How to Structure a Wind-Down Plan That Satisfies FCA Solvent Exit Expectations

The FCA now expects every solo-regulated firm to demonstrate it can wind down in an orderly, solvent manner. The tension is obvious: the more credible your plan, the more it can look, to an auditor or a nervous counterparty, like management contemplating cessation. Getting the framing wrong creates real going concern exposure. Getting it right means a plan that is operationally serious, financially resourced, and clearly bounded as a contingent construct.

Key Executive Takeaways

• A credible Wind-Down Plan must show quantified resources, decision triggers and operational sequencing, but must be framed explicitly as a contingent scenario rather than a base case or management intention.
• The going concern risk is created less by the plan itself than by ambiguous triggers, unfunded assumptions and inconsistent language between the WDP, ICARA, board minutes and audit representations.
• Treat the WDP, the solvent exit analysis under the new rules, and the ICARA wind-down capital as one integrated document set with a single owner and a single set of numbers.

Frame the plan as contingent, not intended

The opening pages matter more than executives realise. State clearly that the plan is a regulatory contingency required under WDPG and, for in-scope firms, the solvent exit rules effective from 2025. Say what it is not: it is not a strategic option under active consideration, not a signal of financial distress, and not a base case in the ICARA. Auditors read WDPs. So do rating analysts and large counterparties who invoke information rights. Ambiguous purpose language is the single most common trigger for going concern questions.

Anchor triggers in objective, board-owned metrics

The weakest WDPs use narrative triggers such as "sustained deterioration in profitability". The strongest use quantified, board-approved thresholds tied to the same metrics that drive the ICARA: own funds ratio, liquid asset buffer in days of coverage, client money reconciliation breaches, key person departures above a defined threshold. Distinguish clearly between early warning indicators, which prompt management action, and wind-down triggers, which prompt board decision. Blurring the two creates the impression that wind-down is closer than it is.

Cost the wind-down properly, then fund it

Most plans understate wind-down costs by 30 to 50 percent. The usual gaps: retention payments for critical staff, run-off insurance, extended data retention, legal costs for contract novation, regulatory fees during the exit period, and the tail cost of complaints handling. Build a bottom-up cost model covering the full exit period, typically 6 to 24 months depending on business mix. Then demonstrate that liquid resources cover the peak funding requirement, not the average. This is what supervisors mean by "adequate financial resources for solvent exit", and it is the number the ICARA must reconcile to.

Sequence operational steps against real dependencies

A credible operational plan identifies critical third parties, client-facing obligations, and regulatory notifications in the order they must occur. Novation of client contracts typically drives the critical path. Data migration and record retention obligations extend well beyond operational cessation. Map dependencies explicitly: which permissions can be varied, which require full cancellation, which client segments require FSCS-aware communication, and which staff are retained through which phase. Vague operational sections are where Section 166 reviewers concentrate.

Reconcile language across the document set

The going concern risk crystallises when the WDP, ICARA, board minutes, going concern paper and audit representations use inconsistent language. Appoint a single owner, usually the CFO or COO, to sign off consistency across all five. The going concern assessment should reference the WDP as a regulatory contingency plan, note that no triggers have been breached, and confirm the base case remains continued operation. The WDP should reference the going concern conclusion. Circularity here is a feature, not a bug: it demonstrates governance discipline.

What good looks like

A good WDP is roughly 40 to 80 pages, quantified throughout, with a clear separation between the solvent exit analysis, the operational plan and the financial resources assessment. It is refreshed annually alongside the ICARA, tested through at least one tabletop exercise, and reviewed by the board with recorded challenge. It reads as a serious contingency, not a strategy paper and not a compliance artefact.

The immediate decision point: who owns reconciliation across your WDP, ICARA and going concern paper this cycle, and when will the board see all three together?

Frequently Asked Questions

Does the new solvent exit regime replace WDPG?

No. The solvent exit rules coming into force in 2025 sit alongside WDPG. In-scope firms must produce a Solvent Exit Analysis and, on request, a Solvent Exit Execution Plan. Treat these as extensions of the existing WDP framework, not replacements, and integrate them into one document set to avoid inconsistency.

How do we avoid the auditor raising going concern questions?

Brief the auditor early, before they see the WDP cold. Explain that the plan is a regulatory requirement, not a management contemplation of cessation. Show the trigger framework and confirm none are breached. Ensure the going concern paper explicitly addresses the WDP and reaches a clear conclusion.

How detailed should wind-down costs be?

Detailed enough that a supervisor can trace each material cost to an assumption and a source. Aggregate figures without underlying build are the most commonly challenged element in supervisory reviews.

Who should own the WDP?

Accountability sits with a named SMF, typically the CFO or CEO. Day-to-day ownership can sit with risk or finance, but the SMF must be able to defend the numbers, the triggers and the operational sequencing personally.

How often should we test it?

At least annually, through a tabletop exercise involving finance, operations, legal and compliance. Document the findings and feed them into the next refresh. Untested plans are visible to supervisors within minutes of the first substantive question.