FAQs - Data Sheet FSA009

There are 3 ways a BIPRU investment firm can calculate its capital resources (GENPRU 2.2.19R):

• Deduct both material holdings and illiquid assets (only with an investment firm consolidation waiver) - GENPRU 2 Annex 6R
• Deduct illiquid assets (but must inform the FSA) - GENPRU 2 Annex 5R
• Deduct material holdings (all other investment firms) - GENPRU 2 Annex 4R (effectively the default position)

This question helps us understand which methodology the firm intends to use to calculate financial resources and is a requirement under GENPRU 2.2.19R.

If a firm is subject to consolidated supervision, they will need to submit the form on a group as well as single entity basis. The GRN helps us distinguish between consolidated reports from groups with a number of consolidations and also allows us to link the reports with legacy data.

If the firm have yet to be issued with a GRN please contact the Firms Contact Centre at fcc@fsa.gov.uk or call 0845 6069966.

The requirement to submit the consolidated reports falls equally on all members of a group under SUP 16.3.25G, so this allows us to monitor the submission of reports and minimise the likelihood of chasing a submission which has already been made.

BIPRU 8.3 sets out the scope for non-EEA sub-groups. However, there are some implications that can be drawn from that detail. First, a non-EEA sub-group cannot exist unless the authorised firm is a member of a UK consolidation group (defined in BIPRU 8.2); if there is no UK consolidation group, there will be no non-EEA sub-group. Second, once the UK consolidation group has been identified, you need to identify each undertaking in that group that is an institution, financial institution or asset management company with its head office outside the EEA. Third, identify that the non-EEA firm is a subsidiary of a BIPRU firm in that UK consolidation group or that a BIPRU firm in the UK consolidation group holds a participation in the non-EEA firm. Finally, check the BIPRU firm is not a parent institution in a member state - if it is, there is no non-EEA sub-group: if it is not, then a non-EEA sub-group will exist.

This section helps us understand on what basis your capital requirements are calculated. Those firms answering ‘No’ will complete data elements 26A to 28A and possibly 35A, while those answering ‘Yes’ will complete data elements 29A to 35A.

Firms should complete each data element as a stand-alone total (the only sub-totals are for data elements 22A and 25A).

The phrase is really shorthand for “for firms under existing rules for credit risk” ie those that answered ‘No’ in data element 18A. The capital requirements will mean the CRD plus any Basel 1 rules applying under the transitional provisions. BIPRU transitional provisions include a mapping exercise between old concepts and new and also details which of parts of IPRU remain and similarly, which parts of GENPRU and BIPRU apply during the transitional period.

For existing supervisory returns (ie those except FSA009), the capital adequacy sections need to be completed with notional data sufficient to pass validation tests and be submitted to the FSA and accepted. The figures in the capital adequacy section of these returns will not be looked at by supervisors as the data will not be accurate - the data on FSA009 will be relied on instead. For other sections of the "old reporting" e.g. balance sheet, P&L, large exposures etc it would be based on the data as currently supplied.

The 'Expenditure Based Requirement' (EBR) has been replaced by the 'Fixed Overheads Requirement' (FOR). Firms should continue using the figure calculated under the old rules for EBR until their first audited figures are available, after which they should follow the FOR rules as detailed in GENPRU 2.2.53R.

Please see the transitional provisions at GENPRU TP14 for further guidance.

The ‘capital resources requirement’ is now more correctly called the ‘variable capital requirement’. The two requirements (variable capital requirement and base capital resources requirement) have to be met by capital resources that are calculated slightly differently - see GENPRU 2.1.43G. So it would not necessarily produce the right number to use 37A in the CRR surplus calculation. This difficulty is addressed more explicitly in FSA003, but we did not want to over-complicate the reporting format in FSA009 given its temporary nature.

As its name suggests, this is guidance given by the FSA to individual firms. For most investment firms, it is unlikely we will give such guidance. Banks and building societies previously had Individual Capital Ratios set and these firms have been told how to calculate their capital requirements until an ICG is set for the firm. They will report these figures in these data elements. Please see the transitional provisions in GENPRU TP9.