All investment firms (BIPRU, CPMI and IFPRU firms) need to assess the impact of wind down in their ICAAP. The FCA have issued guidelines on what is required in a firm’s wind down plan. For many firms, the cost of winding down is a key driver of how much capital they need to hold and so the associated wind down plan takes on greater importance.
Wind down planning is a process by which the Board identifies the steps and resources it needs to wind down its business, especially in a resource-stressed situation. They are often not assessed in enough detail and firms only look at wind down in an unstressed situation rather than what would happen to the firm if they were not winding down in an orderly manner.
The FCA has recognised there is an issue and published guidance to help firms prepare better plans. A plan should contain the following:
- Who will be affected by the wind down if it happens
- What steps would need to be taken during the wind down process
- What resources would be needed to complete the steps identified in the operational analysis
- Who should be informed, of what, when and by who
The wind down plan also needs to be approved by the Board. The ICAAP should at least summarise the main points from the wind down plan and be incorporated into the analysis.
We have worked with investment firms for many years and have the experience and skill set to help you draft, review and refresh a plan tailored to your circumstances.