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Despite the decisive tone of the rules being consulted on so far, there are a number of important outstanding areas which will be clarified in the second round of consultation expected in Q2, 2021. Of most significance are rules relating to details of the fixed overheads requirement (FOR) calculation and monitoring, liquidity, the application of Pillar 2 assessment and risk management process, additional regulatory reporting, some K-factors remuneration requirements and any specific gold-plating for ‘Collective Portfolio Management Investment’ (CPMI) firms. These collectively will form the building blocks for the IFPR regime in the UK.
The aim of the IFPR is to create a simplified risk-responsive regulatory structure for investment firms. This is somewhat of a misnomer in the short run as the regime is likely to impose additional operational and compliance burdens and potentially additional capital requirements and calculations for most firms. Accordingly, it's imperative that firms start assessing the impact of the IFPR on their structure and business.