The FSA has published a Dear CEO letter that it has sent to authorised firms setting out how it will monitor compliance with the new liquidity regime that came into effect on 1 December 2009. The Dear CEO letter also outlines how firms can confirm that they comply with the new systems and controls requirements.
The FSA has asked firms to confirm in writing by 12 February 2010 that:
- The new systems and controls requirements have been successfully embedded within their firm and outline any remaining action that needs to be taken.
- They have appropriate plans in place to ensure accurate electronic reporting of liquidity data from their switch on date.
The FSA also sets out the following next steps it will take:
- It will select a cross-section sample of firms and request information about the arrangements they have put in place to comply with the new liquidity standards for banks, building societies and investment firms (BIPRU 12.3 and 12.4).
- It will follow up with firms that provide incomplete or inadequate documentation and this may include an on-site visit. If firms have not taken appropriate action the FSA will consider enforcement action.
- After its review of the systems and controls information provided it will visit some further firms in Q2 2010 to conduct in-depth, on-site reviews of how they have put in place the requirements in BIPRU 12.3 and 12.4. The FSA intends to publish its findings, including good practice, in Q3 2010.
View FSA Dear CEO Letter - FSA requirements on your firm’s liquidity risk management, 13 January 2010