The guide, known as WDPG, shows what an effective plan “might include”; it does not itself require one (WDPG 2.1.1). The requirement comes from the rules for each type of firm, and the FCA uses a firm’s wind-down planning when it judges whether the firm holds adequate financial resources (TR22/1 paragraph 2.9). Download the Word outline, which follows the structure below.
Which FCA firms need a wind-down plan?
Every FCA solo-regulated firm is expected to have the resources to wind down in an orderly way, and investment firms and payments firms have specific expectations to meet. The FCA ties the general expectation to the appropriate resources threshold condition, COND 2.4, and says part of the role of adequate financial resources is to enable an orderly wind-down (TR22/1 paragraph 2.2).
| Firm | Where the expectation comes from | Review |
|---|---|---|
| MIFIDPRU investment firm | MIFIDPRU 7.5.7R and 7.5.9R, as part of the ICARA process, with the WDPG and FG20/1 as guidance (7.5.8G) | ICARA process reviewed at least every 12 months and after a material change (7.8.2R) |
| Payment or e-money institution | FCA Approach Document (May 2026), paragraphs 3.73 to 3.76; CASS 10A resolution pack for safeguarding institutions since 7 May 2026 | At least annually, and when a change could materially alter how the firm would wind down (3.75) |
| Other FCA solo-regulated firm | COND 2.4, with the WDPG and TR22/1 as guidance | A living document refreshed after material change (WDPG 3.1.5); the guide’s example of effective practice is a review at least once a year (WDPG App 12) |
| Non-systemic PRA-regulated bank or building society | A solvent exit analysis instead, under chapter 7 of the Recovery Plans Part and SS2/24 | After a material change and at least every three years |
Source: FCA Handbook, MIFIDPRU 7 and WDPG; FCA, Payment Services and Electronic Money: Our Approach, version 8, May 2026; FCA TR22/1; PRA Rulebook, Recovery Plans Part, rule 7.3.
Banks and building societies regulated by the PRA follow a different route, covered in our article on solvent exit analysis.
What does each section cover?
Each section of the template answers one part of the guide. The WDPG’s quick reference guide, appendices 1 to 12, breaks wind-down planning into steps, and the FCA says the finished plan will be easier to use if it is simply structured, with sections such as the governance process, the operational analysis, the revenue and cost schedule and the resource assessment (WDPG App 12.1.2).
| Section | What it covers | WDPG reference |
|---|---|---|
| 1. Ownership and approval | The governing body’s approval, the accountable owner and the working group that prepares the plan | 3.1.4, 3.2.5; App 2, App 3 |
| 2. Business and operating model | How the balance sheet makes money, sources and uses of capital and liquidity, areas that are hard to wind down, and dependencies on the group and third parties | App 4 |
| 3. Wind-down scenarios and management information | Severe, relevant scenarios that would make the firm unviable, found through reverse stress testing, and the information to monitor | 3.3, 3.4; App 5 |
| 4. Governance, indicators and triggers | Who decides, on what information and at what thresholds; when the FCA is told | 3.5; App 6 |
| 5. Impact assessment | Customers, counterparties, markets, employees and third parties such as landlords, with mitigations; the Consumer Duty continues during wind-down | 3.6; App 7 |
| 6. Operational analysis | The sequence of actions from the decision to the cancellation of permission, with owners and durations | 3.7; App 8 |
| 7. Time and costs | A month-by-month schedule of revenue and costs for the whole wind-down period | 3.8.7; App 9 |
| 8. Resource assessment | Financial and non-financial resources needed against those held, including key staff and outsourced services | 3.8; App 10 |
| 9. Special considerations | Client money and custody assets, the communications plan, groups and overseas business | 4.1 to 4.5; App 11 |
| 10. Cancellation of permission | What the FCA will check before it cancels the Part 4A permission | 3.9 |
| 11. Testing, review and approval | How the plan is tested, reviewed and kept current | 3.1.5; App 12 |
Source: FCA Handbook, Wind-down Planning Guide, WDPG 3 (updated 26 June 2026), WDPG 4 and WDPG App 1 to App 12.
Two annexes in the outline add what the guide leaves to other rules. For a MIFIDPRU investment firm, the own funds and liquid assets the wind-down needs, the wind-down triggers and the summary that goes into the ICARA document. For a payment or e-money institution, the ten items the FCA lists in paragraph 3.73 of its Approach Document, from identifying customer funds and returning them promptly to realistic triggers for seeking advice on entering an insolvency process.
How do you cost a wind-down?
Month by month, from the board’s decision to the cancellation of permission, with cash shown separately from capital. The guide’s example of effective practice is “a month-by-month schedule of revenue and costs”, itemised and conservatively estimated; a quarterly estimate, it notes, makes it hard to tell whether the firm could meet its expenses each month (WDPG App 9).
The costs to include are the ordinary ones of keeping premises and systems running, and the extraordinary ones of closing: legal and professional fees, insolvency practitioner fees, redundancy and retention payments, pension fund deficits, lease and other termination penalties and the costs of breaking contracts (WDPG 3.8.7; App 9). Income shrinks once the decision is made, because the firm should not normally take on new clients (WDPG 3.5.4). Payments firms should also allow for potential redress and litigation costs, depleted revenue and impaired asset quality (Approach Document paragraph 3.74).
The FCA’s thematic review of wind-down liquidity is the most practical guide to the cash side. Firms that modelled the whole wind-down generally forecast cash daily for the first two weeks, weekly to the end of month three and monthly after that, because the largest mismatches come early (TR22/1 paragraph 3.16). A firm can be cash positive over the whole period and still face significant timing mismatches (paragraph 3.6); among non-bank lenders the FCA saw them in month one, when retention payments, professional fees and redundancy payments all fall due (Annex 1). The guide’s example of less effective practice is a firm that “only assesses its capital adequacy” and not its ability to pay each month’s bills (WDPG App 10).
For a MIFIDPRU firm the result sets a floor. The firm must use its wind-down analysis to assess the own funds and liquid assets an orderly wind-down needs, and the answer cannot be lower than its fixed overheads requirement or its basic liquid assets requirement (MIFIDPRU 7.5.9R). Where the basic requirement would not fund the early stages, the firm may need to hold more liquid assets for the gap (MIFIDPRU 7.7.5G).
Which triggers should start it?
Quantitative ones, worked back from the resources the wind-down needs. In its review the FCA found firms that relied on qualitative statements with no actual wind-down trigger, triggers disconnected from risk appetite, and triggers set “with no reference to the financial resources required to complete a wind-down” (TR22/1 paragraph 3.30).
The good practice it describes is simple to state. Triggers reflect the resources needed to finish the job: “if the firm needs £5m of cash to complete its wind-down, the firm should consider winding down once it reaches that cash threshold”. They come from reverse stress testing, include forward-looking measures such as cash forecasts, appear in regular management information, and each one is a decision point for the board (TR22/1 paragraph 3.31). The guide adds that a firm should act swiftly and “not wait until breaching threshold conditions” (WDPG 3.3.5).
MIFIDPRU sets the outer limits for investment firms. The own funds wind-down trigger is the fixed overheads requirement, unless the FCA sets another amount, and the liquid assets wind-down trigger is the basic liquid assets requirement (FCA Glossary; MIFIDPRU 7.7.17G). Below either, the FCA would normally expect the firm to start winding down unless the governing body has determined there is an imminent and credible likelihood of recovery (MIFIDPRU 7.5.10G). The early warning indicator for own funds sits at 110% of the own funds threshold requirement unless the FCA sets a different level (MIFIDPRU 7.6.12G). Payments firms should set “realistic triggers to start a wind-down” and separate triggers for seeking advice on insolvency (Approach Document paragraph 3.73).
How often should it be tested?
The FCA sets no fixed testing cycle, but it says testing is “the best way of showing the firm’s Board/governing body, as well as the FCA that the plan and process is credible and operable” (TR22/1 paragraph 1.4). Review expectations are annual: at least once every 12 months for the ICARA process, at least annually for payments firms, and at least once a year in the guide’s example of effective practice (MIFIDPRU 7.8.2R; Approach Document paragraph 3.75; WDPG App 12).
A test can be a walk-through of the decision with the people who would take it, or a run of the cash model through a fast-moving scenario. For safeguarding institutions there is a hard number to test against: each document in the CASS resolution pack must be retrievable within 48 hours of an insolvency practitioner’s appointment, or of a decision or regulator’s request to retrieve it (CASS 10A.1.7R). Timing that retrieval is a quick, revealing test.
How does it link to the ICARA?
For a MIFIDPRU investment firm the wind-down plan is part of the ICARA process, and its numbers set a floor under the firm’s own funds and liquid assets. The overall financial adequacy rule requires a firm to hold enough to remain viable through the cycle and to ensure that “the firm’s business can be wound down in an orderly manner” (MIFIDPRU 7.4.7R).
- The ICARA must identify the steps and resources for an orderly wind-down in a realistic timescale and evaluate the harms it could cause (MIFIDPRU 7.5.7R).
- The wind-down planning must be consistent with the own funds and liquid assets assessed as necessary for wind-down, and with the recovery actions and the point at which no further recovery is feasible (MIFIDPRU 7.4.12G).
- The ICARA document includes an overview of the wind-down planning, with required actions, timelines and key assumptions (MIFIDPRU 7.8.7R).
- In a group ICARA, each MIFIDPRU firm keeps a separate wind-down plan and applies the triggers individually (MIFIDPRU 7.9.5R).
- A notification that own funds have fallen below the wind-down trigger must state the firm’s intentions on activating its wind-down plan (MIFIDPRU 7.6.11R).
Our ICARA service covers the wider process, and our guide to what an ICARA is explains the harms and threshold requirements. Our wind-down planning service writes, reviews, costs and rehearses the plan.
Questions readers ask
When does the wind-down period start and end?
It starts when the governing body makes the formal decision to wind down the regulated business, and ends when the FCA cancels the firm’s Part 4A permission (WDPG 3.2.2 and 3.2.3). Planning also covers what comes before the decision: the scenarios, indicators and management information that tell the board it is time (WDPG 3.2.4).
Who approves the wind-down plan?
The firm’s governing body. The guide describes the end product as a documented plan “approved by the firm’s governing body”, with a nominated person keeping it current (WDPG 3.1.4), and suggests the governing body approves every material revision (WDPG 3.1.5).
What will the FCA check before cancelling permission?
Whether cancelling would harm customers or disrupt markets, whether long-term commitments have acceptable arrangements, whether complaints are resolved or provided for, whether all client money and assets have been returned under the CASS rules, and whether any FCA fees are outstanding (WDPG 3.9.1).
Can a group have one wind-down plan?
A group can plan together as long as the planning covers each regulated firm in it, including how each would be wound down and how the entities interact (TR22/1 paragraph 2.8). In a group ICARA, each MIFIDPRU investment firm still needs its own wind-down plan and applies its triggers individually (MIFIDPRU 7.9.5R).
Sources: FCA Handbook, Wind-down Planning Guide, WDPG 2.1.1, 3.1.4, 3.1.5, 3.2.2 to 3.2.5, 3.3, 3.3.5, 3.4, 3.5, 3.5.4, 3.6, 3.7, 3.8, 3.8.7, 3.9.1 and 4.1 to 4.5 (WDPG 3 updated 26 June 2026) and WDPG App 1 to App 12; FCA Handbook, MIFIDPRU 7, 7.4.7R, 7.4.12G, 7.5.7R to 7.5.10G, 7.6.11R, 7.6.12G, 7.7.5G, 7.7.17G, 7.8.2R, 7.8.7R and 7.9.5R; FCA Glossary, own funds wind-down trigger; FCA Handbook, CASS 10A (updated 7 May 2026), CASS 10A.1.7R; FCA, Payment Services and Electronic Money: Our Approach (version 8, May 2026), paragraphs 3.73 to 3.76; FCA TR22/1 Observations on wind-down planning: liquidity, triggers and intragroup dependencies (11 April 2022), paragraphs 1.4, 2.2, 2.8, 2.9, 3.6, 3.16, 3.30 and 3.31 and Annex 1; PRA Rulebook, Recovery Plans Part, rule 7.3. Accessed 10 October 2026.
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