On 1 March 2024, the FCA published a new webpage to advise firms on how to prepare effective wind-down plans. As the FCA requires some firms to submit a wind-down plan as part of their application for authorisation, it highlights the benefits of wind-down plans more generally, which include assisting firms in exiting the market in an orderly manner if their business is no longer viable. This may include stopping its regulated activities and cancelling its permissions with minimal adverse effect on its clients, counterparties, or the wider market. It may also help a firm assess if it would have adequate resources (both financial and non-financial) to wind down in an orderly manner, especially under challenging circumstances.

The webpage outlines how a wind-down plan should:

  • Identify the steps and resources a firm needs to wind down its business, especially in a situation where resources are limited.
  • Evaluate the risks and impact of a wind-down and consider how to mitigate these risks.

The webpage further identifies factors firms should take into account when formulating a plan, including:

  • Business and operating models. 
  • Key revenue drivers, clients and functions. 
  • Vulnerable areas.

The webpage additionally urges firms to consider potential various scenarios which could lead to a wind-down, and to a potential recovery. Examples include significant financial losses with no signs of timely recovery, loss of key clients without the realistic prospect of replacing them in good time and loss of critical infrastructure (e.g., essential IT systems) with no signs of timely recovery.

Further guidance can be found in: