Context
The FCA has updated its Finalised Guidance for Insolvency Practitioners on how to approach regulated firms, and has published a Feedback Statement following its Guidance Consultation GC24/1 published last year. Although not of any great significance to authorised firms, there is some useful clarification in the updated Guidance in relation to the FCA’s expectations of all firms in circumstances where insolvency is planned, expected or is even deemed a probability by firms.
Key points to note and next actions
The main aim of the Guidance is to set out the FCA’s views of how an Insolvency Practitioner should ensure regulated firms meet their ongoing financial services regulatory obligations following the Practitioner’s appointment.
In relation to the FCA’s expectations:
- Early engagement is crucial for managing firm failures and reducing risks to consumers. In line with FSMA, the FCA expects its consent to be sought as early as possible and filed with the notice of intention to appoint administrators.
- The Guidance refers to SUP 15, which contains detailed rules on when firms must notify the FCA of events, including insolvency-related ones like meetings to consider a resolution for winding up the firm or the making of, or any proposals for the making of, a composition or arrangement with any of its creditors.
- Earlier notification under SUP 15 may often be required, such as when a firm anticipates failing to satisfy any of the threshold conditions, including the requirement to maintain adequate financial resources for regulated activities. The FCA has updated guidance to remind firms to notify about certain events that may signal insolvency.
While not required by law, the FCA expects key documents like winding-up orders to be sent to it.