The FCA has recently released an update relating to their authorisations case work, and explaining the circumstances that can impact their efficiency in meeting their statutory and voluntary timelines.
Once more the FCA has highlighted the importance of operating a robust gateway in order to deliver consumer protection and ensure competitiveness in the market. The regulator listed the following areas of authorisations case work where they have struggled to meet their statutory deadlines and voluntary targets in 2021/22:
Near target
- Authorisation applications – Part 4A Permission (Statutory)
- Money laundering registrations (Statutory)
- Variation of permission (Statutory)
- Change in Control (Statutory)
Other service metrics
- Approved Person Status (Statutory and Voluntary)
- Payment Services Regulations and Electronic Money Regulations (Statutory)
- Appointed Representatives (Voluntary)
- Mutual Society Registrations (Voluntary)
As explained by the FCA, a range of factors have caused the delays in progressing these cases, with the most important ones being:
- Increased scrutiny at the gateway – More time devoted to researching possible financial irregularities and conducting holistic reviews of firms business models have played their part in scrutiny of applications now taking longer. One headline result of this increased scrutiny is that across 2021/22 the number of firms that were not granted authorisation was up from 1 in 14 in 2020/21 to a figure of 1 in 5.
- Incomplete or poor-quality applications – This was another big issue for the FCA, especially with applications for Money Laundering Registrations, Payments Services Regulations and Electronic Money Regulations. For crypto-asset business applications, 65% were deemed to be of poor quality in terms of governance and systems and controls, which resulted in the firms not being registered.
- Substantial increase in Approved Person Status applications – This resulted from the expansion Senior Managers and Certification Regime (SM&CR).
The FCA reports that their mission to become a more assertive, innovative, and adaptive regulator, has prompted them to take steps to improve their quality of service and customer experience when dealing with applications.
They have reportedly reduced their “live” caseload by around 47% since December 2021, and are aiming to fully meet their statutory service metrics by the end of 2022/23. For cases that are of complex nature, the FCA indicated that additional time may be needed for greater scrutiny and engagement in order to meet their wider objectives.
In the case of applications for a Variation of Permission, FCA reports that it met their deadline 99.8% of the time, missing it in just 3 out of 1254 cases as a result of their complex nature.
Improving assessment times
A strategic transformation activity programme has been set in place by the FCA to ensure they meet their service metrics, and ensure improvement of the authorisations gateway.
Actions that will be taken include the following:
- Increased capacity and capability – For the previous fiscal year, the FCA had recruited an additional 95 permanent staff, and had also appointed financial analysts with market expertise in key areas to help train and mentor the other staff. This resulted in faster allocation to case officers and a decrease in caseload. A further 30 case officers are expected to be hired by the FCA for 2022/23.
- Transforming the application experience – Digitisation of authorisation forms, data enrichment, and validation, has resulted in improvements to the customer experience during the application process. There are ongoing steps to reduce unnecessary steps and improve the journey – an example here is a revised Senior Management Functions (SMF) form which is currently in progress, with others rest following suit.
- Systems improvements – An upgrade to the current FCA case management systems is underway, and promises a better user experience by 2023. This will result in the case officers handling cases more efficiently, reducing manual effort, increasing automation, and enhanced response times. Triage processing changes are also being explored.
- Improved communication and engagement – After gathering feedback from firms seeking registration under 5MLD and Funeral Plans, this has shown that firms need support in understanding better what it means to be ready, willing, and organised before applying for authorisation. As a result, the FCA will seek to better its engagement and communication through their website and customer support. An enhanced supervision approach is being developed for high-growth and innovative firms, to identify and address potential harm arising at the newly authorised stage.
- Planning for remit increases – From their experience with Crypto-asset and Funeral Plan firms seeking authorisation, FCA has recognised the importance of having sufficient time to plan etc. for new sectors entering its remit. This includes:
-
- More work to understand the size and market that comes within their perimeter
- Engage with the sector to manage expectations and explain what means to be regulated, especially to firms who are being newly introduced to regulation
- Apply sufficient scrutiny and work with firms to ensure they are ready, willing and organized prior to their application.
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.
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.
About Complyport
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).
Our clients tell us we live our values; we are driven, agile and collaborative.
