FCA Authorisation: Navigating the Path to Success
Applying for FCA Authorisation can be a daunting and complex undertaking with no guarantee of success; 1 in 5 firms which applied for authorisation during 2021 were refused, rejected, or withdrew their application after discussions with the regulator.
The FCA has made no secret of the fact that it is continuing to apply its standards more robustly when considering applications for authorisation. This approach is consistent with the FCA’s ongoing Transformation Programme which underpins its ambition to become a more innovative and assertive regulator.
One important change that recently (November 2021) came into play is a reform to the regulator’s formal decision-making arrangements: the FCA has moved some of its key decision making from its Regulatory Decisions Committee (RDC) to its senior managers. This fresh approach is intended to deliver a more efficient means of tackling firms and individuals who do not meet the FCA’s mandatory standards as managers can respond more quickly to prevent or stop consumer harm.
Crucially, this means that FCA staff will now be empowered to make some important decisions, including the final decision about a firm’s application for authorisation or an individual’s application for approval.
Getting FCA Authorised – What are the Challenges?
Applicants must meet a range of requirements before being allowed to operate in the UK market.
The FCA will need to be satisfied that, amongst other things, an applicant firm is “ready, willing and organised” to be authorised, can meet the FCA’s Threshold Conditions for Authorisation, and will fully comply with its Principles for Businesses. This can mean that at the application stage, applicant firms can expect to see their business plans, risks records, budgets, resources, systems, controls, and key staff (specifically the necessary qualifications and experience they have to carry out their roles effectively) all subject to scrutiny.
Since the regulator is increasingly keen to flex its regulatory muscle, the challenge to ensure the submission of a “complete” application can be a significant one. Recent changes in decision-making powers have been made to, in effect, streamline the process by which the FCA can decide to refuse an application. (Despite this, applicants may experience delays in receiving a decision as there are currently high volumes of applications on the FCA’s books.)
Frequent examples of issues that can be encountered along the way include:
|Challenge||Significance For Firms|
|Whether an application is deemed to be “complete” or “incomplete” on submission||This will be largely determined by the question of whether the firm has submitted all correct (and fully completed) forms relevant to the application as well as providing all necessary supporting documentation to the required standard. The distinction here (complete vs incomplete) will have an important bearing on the statutory timescale that the FCA is afforded in which to make its decision.|
|Defining regulated activities||Firms must ensure that (1) the correct regulated activities for which the firm seeks permission have been selected by the applicant, and (2) that these give an accurate reflection of the regulated business that the firm intends to undertake. This will be an important consideration for the FCA in firming its view on whether the firm is ready, willing, and organised enough to be authorised.|
|Providing all required forms and supporting information||The issue of perceived non-disclosure of relevant information can present a serious obstacle to the smooth progression of an application, particularly given the regulator’s expectations as set out in Principle 11 (Relations with regulators) of its Principles for Businesses.|
|Responding to “fit and proper” type questions openly, honestly, and fully
Firms should not overlook the possibility of post-submission activity once their application has been allocated to an FCA case officer. As there is no prescribed or finite pool of questions that may be raised during the authorisation process, firms should be ready to provide prompt, comprehensive, and accurate responses to questions that may be asked of them post-submission.
How Complyport can help
Compliance assistance can be invaluable to a firm setting out on the road to regulation, especially against a dynamic backdrop of ever-updated expectations and requirements. (For example, at the time of writing the FCA has just implemented its revised fee structure for firms seeking authorisation.)
Additionally, achieving the goal of FCA authorisation is not the end of the story – if anything it instead marks the end of the beginning. Once authorised, firms must continue to meet the FCA’s standards and rules and achieve good outcomes.
Complyport is a market leader in FCA authorisations and have successfully assisting in over 1000 applications. Over the last 20 years, we have provided guidance and advice on permissions required, outlined the amount of regulatory capital the new firm will need and project managed the building of the application pack.
Once a firm is successfully authorised, Complyport’s expert consultants assist firms in remaining compliant with regulation as well as advise them on how to meet and adapt for upcoming regulatory change. We are currently providing regulatory support to over 600 regulated firms on an ongoing basis globally.
Click here to learn more about Complyport’s FCA authorisation support and to book a free consultation meeting.
Complyport is the City’s market leading consulting firm supporting the UK financial services industry for over 20 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.
Complyport advises and assists firms to become authorised and to comply with the rules and requirements of regulators on an ongoing basis. Our vision is to be there for our clients every step of the way, helping them change, grow, and excel through expertise, insight, and innovation, and in so doing to become our clients’ most valued supplier and trusted advisor.
With presence in the UK and EU, as well as via our Associates Network, Complyport can assist firms across multiple jurisdictions.
Complyport’s multidisciplinary consultants possess deep expertise in their field, having acted in FCA skilled person reviews, as expert witnesses in legal cases and as expert investigators for firms or their legal advisers.
Day to day, we conduct audits and reviews of a firm’s products, processes, policies, and procedures to identify scope for business, to determine the impact of regulatory developments and to verify compliance with local regulations. Complyport can also assist firms by providing personnel to cover all the key compliance functions including resourcing individuals to be registered as your Compliance Oversight Function (SMF16) and/or Money-Laundering Reporting Officer (SMF17).
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