You are viewing COREPRU 3.1 Purpose and interpretation as it appeared on 25/10/2027. The current version of COREPRU 3.1 Purpose and interpretation was last updated on 25/10/2027.

COREPRU 3.1 Purpose and interpretation

Purpose

25/10/2027G

This chapter explains how a firm must calculate its own funds. Own funds is the term the FCA commonly uses to describe a firm’s regulatory capital.

Principles underlying the definition of own funds

25/10/2027G

By requiring a firm to maintain an appropriate level of own funds, the FCA helps ensure that:

  1. (1) a firm can absorb losses while continuing to operate as a going concern;
  2. (2) a firm can absorb losses in liquidation in an orderly way that minimises harm to clients, markets and the wider financial system;
  3. (3) own funds are calculated consistently and transparently, allowing the FCA and other stakeholders to assess a firm’s loss-absorbing capacity; and
  4. (4) the interests of a firm’s owners are appropriately aligned with the long-term interests of the firm itself.

Interpretation

25/10/2027R

A firm must categorise and value its assets and off-balance sheet items in accordance with the applicable accounting framework, unless a rule specifies otherwise.

25/10/2027G

Every provision in the Handbook must be interpreted in the light of its purpose (GEN 2.2.1R). A firm must therefore look beyond the legal form of its capital arrangements and consider their economic substance. This includes considering matters not set out in the terms of a capital instrument.

Mutual societies

25/10/2027G

The FCA recognises that a mutual society may require modification of certain requirements in this chapter. The FCA will generally use the own funds rules for mutual societies in the PRA Rulebook as the starting point for such modifications, but will discuss this with relevant mutual societies.

Point In Time
25/10/2027