This review reiterates our expectation that firms have adequate financial and non-financial resources to wind-down in an orderly manner, and sets out our observations of how they are doing this.
Read the thematic review (PDF)[1]
Why we conducted a review
We completed a piece of thematic work on wind-down planning across different business models, in light of the ongoing COVID-19 pandemic and the potential harms caused if a wind-down is not orderly. Our work focused on liquidity needs during wind-down, intra-group dependencies, and wind-down triggers. This review does not represent a shift in policy or changes in firms’ requirements.
Who this applies to
- all FCA regulated firms
Background to our observations on wind-down planning
We held bi-lateral discussions with a number of firms on the assessment of cashflow needs, modelling methodology, intra-group reliance, and risk management frameworks including stress testing. This shed light on various strengths and weaknesses in wind-down planning across a number of business models.
Next steps
Our observations may be relevant to all firms, regardless of the broader economic environment.
We encourage firms to review the observations and consider incorporating these into their own wind-down planning processes and documents, in a way that is proportionate to the nature, scale and complexity of the firm’s activities.