The Financial Conduct Authority has clarified that disclosures for the UK Investment Firms Prudential Regime will be required on an individual entity-level basis.
In the final policy statement on the IFPR rules, which will come into effect on January 1 2022, the regulator said it had taken on board feedback about the possible burden of disclosures being required on both an individual entity and group-level basis for investment firms that are part of a group.
Most respondents favoured disclosure being made on a consolidated basis or allowing firms the choice.
However, the FCA decided against this, adding that it will encourage firms to voluntarily disclose on a consolidated basis, as well as the mandatory individual disclosure.
The disclosure rules cover a firm's own funds and own funds requirements to allow potential investors to assess its strength, investment policy to provide information on the firm’s behaviour, and risk management, governance and remuneration to provide key information on the firm’s culture.
Non-SNI firms will also have to disclose a summary of their approach to diversity on their management body.
The FCA said: "Disclosing this information helps stakeholders to make more informed decisions about their relationship with
the firm.
“We consider that this approach is the most consistent with our general approach to consolidation under the IFPR, and strikes the best balance between transparency and regulatory burden.
“This is because individual disclosures provide more granular information than consolidated, and this information is more relevant to the specific entity that conducts the investment services and activities.”
The regulator also said it considers this approach fairer, as it ensures there is no difference between groups subject to this regulation, and those firms that are not part of a group.
The rules are the results of the final consultation on the IFPR, which took place in August this year.
The UK regime is a replacement of the EU’s investment firm directive, and investment firm regulation.
The rules also include a stipulation that firms adhering to the regulation with a financial year end in 2022 that falls before December 30 must make their first disclosures by that time, but only for their own funds, their own fund requirements and governance.
Disclosures for risk management and investment policy are then required on or before the firm’s year end in 2023.
The FCA said firms should now make the necessary preparations to ensure compliance with the requirements.
sally.hickey@ft.com
