For financial firms operating in the UK, compliance with the Financial Conduct Authority (FCA) is not merely a procedural formality but a critical aspect of maintaining regulatory integrity. Hedge funds, wealth managers, private equity firms, brokerage and dealing firms, insurance providers, and other financial entities must adeptly navigate the continuously evolving landscape of financial regulations.
Ensuring FCA compliance is essential for safeguarding your firm’s financial stability and operational resilience. It provides your clients with the assurance that their investments are secure, fostering trust and confidence in your services. We are here to assist you in achieving and maintaining this compliance, ensuring that your firm meets all regulatory requirements effectively.
Enterprise Investment Scheme (EIS) guide
The Enterprise Investment Scheme aims to encourage investment in small companies with the intention that they will grow and create employment.
What is FCA reporting?
If your business is registered with the Financial Conduct Authority (FCA), it must comply with FCA reporting requirements. This is in addition to standard reporting obligations with Companies House and HMRC. These requirements ensure that financial firms operate with sufficient capital and liquidity, reducing systemic risk in the financial sector. The reporting obligations begin as soon as FCA registration is granted.
Here are some important points to remember:
- FCA reporting applies to firms of all sizes, including start-ups. It is not just for large asset managers.
- It is a continuous obligation – once registered, firms must report regularly, not just once.
- Reporting requirements are structured and predictable, with clear deadlines set in advance.
How Wilson Partners keeps you FCA compliant
In-line with FCA requirements, Wilson Partners applies our considerable experience across all of our clients’ major financial functions. Just click the links below to learn more about the specifics of each service:
All firms registered with the Financial Conduct Authority (FCA) are required to submit financial reports through RegData, the FCA’s online reporting platform. Each firm adheres to a RegData reporting calendar, which specifies their quarterly and annual filing deadlines. These reporting obligations are continuous, not one-off tasks—businesses must ensure compliance throughout their entire operational lifecycle.
Although most firms in this sector are aware of their regulatory obligations, many tend to underestimate the complexity involved in FCA reporting calculations. Routine business activities—such as taking drawings, paying bonuses, or recognising profits—can inadvertently impact a firm’s compliance status.
Many firms fail to realise how everyday financial decisions can impact their capital adequacy. For instance:
- Taking excessive drawings can reduce available capital, pushing a firm below the required threshold.
- Paying out bonuses above performance fees can unexpectedly deplete financial reserves.
- Profit cannot be included in capital adequacy calculations unless it is audited profit—meaning mid-year profits do not count.
If a firm fails to meet its capital or liquidity obligations, it must immediately report the breach to the FCA. This involves:
- Filing a special report outlining the breach.
- Explaining the cause – why it happened.
- Detailing the corrective action – what is being done to fix it.
- Providing preventative measures – what systems are in place to stop it from happening again.
If breaches aren’t rectified quickly, firms risk serious regulatory action, including:
- Increased scrutiny from the FCA.
- Reputational damage – clients and investors losing confidence.
- Loss of FCA registration, effectively shutting down operations.
Wilson Partners employs a straightforward, transparent, and proactive approach to ensure you’re compliant. By treating every month-end as if it were a year-end, we provide our clients with a clear understanding of their financial standing well in advance, preventing any potential non-compliance issues from arising.
The Wilson Partners FCA reporting process
FCA compliance reporting can indeed be highly technical. That’s why we implement the simplest, most transparent, and logical processes available. By monitoring financial thresholds at every month-end, we provide clear and proactive guidance. This approach ensures our clients remain compliant and avoid any unexpected issues.
Our basic five-step framework may sometimes need to be augmented with bespoke services, but for most clients, here’s what you can expect:
The first step in FCA compliance reporting is determining the firm’s base capital resources requirement. This is a permanent minimum capital requirement that firms must hold at all times:
- £75,000 for MiFID investment firms
- €125,000 for firms under the FINN regime
- Additional requirements apply for firms managing over €250 million AUM
For most firms, this figure is just the starting point. The real test comes when calculating their fixed overhead requirement (FOR).
The FOR is a measure of a firm’s fixed costs over a three-month period. To calculate it, we:
- Exclude variable costs such as performance-based bonuses.
- Focus on essential, recurring expenses.
- Take the higher of either the base capital requirement or the FOR as the minimum capital hurdle.
For most firms, the FOR is the primary capital adequacy threshold they must meet.
To measure whether a firm meets its capital adequacy requirement, we:
- Assess Tier 1 capital, including partner contributions and retained earnings.
- Adjust for negative or positive partner current accounts.
- Deduct any excess drawings beyond current year profit – if drawings exceed profit, the deficit reduces regulatory capital.
The goal is to ensure that the firm’s adjusted capital remains above the FOR, maintaining compliance.
Alongside capital adequacy, firms must meet their Liquid Asset Threshold Requirement (LATR), ensuring they have enough readily available cash. The calculation involves:
- 1/3 of the FOR (one month’s fixed costs).
- Ongoing Liquid Asset (OLA) requirements based on firm classification.
- Total LATR – the minimum liquid funds required.
To meet this requirement, firms must ensure:
- Their cash in the bank is accessible within 30 days.
- Core liquid assets (GBP cash reserves) and non-core liquid assets (foreign-denominated reserves) exceed the LATR.
Rather than waiting for quarterly submissions, Wilson Partners runs monthly financial reports, tracking capital adequacy and liquidity thresholds in real-time. This means:
- Clients receive early warnings before approaching regulatory limits.
- Avoiding the need to file exception reports for non-compliance.
- Preventing compliance breaches from escalating into larger financial risks.
Helping you stay in control
The ethos behind our process is simple: FCA compliance reporting is complex, but it doesn’t have to be stressful.
With Wilson Partners, firms get clear, proactive financial oversight that prevents problems before they arise. Our process ensures compliance isn’t an afterthought – it’s built into your financial strategy right from day one.
David O'Farrell, Wilson Partners
FAQs
The cost of FCA compliance reporting varies depending on the structure and complexity of your firm. Businesses with multiple entities, consolidated reporting requirements, or cross-border structures will naturally have more intricate compliance needs, increasing the workload.
At Wilson Partners, we operate on a bespoke fixed-fee model rather than time-based billing. This means we tailor a package of services based on what your firm requires, typically covering:
- Monthly financial management (e.g., management accounting, bookkeeping, payroll).
- Quarterly reporting (e.g., VAT returns, RegData submissions).
- Annual compliance work (e.g., statutory accounts, tax returns, company secretarial services).
Every firm is different, so rather than providing a one-size-fits-all number, we work closely with clients to create a pricing structure that reflects their needs. To discuss your requirements and receive a tailored quote, get in touch.
ICARA (Internal Capital and Risk Assessment) reporting is a mandatory requirement for FCA-regulated investment firms under the Investment Firms Prudential Regime (IFPR). It’s designed to ensure firms assess and manage their financial resilience and operational risks effectively.
Each year, firms must prepare a three-year financial forecast and stress test their assumptions. This means evaluating scenarios such as:
- A significant drop in AUM (Assets Under Management).
- The departure of a key staff member.
- Market downturns or operational disruptions.
The ICARA report must demonstrate how the firm would respond to these risks and ensure it holds sufficient capital and liquidity to remain compliant.
While Wilson Partners provides the financial data, forecasts, and reporting required, ICARA reporting also involves specialist FCA compliance consultants. We work closely with these firms, who handle the risk-weighting process and complete the final ICARA submission.
ICARA reporting is an ongoing compliance cost and a crucial part of FCA oversight. Firms should budget for this separately, as it falls outside standard financial reporting. If you need support preparing ICARA financials, we’re here to help.
The key to simplifying FCA compliance is setting up robust systems from day one. Businesses should:
- Work with an experienced accountant to ensure financial infrastructure is correctly established.
- Implement monthly financial reporting rather than waiting for quarterly or annual filings.
- Maintain a clear forecast of financial milestones to track capital adequacy and liquidity thresholds.
Wilson Partners specialises in building efficient compliance processes, ensuring firms meet FCA requirements without last-minute stress.
Unlike some regulatory frameworks that evolve frequently, FCA reporting requirements have remained largely consistent over time. The core financial reporting obligations – capital adequacy, liquidity monitoring, and ICARA assessments – have been in place for years, with only minor adjustments.
FCA compliance isn’t about business growth – it’s about financial stability and regulatory approval. Unlike voluntary best practices, compliance is mandatory; businesses must meet FCA standards or risk losing their ability to operate.
That said, well-structured financial oversight can help firms avoid disruptions, maintain investor confidence, and ensure smoother operations – all essential factors in running a successful financial firm.
You may be interested in...
Our people
It’s all about the people! We work hard to maintain our unique culture and recruit those who share our passion for client service, the value we can add to those around us and our never-ending quest to develop ourselves and our clients.
Ryan Burkett
Robert Simmons
Lloyd White
Heng Dou
Fahmid Khan Milky
David O’Farrell
Connor Hehir
Ben Clark
More SME services
