New Public Disclosure Obligations Under the IFPR: What, When and How?


Prema Thongdok and Martin Lovick

Publish Date


Compliance Alert


  • Compliance

On 26 November 2021, the FCA published its third and final Policy Statement, PS21/17, on the new Investment Firm Prudential Regime (IFPR), which subsequently came into force on 1 January 2022.

This provided a wrap-up of outstanding issues, covering areas such as the treatment of own funds (excess drawings by partners and members), depositories, and changes to the UK resolution regime. Of broader interest are the new disclosure requirements for MIFIDPRU firms, the subject of the rest of this paper.

What is the purpose of these disclosures?

The public disclosure requirements of IFPR are set out in MIFIDPRU 8, replacing the previous Pillar 3 requirements of BIPRU 11. The objectives are broadly similar, namely, to inject market discipline on firms by requiring them to disclose information to key stakeholders and counterparties. MIFIDPRU 8 seeks to refine this approach through disclosures on firms’ own funds (financial strength), behaviour (investment policy) and culture (risk management, governance, and remuneration).

Is there some proportionality in the requirements?

Yes, many of the new disclosure requirements apply only to non-SNI MIFIDPRU firms. The main exception is the required disclosures on remuneration policy and practices which apply to both Small Non-Interconnected (SNI) and non-SNI firms alike. SNI firms that have additional Tier One instruments (AT1) must also make disclosures on risk management and own funds (see below for more details).

The FCA advises that a firm’s qualitative disclosures under MIFIDPRU 8 should be appropriate to “its size and internal organisation, and to the nature, scope, and complexity of its activities”. In other words, the FCA expects that these will be more concise for smaller firms with straightforward business models.

Is the basis of disclosure at the solo firm or at the group consolidated level?

The FCA have reigned back on their original proposal that firms disclose on both an individual and consolidated basis, which they believe would be unfair to firms subject to group consolidation or those using the Group Capital Test. Firms will only be required to disclose on an individual basis, although the FCA states that firms can additionally disclose on a group basis if they wish to. Groups can disclose certain policies on a central website but if they do so they must make it clear which individual entities these apply to.

When must the disclosures be made public?

Firms are required to make the public disclosures on the same day that they publish their annual financial statements (firms without annual statements must publish on the same date that they submit their annual solvency statements to the FCA (under SUP 16.12)). The new disclosure requirements apply to all accounting periods ending after 1 January 2022.

Note, however, that there are transitional arrangements to allow firms to adjust to the new requirements:

  1. Firms with accounting reference dates on or before 31 December 2021 must continue to meet their prior disclosure obligations under BIPRU. In other words, they must publish a Pillar 3 statement for that period.
  2. For accounting periods ending after 31 December 2021 but before 31 December 2022, firms will be required to make disclosures only on own funds, own funds requirements and governance (see below for details).
  3. Firms with accounting periods ending on 31 December 2022 will be required to make a full set of disclosures except remuneration.
  4. All periods ending on a date in 2023 and beyond will be subject to the full disclosure regime. In other words, firms with periods ending 31 March 2023 are likely to be the first to make the new, more onerous remuneration disclosures.

How should the disclosures be made?

The overarching requirement is that disclosures are published “in a manner that is easily accessible and free to obtain.” The FCA makes clear its “expectation” that the disclosures are made on the firm’s website. However, it does allow for situations where either the firm does not have a website, or where disclosure via a website would breach the law of another jurisdiction”.

What are the key elements to be disclosed (note, some apply to non-SNI firms only)?

Risk management policies: firms are required to disclose their objectives and policies in relation to certain key risks: own funds, concentration and liquidity. This must include a concise statement approved by the governing body describing the potential for harm associated with the business strategy, and a summary of the processes used to manage each risk, and how these help to reduce the potential for harm.

Governance arrangements: non-SNI firms are required to disclose certain information including:

  • An overview of the firm’s governance arrangements.
  • The number of directorships held by each member of the governing body (note, this only applies to directorships of commercial enterprises, so charities are excluded. Directorships of other group entities are also excluded).
  • A summary of the firm’s policy on promoting diversity on the governing body.
  • Whether the firm has established a risk committee.

Own funds: firms must provide details of own funds (using the template provided in MIFIDPRU 8 Annex 1R), and a reconciliation of the same information in the firm’s report and accounts (where available).

Own funds requirements: firms must disclose details of their own funds requirements including the fixed overhead requirement (FOR) and a breakdown of their K-factor requirements (non-SNI only). All firms are also required to disclose their approach to assessing their compliance with the overall financial adequacy rule (MIFIDPRU 7.4.7R)

Remuneration: Firms are likely to find remuneration the most sensitive aspect of the new disclosure requirements. However, it should be noted that the more intrusive elements apply only to non-SNI firms and there are also some other opt-outs available. The requirements are divided into qualitative and quantitative:

Qualitative: all MIFIDPRU firms must provide a summary of their remuneration policy, including its approach to the remuneration of all staff, the objectives of these incentives, and a description of the firm’s governance arrangements. This must include a description of the different elements of remuneration and whether these are fixed or variable in nature. Non-SNI firms must also disclose what categories of staff have been deemed Material Risk Takers (“MRT” – as defined in SYSC 19G.5), plus key elements of their policies including ex-ante and ex-post risk adjustment to variable remuneration, and how malus and claw-back may be applied.

Quantitative: non-SNI firms are required to disclose the following for each annual performance period:

  1. The total amount of remuneration awarded to all staff, split into fixed and variable elements.
  2. The total number of MRTs.
  3. The total remuneration awarded, split into 3 categories – senior management, other MRTs and all other staff – and also split into fixed and variable.
  4. The total amount of guaranteed variable remuneration awarded, split into senior management and other MRTs.
  5. The total amount of any severance awards to MRTs, again split into the same categories, plus the amount of the highest single award.

Recognising that some of the above disclosures may mean that remuneration awards can be identified at an individual level, the FCA allows that the split between senior management and other MRTs, or the aggregate awards to MRTs, can be omitted where these refer to just one or two individuals.

Note: there are further disclosure obligations for very large firms subject to the extended remuneration requirements, as set out in SYSC 19G (pay-out in shares, deferral etc).

Investment policy: non-SNI firms are required to disclose certain information on voting rights and behaviour in respect of certain investments held by the firm or on behalf of client mandates (provided these authorise the firm to vote on their behalf. This applies only to investments in shares listed on regulated markets and where the aggregate holdings controlled by the firm exceed 5% of total voting rights. There is a potential opt-out for information considered proprietary or confidential, but the firm should make a record of such situations and may be asked by the FCA to justify their reasons for non-disclosure. There is a template for making investment policy disclosures in MIFIDPRU 8 Annex 2R.

How we help

  • The implementation of new FCA regulation, such as IFPR, is one of the offerings that sits under our Comprehensive Customised Compliance (C3) solution, which provides a broad package of solutions for compliance advice and assurance on an on-going basis.
  • We also offer a range of prudential and regulatory reporting solutions, to support firms subject to MIFIDPRU, and can assist firms with the implementation of individual elements of IFPR, including the new ICARA, remuneration policies plus the new disclosure requirements as set out above.

If you have any questions on this alert or would like to discuss your firm’s unique compliance concerns with our team, complete this form or call +44 (0) 20 7042 0500.

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Related sources

  • A checklist providing top tips around addressing your obligations. 
  • An essential Q&A to help you better understand your remuneration rule requirements under the IFPR.