Insights

The FCA has published its latest multi-firm review, this time focusing on risk management and wind-down planning in the e-money and payments sector. While aimed at EMI and PI firms, the implications extend well beyond. For capital markets firms, particularly those supporting or partnering with high growth fintechs, the findings offer important lessons on embedding credible risk frameworks and building exit strategies that regulators will trust.

What the FCA found

The review makes for sobering reading. Not one of the 14 firms assessed met the FCA’s expectations in full. Key shortcomings included:

• Risk management was often fragmented or theoretical – wind-down plans read more like academic exercises than operational playbooks.
• Group dependencies, including cash, tech and governance, were poorly understood or not documented at all. 
• A recurring theme was the disconnect between risk appetite, financial forecasting, and wind-down triggers. Liquidity buffers were often set using static balances rather than scenario-based stress testing.
• Wind-down plans lacked ownership and operational credibility. In some cases, firms underestimated the cost and complexity of exiting their market particularly in relation to safeguarding obligations and customer redress.

In short, many plans lacked credibility where it counts, in the face of actual disruption.

Signs of better practice

Encouragingly, the review wasn’t without examples of better practice. A small number of firms had displayed a more mature approach. These included:

• Wind-down plans tied to live, real-time management information
• Clearly defined board-level triggers and realistic cost models.

These firms had mapped intra-group exposures and understood the operational consequences of winding down key activities.

Why capital markets firms should care

For capital markets firms, especially those with principal trading permissions, group structures, or exposure to payment flows, this is a timely reminder. The FCA expects wind-down planning to be much more than a regulatory checkbox. It needs to be data-led, stress-tested, and fully integrated into your risk and liquidity management frameworks.

A quick health check for your framework

Use the FCA’s findings as a benchmark of your own arrangements:

• Is your wind-down plan fully costed, owned, and operable – not just documented?
• Are your liquidity and capital buffers built from real stress scenarios?
• Have you clearly defined the trigger events that would lead to wind-down?
• Do your risk appetite statements meaningfully influence decision-making?
• Have you mapped your intra-group and third-party dependencies?
• Are safeguarding, customer redress, and operational continuity built into your exit plans?

If the answer to any of the above is uncertain, now is the time to revisit your framework.

How we can help

At fscom, we’re helping capital markets firms move beyond box-ticking and paper based policies. We support clients to build and embed credible, proportionate wind-down plans that align with regulatory expectations and withstand scrutiny.

Whether you’re looking a full wind-down review, support with building stress-based liquidity models, or simply a second opinion on your existing plans, we’re here to help.

Contact our prudential risk specialists today to arrange a quick diagnostic or full, tailored review.