The FSA consults on the permission regime
14/10/1999
The FSA today issues a consultation paper outlining the next stage of development of the single authorisation process. It covers granting firms permission to carry on regulated activities, offer certain types of investments and deal with certain types of customer. The paper asks for feedback on the implementation of procedural clauses in the Financial Services and Markets Bill and on the content and method of publication of the public record of firms and products which are regulated by the FSA.
The paper is available on this website at: http://www.fsa.gov.uk/pdf/cp29.pdf
David Kenmir, the FSAs Authorisation Director, said:
"The permission regime, in conjunction with the Qualifying Conditions for Authorisation (QCAs), is an important part of the FSAs regulatory approach. Firms will only be allowed to undertake activities if they are fit and proper to do so. This will contribute directly to the FSAs market confidence and consumer protection objectives.
"The FSA is developing its authorisation and supervision processes in consultation with the regulated community and we look forward to their feedback on this consultation paper. Practitioner input via the trade associations and professional advisers represented on our informal advisory panel will ensure that the Authorisation Manual, which will contain the detailed guidance on the authorisation process, is as user-friendly as possible."
Authorisation process: A firms application should contain a description of the regulated activities it proposes to carry out and an explanation of how it plans to comply with the FSAs regulatory requirements relating to those activities. The FSA will assess this information and will grant permission if it is satisfied the firm meets the QCAs and is ready, willing and organised to comply with the regulatory requirements related to its proposed regulated activities. Once permission is granted, the firm is authorised automatically.
Varying a permission: Firms that wish to undertake further regulated activities will simply apply to their supervision team to vary their permission rather than have to seek a new authorisation. This should be much quicker than the present system because the FSA will already have almost all of the information it needs to make a decision.
The FSA Register: The FSA will maintain a new, easy to understand register of authorised firms that consumers and industry participants will be able to use to find out whether a firm is authorised or not and what activities it has permission to undertake. When an application for permission is granted, varied or withdrawn the FSA will update the register. The FSA is considering whether other information, such as a firms disciplinary record, should be included so that a consumer is able to see all publicly available information about a firm before deciding to enter into a relationship with it.
Next Steps: The Authorisation Manual will contain the detailed guidance on the processes outlined in this consultation paper and in consultation paper 26 on the regulation of Approved Persons. The revised guidance on the Qualifying Conditions for Authorisation, as discussed in the recent response statement on consultation paper 20, will also be published for consultation with the Authorisation Manual. The manual will be published for consultation next year and to ensure that it is as user-friendly as possible the FSA is setting up an informal advisory panel with trade association, legal and accountancy representation.
Grandfathering: Firms authorised under existing legislation will, in the vast majority of cases, not need to apply for authorisation once the Financial Services and Markets Bill is enacted. The FSA will publish a policy statement 7 months before N2 which will explain how information held by the existing regulators will be converted to reflect the terminology in the new legislation. It will also explain the process by which firms will have an opportunity to comment on the information relating to them before N2.
Notes for editors
The members of the Authorisation Manual informal advisory panel are: Paul Smee (AIFA), Mary Francis (ABI), William Mason (BBA), Richard Symington (The CCL Partnership), Tamasin Little (SJ Berwin & Co), Simon Morris (Cameron McKenna), Rachel Kent (Lovell White Durrant), Marcus Sephton (KPMG), Julian Korek (Robson Rhodes) and Nigel ONeill (Chiltern Group).
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.