The FCA has published its approach to the authorisation and supervision of international firms. The ‘approach document’ is relevant to all international firms that require authorisation in the UK, including those that have applied or intend to apply in the future and those that are already authorised in the UK.
Around 1,500 EEA firms that have entered the UK’s Temporary Permissions Regime and are awaiting FCA instruction to submit their applications will need to understand and comply with these requirements.
The FCA explains how they will assess international firms against minimum standards (FCA Threshold Conditions) when they apply for authorisation and sets out general expectations for these firms. The FCA will consider the international firm’s potential to cause harm (‘risks of harm’) and the level of these risks. The 3 keys risks are:
(i) retail harm – focusing on the protection of UK retail customers;
(ii) client asset harm – focusing on the impact on UK client assets in the event of firm insolvency and misalignment between UK and home state insolvency regimes;
(iii) wholesale harm – covers potential shocks and risks originating from the firms which affect the stability and integrity of the UK markets.
The FCA will also consider:
- The nature of the firm’s operations and the capability of it being effectively supervised.
- Personnel and decision making and a firm’s ability to comply with the FCA Senior Managers and Certification Regime, governance structures and management oversight arrangements.
- Non-financial resources including the systems and controls.
- The firms home state jurisdiction and how the arrangements in that jurisdiction affect the ability of the firm to meet the relevant minimum standards for authorisation.
Eiger Regulatory Partners can provide experienced Compliance Practitioners and relevant SME expertise (eg client assets, SMCR, retail regulations, wholesale conduct) to support and guide you through the authorisation process and in the creation of the required governance, controls and documentation required for submissions.