The FCA published last week its “good and poor practice” guidance on applications for authorisation and registration. The publication is intended to assist firms in understanding the regulator’s expectations of applicant firms and to help raise the quality of the applications the FCA receives.
The piece sets out useful observations on three key elements applicable to all applications.
1.Firms should have staff with the appropriate skills, experience and capacity
The FCA highlights that good application practice includes firms:
- Undertaking their own suitability assessment of their Approved Persons to a high standard. Firms should demonstrate that individuals have a firm grasp of their obligations once authorised and that they have the right to work in the UK;
- Providing a clear ownership structure chart to enable identification of controllers and that the firm making the application has genuine UK business operations; and
- Demonstrating that members of staff can discharge their responsibilities effectively. Firms are expected to proactively recognise any gaps in resources at the point of submitting the application and demonstrate how they intend address the gaps within an indicative timeframe.
2.Firms should have robust policies that document their processes and procedures
Good application practice outlined by the FCA includes:
- Providing a comprehensive regulatory business plan, including sound justifications for the regulatory permissions being sought, and (where relevant) giving due consideration to the Consumer Duty and the risks posed to customers under a range of likely customer scenarios (e.g. vulnerable customers).
- Being able to produce policies and procedures for inspection which are sufficiently tailored to the applicant’s business and documenting how the firm will comply with the specific regulatory requirements that apply to the firm.
3.Firms should have appropriate financial resources for the nature and scale of their business
The FCA notes that good practice includes providing complete and accurate financial forecasts in a format that is easy to understand, including relevant notes and assumptions, together with providing the relevant evidence of funding arrangements to demonstrate that it can meet its prudential requirements and summarising any contingency plans.
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