PROTECTING THE PERIMETER
Our Authorisations Division is the FCA ‘gateway’ to regulated activities in the UK. At some point during their regulatory lifetime, all UK-regulated firms will engage with us. We expect to make around 40,000 regulatory decisions per year, to ensure that only the right firms, run by the right people, and selling the right products, to the right consumers, are approved to do business.
Our authorisation processes will be clear and straightforward. We will be open with firms and will make bold and timely decisions. The changes to our approach will be set out before Day One and built into the authorisation processes for both dual-regulated (PRA and FCA) firms and FCA-only regulated firms.
Ensuring the high quality of those who enter the industry is a key priority for us and is an effective way of helping to protect consumers, firms and markets from harmful behaviour and financial crime.
We will take forward the FSA’s existing conduct requirements, which will continue to be both appropriate and necessary to achieving good outcomes for consumers and promoting competition.
We know, however, that there is a fine balance to be struck between ensuring high standards at the gateway and making sure we do not stifle innovation and appropriate levels of access for new participants. Review of barriers to entry
We have reviewed the conduct requirements that apply to new banks to ensure they do not pose excessive barriers to entry or expansion. As part of this, we have looked at whether we can make the authorisation process more manageable for firms, while still ensuring they meet the threshold conditions test, which aims to ensure the minimum standards for those doing business in the financial services sector. We will publish our proposals by the end of the year.
Dual regulation
When the FCA and PRA come into effect, they will have separate authorisation functions, but will have a single administrative process for dual-regulated firms.
Firms that are dual-regulated will apply to the PRA unless directed otherwise. When we make authorisation decisions, applications from dual-regulated firms will be considered by both the FCA and the PRA and will follow one of two processes set out below:
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Consent: when a firm applies to the PRA for authorisation or voluntary variation of permission or approved persons, our role will be to give or refuse consent to the PRA. If we do not give consent, the PRA must refuse the application. We will focus our assessment on the issues that have conduct implications, and we will accept the PRA’s view of the financial soundness of the firm.
Consult: when a firm applies for a change in control, a waiver which is materially important to our objectives, passporting, transfer of insurance business or cancellation of permission, the PRA must consult us. The PRA will take our response into account but will not be bound by our view.
We will work closely with the PRA to ensure these processes are as smooth and efficient as possible.
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