CP13/6 - CRD IV for Investment Firms - Financial Conduct Authority

CRD IV for Investment Firms
CP13/6
8. The objectives underlying CRD IV are primarily prudential in nature. While there are no direct
implications for consumers, the proposed Handbook text seeks to align the capital held by
firms within the scope of the CRD more closely to the risks arising from their business profile
and the strength of their systems and controls. We expect that the enhancements made to the
prudential framework and governance arrangements for these firms, as a result of the changes
the CRD requires, will make it less likely that they fail in a disorderly manner. This should have
positive outcomes for consumers.
9. Although most of the EU requirements are now directly applicable to firms through the
Regulation, there are a number of areas where we still need to make rules. Our overall approach
to CRD IV transposition - outlined in Chapter 1, should help firms to contain any overall increase
in costs while keeping the benefit of prudential soundness. This is pending an EU-wide review
of what is an appropriate prudential regime for different types of investment firms that the
Commission is required to undertake by the end of 2015.
Competition objective
10. It should be noted that our overall approach towards the exercise of CRD IV derogations and
discretions (where the least burdensome outcomes are being sought) will result in the minimum
feasible impacts on competition in the market.
11. As described in the CBA, there may be some adverse impacts on competition as firms (and
potential entrants to the market) face increased costs. These costs come primarily from the
Regulation and transposition of the Directive where the FCA has no ability to promote a more
beneficial outcome for competition in the markets.
12. There may be some beneficial impacts on competition from the improvements in transparency
arising from CRD IV.
Compatibility with the need to have due regard to the principles of good regulation
13. Under section 1B (5) of FSMA, we must consider the specific matters set out below, when
carrying out our general functions.
Need to use resources in the most efficient and economic way
14. The publication of this CP with a consultation period over the summer allows the industry time
to consider and to implement the relevant changes brought about by CRD IV. Furthermore, the
timing enables the FCA to publish, in due course, a Policy Statement in response to comments
from industry and other stakeholders on our implementation proposals with the aim of
providing the final rules ahead of the CRD IV implementation by 1 January 2014.
15. We outline our overall approach to CRD IV transposition in Chapter 1.
Principle that a burden or restriction which is imposed on a person, or on the
carrying on of an activity, should be proportionate to the benefits, considered in
general terms, which are expected
16. We have undertaken a cost-benefit analysis of the material areas of the changes in order to
help with this CP. Given the diverse nature of the different policy topics covered within the
package of changes as a whole, we include references to the CBA in the relevant chapters –
where appropriate, and in Annex 1.
Financial Conduct Authority July 2013
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