The Financial Conduct Authority has this week issued guidance on Assessing Financial Resources. https://www.fca.org.uk/publications/finalised-guidance/fg20-1-assessing-adequate-financial-resources
Firms are required to maintain adequate resources, FCA state “ We expect firms to assess their adequate financial resources commensurate to the risk of harm and complexity of their business. This starts with considering whether they have enough assets to cover their debts and liabilities.”
Firms should consider risks to the business, the level of risk they are prepared to take and to ensure they have adequate capital and liquidity (funds easily convertible to cash) to support the business. The original consultation was in 2018 but has taken on increased importance since the Covid crisis. It is important to maintain adequate records that you have considered risks to the business. NPA members are reminded that a risk assessment template is available in the NPA website members area. It is important to review risks periodically.