• Doing business with the FSA
  • How do I get authorised
    • Retail intermediaries

Advisers/arrangers – Wholesale funds

A firm which advises and/or arranges and/or markets collective investment schemes predominately to non-retail customers.

Appointed Representatives

An appointed representative (AR) acts as an agent for a Principal. The Principal must be a firm that is FSA authorised. The Principal must accept full responsibility including any liabilities that might arise from the AR's business. There must be a written contract between the Principal and the AR documenting this arrangement.

Bank

A firm that is intending to accept deposits, and to be a credit institution; but which is not intending to be a building society, a friendly society or a credit union.

Companies House form 88(2)

This form confirms your company is registered with Companies House.

We will need to see a copy of this form but if you have not yet registered with Companies House then you will need to provide this to us once the registration has taken place.

Compliance procedures

You are not required to send these in with the application pack but you will need to have these available to be able to write your compliance monitoring programme that is asked for in this supplement of the application pack.

Connected travel insurance intermediary

A firm, such as a travel agent or airline, that sells insurance alongside a travel product such as a holiday, or a plane ticket.

Contact and standing data

Details covering the following: Trading names, Principal place of business, Registered Office, Complaints contact, Compliance address, Locum (if applicable) and Auditor (if applicable)

Details of professional advisers

If you have decided to use a professional adviser you will need to provide us with their details. We will send all correspondence to you but we will ask in the application if you would like your professional advisor to receive copies of our communications with you.

E-money issuer

An undertaking or any other legal person (other than a full credit institution) which will be an electronic money institution (as defined in article 1.3 of the E-Money Directive), issuing means of payment in the form of e-money.

Small e-money issuer exclusion

Article 9C of the Regulated Activities Order (Persons certified as small issuers) excludes from the regulated activity of the issuing of electronic money and of the requirement to be authorised to carry on this regulated activity any small e-money issuer to whom a certificate has been given by FSA under that article (and whose certificate has not been revoked).

Financial adviser (investments)

You should tick this box if you are intending to carry on business as a financial adviser or a personal investment firm.

Forecast closing balance sheet

This is a balance sheet showing the financial position the applicant firm is forecasted to be in after trading for 12 months as an authorised firm. A balance sheet is a statement of the applicant firm's financial position including its assets and liabilities.

Forecast of firms regulatory capital versus regulatory capital requirements

You must provide a month-by-month forecast showing the position of your firm's regulatory capital against its regulatory capital requirements. When applying for authorisation, you will need to refer to the relevant prudential rules in our Handbook to calculate both your firm's regulatory capital and its regulatory capital requirements.

Has the firm previously traded?

If you have been authorised by us or by another financial services regulatory body you should say yes to this question.

Home finance intermediary

This relates to firms who wish to carry on business in regulated mortgage contracts, home purchase plans or home reversion plans.

Home finance provider

Firms that wish to enter into and/or administer any one or more of the following:

• Regulated mortgage contacts
• Home reversion plans
• Home purchase plans

Home reversion provider

These are firms which enter into a home reversion contract with a consumer to buy his property and become the consumer's landlord under a lease.

Initial Disclosure Document / Combined Initial Disclosure Document

If you intend to carry on mortgage and/or non investment insurance contracts the applicant firm will be required to have an IDD or a CIDD. This must provide details to your customers about your firm and the services you provide. Examples of these can be found in ICOB Annex 1 and MCOB Annex 1 in the FSA Handbook.

Insurance intermediary selling non investment insurance contracts

You should tick this box if you are intending to advise on and/or arrange non-investment insurance contracts.

This term is often used to describe General Insurance. An example of a Non Investment Insurance Contract is a pure protection insurance policy used to cover the term of a mortgage. No monies would be paid out at the end of the term unless the policyholder died during the term of the protected mortgage. There is no investment element at all. Other examples of a non investment insurance contract are:-

• a policy covering accident and sickness only
• a policy covering the payment of legal expenses.

Insurance special purpose vehicles

Any undertaking, whether incorporated or not, other than an existing insurance or reinsurance undertaking, which assumes risks from insurance or reinsurance undertakings and which fully funds its exposure to such risks through the proceeds of a debt issuance or some other financing mechanism where the repayment rights of the providers of such debt or other financing mechanism are subordinated to the reinsurance obligations of such a vehicle.

Insurer

A firm whose main regulated business is one of the following

1. effecting contracts of insurance
2. carrying out contracts of insurance
3. a combination of effecting and carrying contracts of insurance

Investment manager

A firm which manages investments on a discretionary basis.

Latest annual accounts

If the applicant firm is already trading then you must send us a copy of the firm's most recent annual accounts.

Limited Company

Private Limited Company

An entity incorporated by registration under the Companies Act 1985 whose members (i.e. shareholders) have a limited liability towards their company – its name must also end with "Ltd". "Limited liability" means that their liability is limited to paying to the company the price they have agreed to pay for their shares – after the shares are fully paid-up no further liability exists. The company has its own legal personality so is separate from the individual(s) who formed the company and from directors/shareholders.

Decisions affecting the business, the company or its assets are made either by directors or by shareholders. The division of powers between board meetings (directors' decisions) and general meetings (shareholders' decisions) imposes a more formal regime on companies compared to partnerships and sole traders. In private companies the same people are often the directors and the major shareholders.

The company alone is responsible for the debts and obligations of the business, even in the event of insolvency (with some exceptions). There are also more onerous obligations around publicity of company information (when compared to sole traders and partnerships).

Public Limited Company (plc)

To be a plc, the company's constitution must state it is a public company, its name must end with "plc" and it must satisfy requirements as to the minimum amount of its share capital.

A plc may apply to have its shares listed on the London Stock Exchange or on the Alternative Investment Market. This means that a price will be quoted at which dealings in the company's shares will take place.

The structure is broadly similar to a private limited company however there are a number of subtle technical differences including, for example, that plcs must have at least two directors whereas private companies only require one. Some differences in practice include the fact that in a plc:

• there is usually a significant difference in personnel between the shareholders (who are likely to include institutional investors) and the directors (who are more likely to be employees in plcs);
• shareholders find it a lot easier to sell their shares;
• dividends must be paid to their shareholders.

Limited liability partnership (LLP)

A LLP is a recognised legal entity by virtue of the Limited Liability Partnerships Act 2000. LLPs are legal entities which are capable of entering contracts in their own right, and are correspondingly liable for debts under those contracts. Any two people associated for carrying on a lawful business with a view to profit can set up as a LLP.

A LLP has some features of a limited company and some of a partnership. For example, it can have the organisational flexibility of, and a similar tax regime to, a partnership.

However, although the partners of a partnership are liable personally for the partnership's obligations, a LLP (like a limited company) is a separate legal entity that is owned by its members (equivalent to shareholders). It is a structure that allows members to protect their personal assets from the liabilities of the LLP.

Lloyds Managing Agent

As defined in article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order (SI/2001/544) a person who is permitted by the Council of Lloyd's in the conduct of his business as an underwriting agent to perform for a member of Lloyd's one or more of the following functions:

1. underwriting contracts of insurance at Lloyd's;
2. reinsuring such contracts in whole or in part;
3. paying claims on such contracts

Material Interest (close links)

A "material" interest is 20% or more of voting capital. If you have a connected firm and are unsure whether to include it as a close link please check the definition of "close links" in COND 2 in the FSA Handbook. Further guidance is also given in the notes to the owners and influencers appendix.

Monthly cashflow forecast

The cashflow statement shows how a firm is paying for its operations and future growth, by detailing the "flow" of cash into and out of the firm.

The cashflow statement is normally similar to the profit and loss statement but shows the actual financial position ofafirm at any time. Hence if a firm starts with share value of £10,000 then this is the starting figure. Include this in your profit and loss to take it forward and for every month you will have income and expenses deducted, showing you the actual financial position of the company at any time.

Monthly profit and loss account

This is a statement showing the forecast income and expenditure, and hence the profit or loss, of the applicant firm for each month for the first 12 months of trading as an authorised firm.

Opening balance sheet

This is a balance sheet prepared as at the start of the applicant firm's first 12 months of trading as an authorised firm. A balance sheet is a statement of the applicant firm's financial position including its assets and liabilities.

Organisational Structure chart

If applicable this structure chart will need to show controllers, close links, groups and any connections to European Economic Area firms and/or non European Economic Area firms. If you are not sure if you have any of these please wait until you are asked in the decision tree as you will be provided with further guidance.

Partnership

A partnership consists of two or more people formed for the purpose of carrying on a business with a view to profit. Unlike a company, a partnership does not have a legal personality of its own and therefore partners are personally liable for the debts of the firm for the period that they were partners – even after leaving the partnership.

Partners generally share:

• the right to take part in making decisions which affect the partnership or the partnership assets, although they may have agreed that this right shall be limited in some way e.g. sleeping partners who have agreed not to be involved in day-to-day matters;
• the ownership of the assets of the partnership;
• the net profits of the partnership – not necessarily equally; and
• responsibility for the debts and obligations of the business without any limit, although if one does not pay then the other partners must pay his share.

Personal pension scheme providers (including SIPPs)

A firm that is establishing, operating and winding up personal pension schemes – including SIPPs. It may also provide advice on its products.

PII quotation

Professional Indemnity Insurance is needed for all retail intermediary firms. It is necessary for you to obtain a quotation as it is mandatory for the completion of the application pack.

Your PII must cover claims arising as a result of the conduct of the firm itself, but also that of your employees and appointed representatives. Employees include (but are not limited to) partners, directors, individuals that are self-employed or operating under a contract hire agreement and any other individual that is employed in connection with the business. Our rules specify that your firm's policy must cover all claims that relate to business carried out from the date the firm is authorised by the FSA.

Broadly speaking, you can obtain a PII policy from:

1. any insurance company authorised to underwrite professional indemnity insurance policies in the European Economic Area (EEA) or
2. A non-EEA insurance company authorised in a Zone A country (Zone A country is defined in the Handbook glossary) the Channel Islands, Gibraltar, Bermuda or the Isle of Man.

Regulatory business plan

You will need to have information readily available to enable you to answer questions on the following subjects:-

• Background to the applicant and business planning
• Location
• Clients
• Target markets and marketing plan
• Personnel and Internal controls
• Outsourcing with third parties

Securities and Futures firms - complex and non-complex description

Non complex

Firms that wish to carry on the following securities and futures activities:-

• advising and/or arranging only;
• corporate finance advisory only;
• business as a Local only;

Complex

Firms who wish to carry on any other business as a securities and futures firm outside of the above.

Sole Trader

A sole trader operates as an individual without the use of a company structure or partners and has sole responsibility for the actions of the business. Business finances cannot be separated from personal finances insofar as the sole trader has unlimited personal liability and is personally responsible for any liabilities incurred by the business.

A sole trader generally:

• Has the right to make all decisions affecting the business;
• Owns all the assets of the business;
• Is responsible for paying income tax on profits of the business;
• Is responsible for the debts and obligations of the business without any limit.

Staff organisational chart

This is a chart to show that you have an management structure and clear reporting lines. You will be given more details in the core details form of this application pack as to what it should deal with. However, the minimum requirements are the names of significant staff, direct reporting lines and direct reporting lines into the board.

Terms of Business

If you intend to carry on business in investments as a retail intermediary, the applicant firm will be required to have a statement of the terms and conditions under which the applicant firm will carry on regulated business with a customer.

Will the firm be solely owned by its Directors or Partners?

If another individual or firm has a stake in the business (and is not a Director or Partner) they may meet our definition of a Controller. Some Controllers will need to complete an application form. Please see the Authorisation application packs for more information