MIFIDPRU and IFPR Reporting: The Skills Behind the Returns

The Investment Firms Prudential Regime changed what UK investment firms have to calculate, report and document — and it landed on finance functions that had largely been built for statutory reporting. Several years on, most firms have the returns going out. Fewer have someone who genuinely understands what sits behind them, and fewer still have that capability in more than one head. This guide is about the people rather than the rules: who actually builds MIFIDPRU returns and the ICARA, what skills the work requires, where firms are typically short, and how to test for the capability when hiring.

For the regime itself, the FCA’s IFPR pages and the MIFIDPRU sourcebook are the authoritative sources, and our guide to regulatory capital, ICARA and the IFPR covers the framework. This page assumes that ground and focuses on the hiring dimension.

What the work actually consists of

Four workstreams, and they demand different things from the person doing them.

Own funds and the capital calculation. Determining own funds by tier, applying deductions, and calculating the own funds requirement as the higher of the permanent minimum requirement, the fixed overheads requirement and the K-factor requirement. The mechanics are arithmetic; the judgement lies in what belongs in the fixed overheads calculation and how the K-factors are derived from the firm’s actual activity.

K-factor measurement. The activity-based metrics — assets under management, client money held, client orders handled, and the risk-to-market and risk-to-firm factors where applicable. This is where finance meets operations, because the source data lives in systems finance does not own, and getting it out reliably each period is frequently the practical difficulty.

The regulatory returns. Submissions through RegData on the reporting calendar, with the reconciliation and evidence behind each. Our guide to RegData, COREP and FINREP covers the mechanics.

The ICARA process. The internal capital adequacy and risk assessment: identifying harms, assessing whether own funds and liquid assets are adequate, wind-down planning, and documenting it all to a standard a supervisor would accept. This is the workstream that most often has no clear owner, because it sits across finance, risk and compliance — and it is the one the FCA looks at — the MIFIDPRU sourcebook sets out what the assessment must cover.

The skills the work requires

Prudential literacy, not just accounting. The distinction matters. A strong Financial Controller can prepare accounts and still not know why an intangible is deducted from own funds or how a fixed overheads requirement is derived. The prudential frame is learnable but it is not implied by qualification — ICAEW, ACCA or CIMA is the baseline and nothing more.

Data capability. K-factors come from operational systems — portfolio management, order management, client money platforms — and the person doing this needs to extract, reconcile and evidence that data, often monthly. In practice this is the single biggest predictor of whether someone can do the job efficiently or spends every quarter chasing.

Documentation discipline. Every judgement in the ICARA needs to be written down in a form that stands up to supervisory review. Firms that treat the ICARA as an annual document rather than a maintained process are the ones that struggle when questions arrive.

Cross-functional working. The data sits with operations, the risk assessment with risk, the regulatory relationship with compliance. Someone who can only work within finance will produce a return but not an ICARA.

And the judgement to know what matters. A great deal of prudential work is proportionate: a small firm does not need the framework of a large one. Someone who has only worked in a large firm may over-engineer it; someone who has only worked in a small one may under-document. Both are correctable, but worth knowing which you are hiring.

Where firms are typically short

Three gaps recur, and each has a different fix.

Key-person concentration. The most common by far. One person understands the calculation, and everything — the returns, the ICARA, the audit questions — depends on their availability. It is a business continuity issue as much as a hiring one, and the fix is documentation and a second pair of hands rather than a more senior appointment.

The ICARA has no owner. Finance produces the numbers, risk owns the harms, compliance owns the relationship, and nobody owns the document. It is assembled annually under pressure and reads like it. Naming an owner is the single most useful organisational decision available here.

Data extraction is manual. K-factors assembled by spreadsheet each quarter from operational reports, with no reconciliation trail. It works until someone leaves or a number is challenged. This one is usually a systems and process fix rather than a hire, though it is the reason the role feels heavier than it should.

Who does this in practice

The ownership pattern varies with firm size, and getting it right avoids most of the pain.

In smaller investment firms, the Financial Controller or Head of Finance owns the prudential work alongside everything else, frequently with external support on the ICARA. Workable, provided the data extraction is reliable and someone external reviews the judgements.

In mid-sized firms, a dedicated regulatory reporting role emerges, sitting in finance but working closely with risk and compliance. This is the seat most often missing, and its absence is why so many firms produce returns by manual assembly.

In larger firms, a prudential or regulatory reporting function with specialists by workstream.

The transition point is usually the second or third reporting cycle, when the firm realises the work is recurring and material rather than a project — and that the person absorbing it has stopped doing something else.

Testing for the capability at interview

Six questions that distinguish genuine ownership from adjacency.

1. Walk me through your own funds requirement calculation. The foundational question. Someone who has owned it describes the components and which one bites for their firm; someone who has reviewed it describes the output.

2. How are your K-factors derived, and where does the data come from? This is the question that separates people who have done the work from people who have supervised it. Expect specifics about systems, extraction and reconciliation.

3. What is in your fixed overheads calculation, and what did you exclude? Judgement lives in the exclusions, and the answer shows whether they made the call or inherited it.

4. Talk me through your ICARA — who wrote it, who owns it, how often is it refreshed? Look for a maintained process rather than an annual document, and for someone who can describe the harms analysis rather than only the capital number.

5. Tell me about a submission that went wrong, or a resubmission. Everyone in regulatory reporting has one. Ownership of the error and what changed afterwards is what matters.

6. How would you explain the capital position to a board that is not prudentially literate? The translation test, and the one most often skipped. In-house prudential work lives or dies on being understood by people who make the decisions. Our guide to regulatory capital in the management accounts covers what good reporting looks like.

Hiring for it: the practical realities

The pool is small and largely employed. Prudential reporting specialists in investment firms rarely appear on job boards; searches rely on direct approach and on knowing who is open to a conversation.

The premium is real. Regulated-firm finance carries roughly a 10–15% uplift over equivalent commercial roles, and prudential specialism prices above general regulated finance because the pool is thinner still. Benchmarks are in our regulated-firm finance salary guide.

Adjacent experience is often the right answer. Someone from a CRR or banking prudential background, or from a consultancy that has advised on ICARAs, can transfer well — the frame is similar even where the rules differ. What does not transfer is a purely statutory reporting background with no prudential exposure.

And time it away from the reporting calendar. Recruiting in the fortnight before a submission is the hardest version of it; an interim covering a cycle is frequently better than a rushed permanent hire. Our FCA-regulated finance practice covers the market, and hiring for regulatory experience the wider specification question.