The centrepiece of the FCA’s drive to develop firms’ financial resilience – the ICARA process, (which replaced the ICAAP regime for such investment firms), has been in place for over a year now. It culminates in the submission of a questionnaire, to be done at least annually, the date for which was decided by each firm back in November 2021.  The opportunity to move that submission date back, is coming to an end soon and going forward the mandatory requirement is that periods between submission dates of this ICARA questionnaire cannot be less than twelve months.  Therefore, with the very first ICARA questionnaire completed as per the regulation, firms should now take the opportunity to reflect and revise that self-imposed deadline date based on their Year One experience.

But what should you consider when deciding whether to change that vital date? It’s key to take a full overview of the work wallchart. Financial year ends, tax year ends, ICARA questionnaire submissions and all other regulatory reporting obligations are all essential so prioritising and planning is paramount.  Compartmentalising and embedding of processes are very useful ways to reduce the critical path of the ICARA process as Mike Chambers, Head of Prudential at Centralis, reminds us:

“Firms which experience the most seamless ICARA processes are those with have integrated the component parts with business-as-usual activities. Firms needn’t wait for the annual ICARA process review to officially start before executing key aspects of it. One example is that the risk framework should be operated throughout the business year to ensure divisions remain abreast of how their activities affect the firms’ potential to cause harm and the resulting impact on capital and liquidity. Another is that financial planning and scenario testing can be undertaken alongside the annual budgeting process – which dovetails nicely with the dreaded ‘going concern’ interrogation from auditors. If these, and other component parts, are owned and delivered in the ordinary course, the annual ICARA review can be streamlined, thereby reducing disruption to the business”.

Decision time

It’s time to carefully reconsider one of the most disruptive regulatory deadlines and take advantage of the seldom-afforded permission to move it.  The Prudential team at Centralis GRC are on hand to advise on the best approach for firms based on the myriad of factors at play as well as assist in integrating ICARA processes to maximise efficiency and minimise disruption of the required annual review.

If you would like to discuss your options, please contact Head of Prudential, Michael Chambers at michael.chambers@centralisgroup.co.uk