FCA urges advisers to plan for wind-down

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The FCA is consulting on guidance for firms closing down their business after advisers requested clearer information from the regulator.

In a 28-page consultation document aimed at solo-regulated firms, the FCA says firms should have a wind-down plan regardless of how they are performing.

The regulator adds the approach it sets out is not mandatory for firms to follow.

It says: “It is not a prescribed approach and firms can depart from it as they choose or use completely different approaches. The approach document does not by itself impose any obligations on firms to create wind-down plans. The intention of this approach document is to make some helpful suggestions in order to assist firms’ thinking in this context.”

The FCA says there are two main areas firms overlook when closing their business: a communications plan and, if the firm is part of a wider group, if group resources would be available as the business shuts down.

The consultation paper adds: “We believe that an effective wind-down plan should help a failing firm to cease its regulated activities and achieve cancellation of permission with minimal adverse impact on its clients, counterparties and the wider markets. So the approach document aims to help a firm factor these considerations into its wind-down planning.”

The consultation closes on 22 July.