, linking this to SM&CR
• a summary of the material harms your firm faces and the controls and mitigations in place
• an analysis of your capital and liquidity planning
• a summary of your compliance with the overall financial adequacy rule
• the outcome of stress testing you have conducted and management response to these scenarios
• an overview of your wind-down planning, including the financial assessment of winding down your regulated business

We give specific attention to detail while drafting the most important components of your ICARA, which are as follows:

1. Projections and budgets
2. Assessment of harms 
3. Wind down costs

As part of the ICARA process, firms must assess and articulate the steps and means to carry out an orderly wind-down and the termination of their regulated business.

The supporting guidance for wind-down planning is in the WDPG section of the FCA Handbook.

A wind-down plan must address the following:

• What is the estimated length of the wind-down period?
• What resources (both financial and non-financial) would be needed to implement it?
• Who needs to be available to assist the firm in winding-down?
• How would the firm deal with redundancies, and which employees need to be retained with special financial arrangements?
• What systems (e.g., IT systems) must be available to the firm during the wind-down?
• Will the firm need to engage professional advisers to wind-down?
• Has the firm considered the implications for any overseas offices and branches?

Essentially, investment firms must create and maintain a wind-down plan. Amounts identified to support this process must be at least your down funds' threshold requirement and the liquid assets threshold requirement.

Our team will ensure that your wind-down plan addresses the FCA's expectations while being unique to your firm.

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