
The step by step process of undertaking the OFAR assessment is complex but essential. If you are unfamiliar with it, the FCA has set out guidance for the assessment, in the form of two detailed flowcharts, within the MIFIDPRU 7 (part of the proposed Handbook text on IFPR). We know first-hand from working with our clients that the flow charts depicting the process can be challenging to follow. Regardless, the FCA expects firms to fully comply with the OFAR.
Firms should consider this as an important requirement to demonstrate compliance with the OFAR. Going forward this will need to be integrated into an appropriate monitoring mechanism linked to management accounts preparation and internal management information process. Meeting the requirements of the OFAR is the primary evidence to demonstrate that the ICARA itself has been implemented as an on-going process as opposed to a document to be updated annually.
Further, firms should take note of the regulatory return MIF007 – ICARA questionnaire, this will need to be submitted to the FCA on an annual basis. The content of this return which is spread over 71 exhaustive questions almost brings to life the intensity of the work that will be expected to be done through the ICARA.
Types of information to be reported within MIF007:
Relating to ‘Assessing and monitoring the adequacy of own funds’ | Relating to ‘Assessing and monitoring of liquid assets held’ |
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Other questions:
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With less than three months remaining to the implementation date, we urge all firms to start working on the key aspects of the regulation as they’re likely to be some significant gaps in the documentation and monitoring that will need to be addressed.
Find the latest on IFPR, and how it will impact your firm here:
Please get in touch to speak to an expert and get further clarification or assistance with these changes.