This technical note was prepared by Rodolfo Wehrhahn, IMF external expert. The assessor is thankful to the staff of the PRA, FCA, HMT, Financial Services Compensation Scheme (FSCS), as well as to trade associations, professional bodies, market participants, and experts he met.
These include external context, business risk, governance, risk management, capital, liquidity, and resolution.
In the area of FC, such a mechanism exists and it has been used in the past. For example: (i) FC can apply override in exceptional cases (and have done) so it isn’t absolute and rigid; and (ii)) just because an issue does not meet the FC threshold, it does not preclude action by supervisors—and in fact there is an expectation within the hybrid model that operates in FCA that supervisors can and should take FC cases forward where FC does not—and this has happened.
These data are from 2013 and are skewed by two firms that will be out of scope by virtue of Article 11 of the Directive in that they are guaranteed by the U.K. government.