WDPG 3.2 Time horizon and the people involved in the planning process
The end point of the wind-down period is when the FCA cancels the firm’s Part 4A permission.
However, wind-down planning is not just about the events during the wind-down period (i.e. between the start point and end point as described above). It also includes what precedes the actual wind-down process. In particular, as wind-down can be triggered by a range of scenarios, firms that proactively identify and monitor key management information, relevant metrics and early warning indicators are likely to be better prepared. It can also support more effective decision making and, where appropriate, timely initiation of the wind-down plan if needed.
Illustration of the time horizon
Considerations during Business as Usual |
Wind-down period |
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Start point |
During wind-down period |
End point |
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• Consider a range of wind-down scenarios and possible mitigants • Identify relevant management information to be monitored • Governance process and internal controls are in place |
A firm’s governing body makes a decision to wind down |
A firm wants to close down its regulated business in an orderly fashion and needs sufficient financial and non-financial resources to do so. In parallel a firm may try to recover and/or pursue other mitigating actions (e.g. find a potential investor). |
Cancellation of permission |
Given the significance of wind-down planning, the governing body of a firm is most likely to be accountable for it, with appropriate engagement of relevant experts across the firm and, if required, externally. Senior individuals typically manage the wind-down process, ideally under the leadership of a designated representative, and are accountable to the governing body. The following table illustrates how different individuals or business areas could be involved in wind-down planning.
Illustration of who could be involved in wind-down planning
Governing body (e.g. Board of Directors) |
Senior management |
Front line business and support areas |
Relevant external experts / third parties |
The firm’s governing body considers and approves the wind-down plan. This may include challenge from non-executive directors if relevant. |
The planning process is likely to be most effective if it is led by an appropriate accountable person(s) reporting to the governing body. For a very large firm or group of firms, a further working group may be created to help coordinate and deliver the process. Senior management, e.g. the CEO, CFO, CRO, COO, provide valuable input to the review, validation and challenge, before the plan is presented to the governing body for deliberation. |
Front line business and support areas are engaged to understand and mitigate potential operational issues and challenges from the wind-down process, e.g. redundancies, IT systems, access to third-party services, etc. |
Firms may find it useful to consult external experts (e.g. an insolvency practitioner) and other relevant third parties to improve their understanding and management of key wind-down issues/scenarios. |
[Note: The above table is an illustration, rather than a definitive list. Firms may need to analyse their organisational structure, business model and operating model to decide on the appropriate participants, bearing in mind that if a wind-down is actually triggered some of the original participants may no longer be present.]