MIFIDPRU 7 Annex 7 Map of rules and guidance relating to the ICARA process
17.1 |
G |
(1) |
The table in this annex identifies the rules in MIFIDPRU 7 that impose obligations relating to the ICARA process and the guidance provisions corresponding to those rules. |
(2) |
MIFIDPRU investment firms may find this annex helpful when designing and reviewing their ICARA processes to ensure that all mandatory requirements have been met. |
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(3) |
Firms should not use this table as a substitute for reading and applying the detailed rules and guidance in MIFIDPRU 7. |
MIFIDPRU rule |
Basic obligation |
Associated guidance |
Content of guidance |
MIFIDPRU 7.4: baseline ICARA obligations |
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Explanation of the link between the overall financial adequacy rule and the ICARA process |
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The requirement to operate an ICARA process to identify, monitor and, if proportionate, reduce all material potential harms relevant to the firm |
Guidance on how firms should seek to mitigate the risk of potential harms |
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The requirement for the ICARA process to be proportionate to the nature, scale and complexity of the firm’s business |
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The requirement for the ICARA process to be internally consistent |
Explanation of the FCA’s expectations in relation to consistency and coherency of the ICARA process |
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The requirement to identify all material harms that may result from the firm’s business |
Explanation of the basic factors that will be relevant when identifying potential harms |
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Cross-reference to additional guidance in MIFIDPRU 7 Annex 1R and MIFIDPRU 7 Annex 2R |
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Guidance on assessing potential harms that is potentially relevant to all firms |
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Additional guidance on assessing potential harms that is relevant for a firm that is dealing on own account or that has significant investments on its balance sheet |
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MIFIDPRU 7.5: Capital and liquidity planning, stress testing, wind-down planning and recovery planning |
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Business model assessment and capital and liquidity planning requirements, including stress testing |
Guidance referring to Finalised Guidance FG20/1 |
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Guidance on stress testing obligations and reverse stress testing for firms with more complex businesses or operating models |
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Additional guidance on more in-depth stress testing and reverse stress testing |
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Recovery planning requirements |
Guidance on issues that may be relevant when assessing potential recovery actions |
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Wind-down planning requirements |
Guidance referring to the Wind-Down Planning Guide and Finalised Guidance FG20/1 |
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Requirement to use wind-down analysis to assess levels of own funds and liquid assets required under overall financial adequacy rule |
Explanation of the interaction between the overall financial adequacy rule and the wind-down triggers |
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MIFIDPRU 7.6: Assessing and monitoring the adequacy of own funds |
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Requirement to produce a reasonable estimate of impact of potential harms on own funds |
Guidance on how the assessment of potential harms interacts with the own funds threshold requirement and the overall financial adequacy rule and how the firm should conduct its assessment |
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Requirement to use assessment under MIFIDPRU 7.6.2R to assess if additional own funds required to meet overall financial adequacy rule |
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Guidance explaining the circumstances in which the guidance in MIFIDPRU 7.6.7G to MIFIDPRU 7.6.10G is relevant |
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Guidance on how a non-SNI MIFIDPRU investment firm should assess whether harms may be covered by its own funds requirement |
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Guidance on circumstances in which harms may not be covered by a non-SNI MIFIDPRU investment firm’s own funds requirement |
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Guidance on how an SNI MIFIDPRU investment should assess whether harms may be covered by its own funds requirement |
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Guidance on how a firm’s assessment of potential harms contributes to determining its own funds threshold requirement |
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Requirement to meet own funds threshold requirement with specified types of own funds |
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Notification requirements when a firm’s own funds reach certain levels |
Guidance on the FCA’s ability to set an alternative early warning indicator |
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Guidance explaining how notifications under MIFIDPRU 7.6.11R interact with general notification obligations under Principle 11 or SUP 15.3 |
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Explanation of FCA’s approach to intervention when firm’s own funds reach certain levels |
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MIFIDPRU 7.7: Assessing and monitoring the adequacy of liquid assets |
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Requirement to produce reasonable estimate of liquid assets required by the firm |
Guidance on the interaction between the overall financial adequacy rule and the liquid assets that a firm must hold |
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Guidance on how a firm should assess the liquid assets required for the ongoing operation of its business |
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Guidance on the basic liquid assets requirement and how to determine the firm’s liquid assets threshold requirement |
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Requirement to meet liquid assets threshold requirement with core liquid assets and non-core liquid assets |
General principles applicable to non-core liquid assets |
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Basic definition of non-core liquid assets |
Guidance on exclusions for non-core liquid assets |
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Requirement to apply appropriate haircut to non-core liquid assets |
Guidance on minimum haircuts for non-core liquid assets |
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Guidance on approach to applying haircuts to shares or units in collective investment undertakings |
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Notification requirements when a firm’s liquid assets reach certain levels |
Guidance explaining how notifications under MIFIDPRU 7.6.14R interact with general notification obligations under Principle 11 or SUP 15.3 |
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Explanation of FCA’s approach to intervention when firm’s liquid assets reach certain levels |
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MIFIDPRU 7.8: Reviewing and documenting the ICARA process |
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Requirement to review the ICARA process at least annually |
Guidance on reviewing the ICARA process following a material change in the firm’s business |
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Requirement for firm to notify the FCA of the submission date of the firm’s MIF007 (ICARA assessment questionnaire) return |
Guidance on interaction between the firm’s ICARA review and its submission date for its MIF007 return |
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Requirement to submit MIF007 return following review of ICARA process due to a material change in the firm’s business |
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Requirement to document review of the ICARA process and minimum contents of review document |
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Requirement for firm’s governing body to review and approve the ICARA document |
Guidance on the interaction between the obligations in COCON and the ICARA process |
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Record keeping requirements in relation to the ICARA process |
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MIFIDPRU 7.9: Firms forming part of a group |
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Requirement for any firm that forms part of a group to assess risks arising from that group or its other members |
Guidance on the entities included within a firm’s assessment of group risk |
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Ability of investment firm group to operate the ICARA process on a group-level basis |
Guidance that an investment firm group is not required to operate an ICARA process on a consolidated basis |
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Disapplication of individual ICARA process requirement in relation to MIFIDPRU investment firm included in a group ICARA process |
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Circumstances in which a group ICARA process cannot be used |
Guidance on when the FCA may prohibit the use of a group-level ICARA process in relation to one or more firms |
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Application of requirements in MIFIDPRU 7.4 to MIFIDPRU 7.8 to an investment firm group operating a group ICARA process |
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Ability to include multiple firms within one ICARA document |
Guidance on when a single ICARA document can be used |
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