So you’ve got a business idea and you’re going to go for it. But you realise that by doing it, you’re going to have to be authorised by the FCA because you’ll be carrying on regulated activities.
So now what?
Well, you should bear in mind that the FCA processed 1,120 applications for authorisation in 2020, all of which take six months for the FCA to review (unless they’re deemed incomplete). That’s a lot of work to get through, so it’s important that you do your best to make the regulator’s life easy by submitting a complete application which demonstrates that you know what you’re doing. The alternative is that your application gets put to the bottom of the slush pile.
So here are our top tips for ensuring a smooth ride through the authorisation process.
- Make sure you get an opinion from a lawyer or compliance consultant on the regulated activities you’ll need to apply for permission to perform. This should also confirm which client categories and investment products you’ll seek permission for as well as any exclusions you should be looking to apply to those activities. Getting this wrong in your application indicates to the FCA that you don’t really know what you’re doing and can set your relationship with the regulator off on the wrong foot.
- Make sure your Regulatory Business Plan is as in-depth as you can possibly make it. Don’t hold anything back and certainly don’t hide anything. The FCA wants to know all about your ownership and organisation structure, the rationale and projections for your business, how qualified your directors and employees are to carry on the activities you’re applying for and, most importantly, how you’re going to make sure that your customers are treated fairly. Failing to provide adequate detail in this document is the single biggest reason for applications being deemed “incomplete”, which gives the FCA 12 months to determine your application, instead of the 6 months it has for complete applications.
- Fill out the right forms! Simple right? Not really. There’s a lot of forms to fill out and you’ll need to supply a lot of supporting documentation. The forms aren’t the same for all firms either – you’ll need to fill in the forms relevant to the activities you’ll be performing and the size and complexity of your business. Alternatively, you could take the stress out of the process and get us to help you.
- Build a rapport with your case worker. You won’t get one right from the off. It usually takes a good few weeks before you’re told who’ll be reviewing your application. But, importantly, you’ll get the chance to get in touch with them through Connect (the FCA’s application management system). So say “hi!”, tell them that you’ll be on hand to help them with responses to any questions they might have and that you’ll do so promptly. Being on friendly terms and being transparent really helps grease the wheels.
- Be ready to prove how you’re ‘ready, willing and organised’. The FCA expects firms to plan and take seriously how they’ll meet the standards of the regulatory system before they apply for authorisation. It assesses this by considering:
- what you’ve done when preparing to submit an application (positive factors indicate reading and showing comprehension of material on the FCA website, engaging lawyers or compliance consultants)
- your attitude (positive factors include being open and honest in dealings, demonstrating initiative to understand regulatory duties)
- whether you have all supporting documentation prepared and the necessary arrangements in place to comply with regulations from the date on which you obtain authorisation.
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