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The importance of wind down planning for non-regulated lenders

In recent years, there has been an increased focus on the necessity of wind down planning among financial services businesses who provide non-regulated lending. Whilst regulated firms have to adhere to the Financial Conduct Authority’s (FCA) guidance, non-regulated lenders have less regulatory burden. However, this is beginning to change. Major credit funds, institutional investors, and regulated entities are now insisting on robust wind down plans for non-regulated lenders as they are crucial to minimise the risk of a disorderly failure, which could negatively impact investors, clients, counterparties, and the wider market in the event of a business failure.

FCA guidance on wind down plans

The FCA has provided clear guidance on what a wind down plan should entail. Specifically, the plan should:

Key components of a good wind down plan

A well-constructed wind down plan should include the following key components:

Areas to consider when producing a wind down plan

A wind down plan should be realistic, robust, and regularly updated to reflect changes in the business and loan portfolio. RSM recommends considering the following areas:

Who should consider wind down plans?

How RSM can help

RSM can assist by reviewing and advising on existing wind down plans, focusing on:

In conclusion, robust wind down planning is essential for any financial services business involved in regulated and non-regulated lending to ensure, firms can develop effective plans that mitigate risks and minimise negative impacts; not just for their business, but for the whole industry.

For further information on wind down planning for non-regulated lenders, please contact on of our experts below.

authors:damian-webb,authors:ian-briant,authors:joshua-varughese