The FCA has published its review regarding the quality of prudential regulatory reporting by MIFIDPRU investment firms, making it clear that while many firms are now submitting broadly reliable reports, there remain areas for improvement that require urgent attention if firms are to meet the expectations of the Investment Firms Prudential Regime.
Overall Findings on MIFIDPRU Regulatory Reporting: A Broadly Positive Picture, with Some Clear Gaps.
The FCA analysed roughly 3,800 firms and 323,000 data items on returns submitted between January 2024 and March 2025. Overall, the FCA’s findings were broadly positive:
- 60% of firms were submitting quarterly returns that were consistent and accurate across reporting periods
- A further 30% were making good progress, with only limited and non-systematic instances of misreporting
- Only 10% of firms were not meeting their reporting requirements and demonstrated recurring reporting errors
Additionally, the FCA’s analysis of cross-validation between returns was encouraging. For non-SNI firms, there was 85% alignment between K-factor requirements reported in MIF001 and the underlying data in MIF003. Given how key K-factors are to setting capital requirements, monitoring the risk of harm posed by a firm, and determining whether a firm is classified as SNI or non-SNI, this level of consistency is reassuring. However, it also implies that over 1 in 7 firms are still getting these critical metrics wrong, a gap the FCA will be keen to close.
Where Firms Are Still Falling Short in MIFIDPRU Regulatory Reporting.
Beneath these broadly positive findings, the FCA identified several areas of recurring weaknesses that firms must address:
Inconsistent ICARA and MIFIDPRU Regulatory Reporting (MIF007).
A key issue is significant inconsistency between figures reported in MIF007 and those in firms’ ICARA documents, with no clear change in the business model to justify differences. The ICARA is meant to be a firm’s primary view of its risks, capital, and liquidity. When the MIF007 return and the ICARA document tell a different story, it undermines the credibility of a firm’s ICARA process and potentially signals to the FCA that prudential risk management is treated as a tick-box exercise, rather than as a live process.
SNI and Non-SNI Classification Issues in MIFIDPRU Regulatory Reporting.
A second finding of concern is firms persistently misidentifying their status as SNI or non-SNI, leading to K-factor not being reported when they should be. SNI/non-SNI status determines the prudential framework that applies, and K-factors are central to IFPR’s assessment of the risk of harm to clients, markets and the firm itself, alongside setting capital requirements. If the classification is wrong, a firm’s capital position and regulatory obligations will be misstated.
The FCA therefore expects firms to revisit their status under MIFIDPRU 1.2 and ensure that all applicable K-factor fields are fully and correctly calculated.
OFTR Calculation Errors in MIFIDPRU Regulatory Reporting.
The FCA also continues to see incorrect calculation and reporting of the OFTR, including instances where OFTR appears lower than the Own Funds Requirement. The OFTR is designed to sit above the Own Funds Requirement, capturing any additional capital firms need to cover its ongoing operational risks and to fund an orderly wind-down.
Such errors undermine prudential soundness: If the OFTR has not been correctly determined, firms may be holding less capital than is needed to cover their risks or to facilitate an orderly Wind-Down.
Data Quality and Controls in MIFIDPRU Regulatory Reporting.
Finally, the review highlights that many firms are still failing on basic data discipline. The FCA points to issues such as figures entered in the wrong units or currencies, prior-period data being copied forward without review, and blank fields where values are clearly required. Firms ought to have simple but robust checks in place to prevent such avoidable mistakes occurring.
Next Steps for Firms and Improving MIFIDPRU Regulatory Reporting.
The FCA will contact firms where it has identified specific issues, setting out data points that fails at least one of their tests. Against this backdrop, we strongly encourage all firms in scope of IFPR to review their prudential reporting processes.
How Cosegic Can Help with MIFIDPRU Regulatory Reporting:
- Independent reviews and “health checks” of MIFIDPRU reporting
- Assessing the adequacy and robustness of the ICARA process and associated capital/liquidity assessments
- Confirming SNI / non-SNI status, identifying which K-factors should apply, and reviewing whether K-factor calculations are being applied correctly
- Testing that the OFTR is calculated and reported in line with regulatory guidance and reflects the firm’s risk profile and wind-down needs
Whatever your prudential needs, our team can help you build a reporting process that is accurate, efficient, and robust under scrutiny.
