On 23 May 2016, the FCA published its consultation on proposed guidance on wind-down planning (GC16/5). The guidance is aimed at FCA solo-regulated firms, in particular, those that are currently performing related analyses, for example, estimating wind-down costs for capital planning.
In wind-down planning, a firm considers how it could close down its regulated business in an orderly manner, including under stressed conditions. This consultation has been introduced as a result of regulated firms and professional advisors seeking further clarification on what wind-down planning should cover.
In May 2015, the FCA gave feedback to the wider industry as part of its prudential forum. The FCA now feels that a non-binding document would benefit firms and their advisors. An effective wind-down plan will enable a failing firm to cease its regulated activities and achieve cancellation of permission with minimal adverse impact on its clients, counterparties and the wider market.
The proposed guidance will detail how regulated firms should close down their business in an orderly manner while under stressed conditions. Once finalised, the document will become general guidance in the FCA Handbook under the ‘Regulatory Guides’ section.
The consultation will close on 22 July 2016.