- Pre-appointment: The FCA clarified the process for obtaining their consent for administrator appointments, emphasising early engagement. In line with the Financial Services and Markets Act 2000 (‘FSMA‘), they expect their consent to be sought as early as possible and filed with the notice of intention to appoint administrators. They also provided guidance on using the FCA Register for searches and clarified the role of an Insolvency Practitioner (‘IP’) as an advisor to a firm before any subsequent appointment as a statutory insolvency officeholder. A Thematic Review of wind-down planning has been produced to assist in the preparation for an insolvency process.
- Early engagement: The FCA stressed the importance of early engagement with relevant regulators and provided clarity on when to notify them, especially regarding events that may signal insolvency. They also reiterated the expectation for IPs to send key documents, like winding-up orders, and clarified information helpful for notices under the Payments and E-Money Special Administration Regime (‘PESAR’).
- Insolvency and regulatory processes: The FCA addressed concerns about claims processes, emphasising the need to consider customer characteristics under the Consumer Duty (further guidance is available in FG22/5). They confirmed that firms in insolvency must continue to submit regulatory returns and clarified expectations for creditor committee representation and IP fees. Additionally, they added a reminder to obtain confirmation from the Ombudsman Service regarding claim closures before cancelling permissions.
- Client assets: The FCA acknowledged concerns about client assets, including distribution plans, shortfalls, and Title Transfer Collateral Arrangements (‘TTCA’). They clarified the application of Client Asset Sourcebook (‘CASS’) rules and the need for IPs to discuss directions with the FCA before proceeding. The response also covered the “top-up” obligation, tax implications, distribution plans, interest on client money, TTCAs, and the Dormant Asset Scheme.Payment Institutions and E-Money Institutions are required to safeguard funds which the IP should continue to safeguard in line with Payment Services Regulations (‘PSRs’) and E-Money Regulations (‘EMRs’). This is highlighted in the Ipagoo case, which is reviewed in more detail below.
- Trading while in insolvency: The FCA reiterated the importance of considering Objective 1 of Investment Bank Special Administration Regime (‘IBSAR’) when trading and confirmed that IPs should report breaches of continuity of supply provisions.
- FSCS and redress: The FCA provided further detail on compliance with redress methodologies, the role of the FSCS, and the use of the term “super-preferred” in describing the FSCS’s claim for deposits. They also clarified FSCS coverage and improved wording related to depositor protection.
- Consumer Duty: The FCA addressed concerns about the relationship between an IP’s duty to creditors and the Consumer Duty, emphasising that these duties do not conflict. They clarified how the Duty is interpreted in insolvency situations and confirmed that the proposed amendments do not have retrospective effect.
- Re Ipagoo: The FCA acknowledged feedback on the Ipagoo case, confirming that their amendments align with the Court of Appeal’s decision. They clarified the top-up obligation and its application and noted ongoing work on safeguarding regimes for payments and e-money firms.
- Hardship: The FCA discussed the amendments related to hardship, emphasising early engagement and proactive handling of hardship cases. They acknowledged the importance of considering both financial and non-financial hardship and maintained the amendments in their original form.
- The Guidance: The FCA responded to comments on the Guidance’s scope and structure, clarifying its application to regulated firms and explaining why they decided not to restructure the document. However, they expressed interest in creating a resolution-themed webpage.
- Other matters: The FCA addressed comments on wind-down plans, equitable set-off, and updates from IPs regarding potential fraud or financial crime. They provided additional resources on wind-down planning and clarified their expectations for IPs to consider applicable laws when disclosing information. Guidance was also provided on ‘Sale of customer data’ noting that an IP should be ensure it is compatible with Consumer Duty.
