

Investment Firm Prudential Regime
What do investment firms need to know?
The UK is set to implement a new prudential regime for MiFID investment firms (the investment firm prudential regime or “IFPR”). This is modelled on the EU’s Investment Firm Regulation (IFR) and Investment Firm Directive (IFD) which although finalised and in force, did not apply before the UK left the European single market on 31 December 2020. As such, the IFR and IFD were not onshored into UK law. However, when the UK was a member of the EU it had been an advocate for introducing such a regime and heavily involved in the policy discussions and so it must come as little surprise that the UK’s proposed IFPR bears a close resemblance to the EU’s IFR and IFD.
Whilst the EU’s regime applies from 26 June 2021, it is anticipated that the IFPR will apply in the UK from 1 January 2022.
The impact on firms is wide-ranging and includes:
- new capital requirements, to be calculated using the “K-factor” methodology designed to reflect the risks presented by firms;
- new rules on prudential consolidation, liquidity and concentration risk;
- a new Internal Capital and Liquidity Assessment process (ICARA);
- new requirements on remuneration policies and practices; and
- extensive reporting and disclosure requirements.
Our Financial Services Regulatory team produced a helpful guide on the IFR and IFD and a series of briefing papers on the main pillars of the regime and their expected impact, which can be accessed via the links below. The team also ran a series of webinars on the UK’s IFPR proposals which can be accessed below. If you would like to receive more information please get in touch with your usual A&O contact.
Catch up on our webinar series

Do you have the K-factor?
Related people: Bob Penn, Kirsty Taylor and Andrzej Wieckowski
View webinar
ICARA so good?
Related people: Bob Penn & Kirsty Taylor
View webinar
Show me the (IFPR) money
Kate Sumpter, Jack Prettejohn, Vicky Wickremeratne, Gordon Bartlett
View webinarRead about IFR/IFD

Firm classification
Download PDF
Capital requirements
Download PDF
Prudential consolidation
Download PDF
Remuneration
Download PDF
Liquidity and concentration
Download PDF
Reporting and disclosure
Download PDF
ICARA and SREP
Download PDFNews & insights

Blog Post: 18 May 2022
In Case T-27/19 Pilatus Bank the Court dismissed an action brought by Malta’s Pilatus Bank, confirming the legality of the ECB’s 2018 decision to withdraw the bank’s licence after an indictment of its…

Publications: 12 May 2022
The first NFT copyright infringement decision handed down in China
Given the explosive growth in the non-fungible token (NFT) market, it was just a matter of time before courts started weighing in on intricate intellectual property (IP) issues associated with the…

Publications: 04 May 2022
The UK Consumer Duty: key themes to watch
This article is the second in our series on the UK Consumer Duty and how it could impact Australian financial services providers.

Publications: 02 May 2022
Regulatory Monitoring - relevant developments regarding German and European regulatory law
Our monthly regulatory newsletter monitors all relevant developments regarding German and European regulatory law in English language.
Download full IFR/IFD guide
