The FSA announces progress on single authorisation process

http://www.fsa.gov.uk/pdf/cp20resp.pdf The FSAs Director of Authorisation, David Kenmir said:

"The Qualifying Conditions for Authorisation (QCA) are key building blocks of the FSAs regulatory approach. It is encouraging that the industry is supportive of our approach and their responses have been invaluable in fine-tuning the regime.

Only firms that are able to meet the QCAs will be granted authorisation. This will provide a safeguard for consumers and contribute to confidence in the integrity of financial markets."

Feedback

Respondents generally welcomed the proposals, which were seen as reasonably balanced, and agreed with the overall approach taken by the FSA. Respondents did, however, suggest some fine-tuning to the guidance and where possible the FSA has taken this on board. The two key changes to the guidance are:

The guidance has been changed to reflect more clearly the fact that the process of application will be an interactive, discursive one in which issues will be dealt with on a case by case basis.

Absolute tests have been replaced by reasonableness tests in a number of places in the guidance: for example, firms will be required to take reasonable steps to identify and consider the various risks they will encounter.

Next steps

The revised QCA guidance will be published for consultation, together with the Authorisation Manual, in the first quarter of next year. The FSA will consult shortly on the next part of the authorisation framework set out in the new legislation: the regime for granting permission to undertake a particular kind of regulated activity (the Permission Regime).

Notes for editors

Any person carrying on a regulated activity in the UK will need to be authorised by the FSA. Instead of the different authorisation procedures under the existing system, there will be a single application process for all types of firms, whatever type of regulated activity they intend to carry on.

Authorisation will follow automatically from the grant of permission to undertake a particular kind of regulated activity. In order to obtain permission, an applicant will need to meet the Qualifying Conditions for Authorisation.

The five Qualifying Conditions for Authorisation can be divided into two categories. The first two, relating to legal status and location of offices, must be met. The other three QCAs are phrased in more general terms that provide discretion to the FSA. These cover close links, adequate resources and suitability.

Authorised firms will be required to comply with the FSAs Principles for Business. A policy statement setting out the latest version of the Principles for Business will be published shortly.

Firms authorised to carry out business under the current legislation should not, in general, have to reapply for authorisation. The FSA is currently awaiting the publication of a draft of the transitional provisions in the Bill from H M Treasury. After we have had the opportunity to consider these transitional provisions in detail, we will be publishing full details of our procedures in a Grandfathering Policy Statement.

The Financial Services and Markets Bill received its Second Reading in the House of Commons on 28 June and is expected to become law during the first half of 2000.