Which FCA principle requires the firm to maintain adequate financial resources?

• A. Client assets protection
• B. Financial prudence
• C. Management and control
• D. Consumer duty

Answer: (B)

Maintaining adequate financial resources is about ensuring the firm has enough capital and liquidity to meet its commitments, absorb potential losses, and continue operating even under stress. This protects clients and the integrity of markets because a firm that can’t meet its liabilities or keep services running could jeopardize client money and trust.

The principle that requires this is the one that emphasises financial prudence—keeping sufficient financial resources to operate safely and fulfill obligations. Other options relate to different duties: protecting client assets concerns safeguarding clients’ money and property; consumer duty focuses on fair treatment and clear communication to clients; management and control deals with governance and oversight. None of these specifically mandate maintaining the firm’s own financial resources in the way financial prudence does.