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As the temporary permissions regime draws to a close, firms looking to operate in the UK permanently will need to meet the FCA’s exacting standards. Although the FCA authorisation process is challenging, those TPR firms who plan ahead of their landing slot will benefit in the long run.
The UK is open for business
In our recent joint webinar, the UK Department of International Trade reiterated that the UK is open for business. But international firms looking to operate here permanently must also be prepared to understand and comply with our regulatory standards.
FCA authorisation: what the FCA is looking for
During our event, the head of the FCA’s Authorisations Division, Val Smith, reiterated that the FCA is keen to support firms currently operating under the Temporary Permissions Regime in preparing for full UK authorisation. She pointed to a number of resources available to TPR firms, including the FCA’s document: Our approach to international firms. She also gave some practical pointers:
The FCA expects that firms are ready, willing and organised for the authorisation process. They expect high quality applications from firms already regulated elsewhere, so make sure you’re devoting the due time and resource to the process. It’s important that you complete all information up front and that you don’t employ an iterative approach. You must also confirm whether the PRA or FCA is your lead regulator.
A landing slot is the allocated time for a firm to submit their application for authorisation. There are 6 landing slots in 3-month blocks, starting from July 2021. All applications will be received by the FCA by the end of 2022, and are due to be completed by end of 2023. Firms that do not apply during their landing slot will be removed from the Temporary Permissions Regime and must cease new business in the UK. The FCA re-iterates that you should make sure you understand when your firm’s landing slot is and that you have enough time to complete your application.
In addition to a comprehensive and well prepared application and being clear on your landing slot, the FCA reminded firms of some other considerations:
- Inform the FCA of any new contact information for your firm
- You must respond to all information requests from the FCA
- You should ensure your firm has access to the FCA’s Connect (online portal)
- It is vital to obtain jurisdiction specific legal advice on insolvency events and financial redress schemes for consumers
- Consider whether the Financial Services Contracts Regime is more appropriate for your firm
EU firms moving from the temporary permissions regime to being FCA authorised should look to avoid some common pitfalls when applying for UK authorisation, and seize the opportunities that the process presents.
Don’t wait for your landing slot before you begin the work
Firms should take the opportunity to put in some early groundwork on their application to make it more efficient and sustainable – even before they have been assigned a landing slot by the regulator. In our experience, some firms have underestimated the amount of work involved and have left themselves only a small window of time to complete the application, losing efficiency in the process. Getting a head start makes the process more straightforward and less resource intensive. It’s also more cost-effective – the more work you front load, the less work you or external consultants will need to do down the line.
Familiarise yourself with the differences between the FCA and your home country regulator
In this post-Brexit world, there is divergence between the UK and European regulatory environments. In terms of approach, while European regulators tend to employ their priorities in a holistic way, the FCA is more agile, applying focus on specific policy areas and adapting according to changing circumstances. Many European firms will be unfamiliar with this approach, but should be integrating it into their work when applying for authorisation. Similarly, there is increasing divergence between the regulations themselves, the IFPR regime being a good example.
Make sure you familiarise yourself with the key differences in approach and expectation between your local regulator and the FCA, so that your application process runs as smoothly as possible.
The application process can be challenging, but brings rewards
It’s important to remember that the authorisation process isn’t a tick box exercise and should be treated as the wholesale and complex process that it is. Gaining authorisation can be challenging, but it is worth it. Ultimately, the excellent reputation of the UK regulators means that investors and other stakeholders can find it reassuring to know that your business needs to conform with their high standards and expectations.
What happens next? Making sure you’re ready to be regulated in the UK
Once you have been fully authorised to operate in the UK, it’s important to keep your ear to the ground and stay on top of the day-to-day regulatory changes that will impact your business. The process doesn’t end once your application is approved. Things are changing quite rapidly in the UK, IFPR being an obvious example of a regulation regime that started from the same place across the UK and EU but is now diverging substantially in the UK to meet the needs of local firms. Maintaining a real-time understanding of your obligations will therefore make your job far simpler. Planning ahead and considering what you might not know will help give you the peace of mind that you’re ready to be regulated in the UK.
We can help
At Bovill, we’ve been helping firms get FCA authorised for over 20 years. We’re currently working with dozens of EU firms to get ready for their landing slots for FCA authorisation and understand what is involved in being regulated in the UK. We’re also working closely with the FCA and UK Government to help international firms navigate the UK regulatory landscape. Get in touch to find out more.