The FCA have, today, issued a Dear CEO letter to IFPRU firms alerting them to the fact that their ICAAP may be requested for detailed inspection.
For some firms this will not be news as the process has already commenced, ICAAPs have been subjected to FCA review and the Supervisory Review and Evaluation Process (SREP) has issued Individual Capital Guidance (ICG).
This would usually take the form of a Pillar 2 capital adequacy requirement as a percentage, say 200%, of the Pillar 1 requirement. This makes the firm retain more capital than they may otherwise have wished. By making firms hold more funding the FCA view this as a way of mitigating, at least partly, the risk and weaknesses identified.
IFPRU firms should review their ICAAPs to ensure that they meet the exact requirements in IFPRU 2.2 and that they are ready to remit to the FCA their ICAAP immediately upon their request.