Context
The FCA has published some findings from a multi-firm review of general insurance brokers about assessing liquidity for orderly wind-down, where it identifies good and poor practices amongst insurance brokers and areas for improvement which firms can learn from.
Key points to note
Firms:
- need to have a good risk management framework that is linked to the business and regularly updated, including stress testing and reverse stress testing
- should have good cashflow modelling in the wind-down plans
- should consider the group situation (and dependencies) where relevant
The FCA recognises the proportionality of this and there is not a “one size fits all” approach, there is also a 90-minute webinar on demand available from the FCA website on its webinars page covering ‘Restructuring and insolvency of FCA regulated firms’.
Next actions
Firms should review these findings, refer to the finalised guidance on assessing adequate financial resources and other relevant regulatory material, and consider whether to apply any of the expectations and observations in the FCA documents to their assessment of liquidity and wider wind-down planning.