The FCA published a “Good and Poor Practice” report on 26 November 2025 addressing the prudential reporting quality of investment firms in scope of the Investment Firms Prudential Regime (IFPR) / MIFIDPRU.
The FCA reviewed how well investment firms were meeting its expectations on the accuracy, consistency and completeness of prudential regulatory data. Examples of good and poor practice are highlighted in the findings.
In this article
What does this mean?
The IFPR was introduced in January 2022 and the FCA provided industry feedback in March 2023 on the regime’s implementation, including concerns about data submission quality. Given the FCA’s increasing reliance on date, accurate, timely and consistent data is fundamental for it to be able to effectively supervise all 36,000 firms and target interventions where the risk is highest.
Scope and methodology: The FCA analysed regulatory returns submitted via RegData for reporting periods from January 2024 to March 2025, running 323,000 tests across approximately 3,800 firms.
The review looked at firms’ data and its alignment with the MIFIDPRU sourcebook, consistency with comparable data from alternatives sources, and whether changes in reported values over time fell within an explainable and credible range.
Areas of good practice: Most firms, around 60%, passed almost all of the FCA’s data-quality tests and demonstrated good practice such as:
consistent reporting across time periods. 90% of firms were found to take a consistent approach between quarterly data and the previous period
effective cross-validation between different regulatory submissions for K-factor requirements. 85% of firms required to report K-factor requirements did so correctly by deriving values in MIF001 from their MIF003 returns.
A further 30% of firms were observed by the FCA as making progress.
Areas for improvement: The FCA also found shortcomings, including:
inconsistent reporting across multiple data sources, such as divergence between firms’ MIF007 regulatory returns and reports on Internal Capital Adequacy and Risk Assessment, or ICARA, processes;
inaccurate application of reporting guidance, particularly the incorrect reporting of the Own Funds Threshold Requirement (OFTR) and how it compares with the Own Funds Requirement (OFR) or the Transitional Own Funds Requirement, where applicable;
errors in classifying the type of investment firm - small and non-interconnected (SNI) vs non-SNI status - and resulting impact on reporting. For example, leaving key fields bank, particularly for the K-factor requirement; and
data entry or unit mistakes, which could suggest data issues or that firms had not updated data before submitting it.
The FCA found that around 10% of firms had recurring reporting errors and were not meeting their reporting requirements. These firms were also considered to have ‘fundamental weaknesses’ in their regulatory reporting systems and controls.
What do firms need to do?
For the 10% of firms who need to improve, urgent engagement and review of the entire ICARA and regulatory reporting processes is needed.
Other firms should benchmark their own reporting against FCA expectations and guidance.
Assess and update, if necessary, data-entry and validation controls to ensure they can detect and prevent the types of errors and inconsistencies highlighted in the FCA’s review.
Firms should take a structured look at their prudential reporting processes and related controls, assessing whether these align with FCA expectations and the requirements set out in MIFIDPRU. The review also provides a prompt to reduce fragmented processes by standardising templates, consolidating data sources and ensuring that internal assessments and regulatory submissions tell a consistent story.
Attention should also be given to the effectiveness of existing quality assurance activity. Firms need to ensure that data is refreshed before submission, that units and inputs are accurate, and that validation checks are capable of identifying inconsistencies across linked returns. Strengthening these controls is important because consistency over time and accurate cross-return validation are now baseline expectations.
The FCA’s examples and previous supervisory feedback should also be used to inform any enhancements. Where weaknesses are identified, or where a data quality notification is received, firms should put appropriate plans in place to address issues and improve the accuracy of future reporting. Firms should have arrangements in place for appropriate escalation and action if errors are found that could materially affect their capital requirements. Focusing on underlying process weaknesses, rather than only correcting individual errors, will help reduce repeated failures and strengthen wider prudential governance.
Next steps
The FCA will email a data quality notification to firms who failed at least one of their tests. Additionally, the FCA will consider whether to add further system-level validations or pop-up guidance in its submission platform, RegData.
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