MIFIDPRU 7.9 ICARA process: firms forming part of a group

1Where a MIFIDPRU investment firm is a part of a group, the firm’s ICARA process must take into account any material risks or potential harms that may result from the firm’s relationship with other members of that group or the group as a whole.

1Subject to MIFIDPRU 7.9.7R, an investment firm group (whether it is subject to MIFIDPRU 2.5 or not) may operate a group ICARA process, provided that the following conditions are satisfied:

1. (1)

   the group ICARA process is consistent with the manner in which the business of the investment firm group, and the risks arising from it, are operated and managed in practice;

2. (2)

   any assessment under the group ICARA process of own funds or liquid assets that are required to cover the identified risks is allocated between individual firms within the investment firm group on a reasonable basis and that basis is properly documented;

3. (3)

   each MIFIDPRU investment firm covered by the group ICARA process complies with the overall financial adequacy rule on an individual basis;

4. (4)

   each MIFIDPRU investment firm covered by the group ICARA process maintains a separate wind-down plan for the purposes of MIFIDPRU 7.5.7R and applies the wind-down triggers on an individual basis;

5. (5)

   the notification requirements in MIFIDPRU 7.6.11R and 7.7.14R apply in relation to each individual MIFIDPRU investment firm included within the group ICARA process, using the amounts determined in accordance with (2) to (4);

6. (6)

   the management of any risks on a group basis takes place within one of the following entities:

   1. (a)

      a MIFIDPRU investment firm within the investment firm group; or

   2. (b)

      the UK parent entity of the investment firm group;

7. (7)

   the governing body of the relevant entity in (6) has accepted overall responsibility for the group ICARA process and for ensuring compliance with this rule;

8. (8)

   the requirement in MIFIDPRU 7.8.8R for the governing body of an individual MIFIDPRU investment firm to approve the content of the ICARA document applies to the governing body of the relevant entity in (7); and

9. (9)

   each individual MIFIDPRU investment firm included within the group ICARA process submits data item MIF007 (ICARA assessment questionnaire) to the FCA on an individual basis, reflecting the position of that firm as it results from the conclusions of the group ICARA process.

1Except as specified in MIFIDPRU 7.9.5R, a MIFIDPRU investment firm that is included within a group ICARA process is not required to comply with the requirements in MIFIDPRU 7.4 to MIFIDPRU 7.8 on an individual basis.

1. (1)

   1An investment firm group must not:

   1. (a)

      operate a group ICARA process if the FCA has directed the investment firm group to manage or assess the risks arising from its business on a different basis because one or more of the conditions in (2) applies in relation to that investment firm group; or

   2. (b)

      include within a group ICARA process any MIFIDPRU investment firm that the FCA has directed to manage or assess the risks arising from its business on a different basis because one or more of the conditions in (2) applies in relation to that firm.

2. (2)

   The relevant conditions are that:

   1. (a)

      there is a material risk that potential harms arising in relation to the firm or investment firm group would not be adequately captured through a group ICARA process;

   2. (b)

      there is a material risk that a group ICARA process would result in excessive complexity that would interfere with the FCA’s ability to supervise the compliance of the investment firm group, or any of the individual MIFIDPRU investment firms within it, with its obligations under MIFIDPRU 7; or

   3. (c)

      the investment firm group previously operated, or the firm was previously included within, a group ICARA process that did not meet the requirements in MIFIDPRU 7.9.

1Except as otherwise specified in MIFIDPRU 7.9.5R, a group ICARA process must comply with the requirements in MIFIDPRU 7.4 to MIFIDPRU 7.8 as if the references in those sections to a “MIFIDPRU investment firm” are references to the investment firm group operating that group ICARA process.

1Where an investment firm group contains multiple MIFIDPRU investment firms, the ICARA document for each firm may be combined within a single document, provided that:

1. (1)

   to the extent that any risks are managed under a group ICARA process, this is clearly documented and explained; and

2. (2)

   for any risks that are managed on an individual basis, and for any requirements that MIFIDPRU 7.9.5R specifies must always apply on an individual basis under a group ICARA process, the combined ICARA document clearly explains the position of each individual firm and how it complies with the relevant requirements.