Are you ready, willing and organised ?

The CP explains how the FSA intends to address its responsibility under the Bill to ensure that applicants meet the QCAs before they are granted authorisation. By ensuring that firms are ready, willing and organised to comply, the FSA will safeguard the interests of consumers and the industry.

The FSAs Director of Authorisation, David Kenmir, said:

"The proposed standards for authorisation will form a cornerstone of the FSAs regulatory work for years to come. Together with the Principles for Firms and the Principles for Approved Persons, they provide the foundation for the regulatory processes of authorisation, supervision and enforcement."

The FSA authorisation process will affect firms which apply to the FSA once the Bill comes into force (during year 2000). Firms authorised under existing legislation will be grandfathered and a separate Policy Statement on this process will be issued in due course.

QCAs will be monitored on an ongoing basis and the FSA will consider taking action to withdraw authorisation from a firm if it ceases to comply with one or more QCA.

Details of QCAs

There are five QCAs which can be divided into two categories. The first two, relating to legal status (page 10 of the CP) and location of offices (page 11) prescribe criteria which must be met.

The other three QCAs are phrased in more general terms which provide some discretion to the FSA. These cover close links (page 12), adequate resources (page 13) and suitability (page 15).

Next Steps

Responses to Consultation Paper 20 should reach the FSA by 18 June 1999.

A CP on the operation of a permitted activities regime will be issued during the 2nd quarter of this year.

The FSAs Authorisation Manual will be issued for consultation during the last quarter of this year.

The FSA will publish a policy statement on grandfathering in the last quarter of this year.

Notes for editors

The application process:

Step one: the firm develops a business plan and discusses with the FSA the details of the regulatory requirements that would apply to these activities.

Step two: the firm sends its completed application pack and business plan to the FSA.

Step three: the FSA conducts a detailed assessment of the application to determine whether it satisfies the QCAs. The FSA must determine a completed application within 6 months, or in any event, 12 months.

Step four: a firm granted authorisation will receive a certificate setting out the regulated activities it has permission to carry on.

If the FSA is not satisfied that authorisation should be granted, a Warning Notice must be given to the firm setting out the reasons why. Firms will be given 28 days to make representations to the FSA, which must then decide whether to grant authorisation.

Firms refused authorisation will be provided with a Decision Notice to this effect, giving the FSAs reasons for its decision. Firms may appeal against this in accordance with the provisions of the Bill.