The FCA has published its final guidance on assessing adequate financial resources.

The guidance is intended to provide clarity the role of financial resources, how firms can best assess their adequacy and how the FCA themselves might make such an assessment.

Importantly, this guidance applies to all firms regulated by the FCA, not just those subject to detailed prudential rules. So, for example, even if you’re not required the carry out and document an ICAAP, the FCA still expects robust systems and controls, governance, leadership and a culture that reduces the risk of harm to consumers and markets. All firms should make assessments of their financial resources and hold adequate resources that reflect the harm they may cause, not necessarily just the regulatory minimum.

Crucially, firms should seek to reduce the likelihood and impact of their own failure, by holding adequate resources and maintaining effective documented wind-down arrangements.

Firms who took note of CP19-20 around a year ago may not be surprised by the contents of this guidance, but either way it is worth a detailed read.