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Most compliance departments will have higher priorities than double checking their regulatory permissions are correct. But the FCA has firmly pushed it up the list.
The regulator issued a statement last month to remind firms to regularly review regulatory permissions. The recent Charles Schwab CASS fine is an example of why this is important.
Having permissions you don’t need can also be a problem. The FCA has always expected firms to remove any permissions that are no longer used. But the new Financial Services Bill, currently making its way through Parliament, will give the FCA power to act more quickly and decisively where a firm is no longer carrying out an activity for which they have permission. These new powers could result in firms being given just 14 days to explain why they need to retain a permission that they might not be obviously using.
Having permissions you don’t need can also result in unwarranted regulatory attention as well as potentially higher capital requirements than are necessary. And removing unused permissions could have the added benefit of a reduction in the FCA fees you pay.
For most firms, the scope of permission is the FCA’s primary window on what you actually do, so it’s worth thinking about what they see.
If you’re a UK regulated entity it’s important to review your permissions at least annually and apply to remove those that are no longer needed via a Part 4A application. If you have authorisation to carry on activities that you don’t currently undertake, then it’s wise to be ready to explain to the FCA why you need to retain that permission and when you expect to use it.
If you need any help in reviewing or varying your scope of permission, get in touch.
