FCA authorisation for temporary permissions regime (TPR) firms

Jan 24, 2022 12:00:00 AM

What has happened?

The FCA issued in January 2022 an update on its website in relation to FCA authorisation requirements under the temporary permissions regime (TPR), which, it has emphasised, is only for firms that want to operate in the UK in the long term, are preparing for full FCA authorisation, and that meet the required standards.

What do you need to do?

The FCA explains that it will seek to ensure that firms, where appropriate, cannot expand their UK business while in the TPR, and that if they do not voluntarily leave the TPR, it will take action to remove them.

The FCA update focuses on four scenarios where this would apply:

FSMA firms that miss their landing slot,
firms that fail to respond to mandatory information requests,
firms that do not intend to apply for full FCA authorisation, and
firms whose FCA authorisation application is refused

The actions the FCA may take against these firms may involve:

taking steps to remove the firm from the TPR,
asking the firm to confirm that it has voluntarily stopped undertaking new business (i.e. onboarding new customers) or, if it does not voluntarily agree to this, seeking to use its powers to prevent the firm from undertaking new business,
directing a FSMA firm to apply in a landing slot sooner than the existing landing slot, or
for payments and e-money firms, requesting the firm to specify a date when it will cease to engage in new business – if it fails to do so, the FCA may specify the date.

A firm may avoid these actions if it voluntarily applies to cancel its temporary permission completely and, if eligible, enter the supervised run-off (SRO) mechanism within the Financial Services Contracts Regime (FSCR).

FSMA firms that miss their landing slot

The FCA expects firms to take regulation seriously and to submit their applications for FCA authorisation when asked to do so. A FSMA firm that misses the landing slot will have failed to meet the FCA’s expectations, and the FCA will expect it to either:

take steps to enter SRO if it has UK business to run off, or
apply to cancel its temporary permissions if it has no UK business to run off

Firms that fail to respond to mandatory information requests

Firms that do not respond to mandatory information requests in connection with the FCA authorisation process (that is, those made under section 165 of FSMA or otherwise) may be unable to demonstrate that they meet the Threshold Conditions (or Conditions for Authorisation, for payments and e-money firms). The FCA may then consider that these firms are not fit and proper or capable of being effectively supervised.

The FCA has taken action against a number of firms that have not responded to mandatory information requests and will continue to do so.

Firms that do not intend to apply for FCA authorisation

The TPR was designed to ensure continuity of service for UK customers. It enables firms to transition from the passporting regime to the full FCA authorisation regime so they can, temporarily, provide that service to UK customers while they seek authorisation or wind down their business.

A firm will need a valid reason if it does not intend to apply for full FCA authorisation; if it does not have one, the FCA will expect it to:

take steps to enter SRO if it has UK business to run off, or
apply to cancel its temporary permission if it has no UK business to run off

Firms whose FCA authorisation application is refused or withdrawn

A TPR firm that fails to meet the Threshold Conditions/Conditions for Authorisation will have its application for FCA authorisation withdrawn if the firm does not voluntarily withdraw it.

If a firm has existing UK regulated business to run off, the FCA will expect it to voluntarily cancel its temporary permission and enter SRO. If it does not do this, the FCA may take action to remove the firm from the TPR.

If a firm’s FCA authorisation application is refused or withdrawn, it should not reapply. However, it may reapply for full authorisation while in SRO.

How can we help you with FCA Authorisation?

If you’d like to know more about how we can help you with your TPR firm FCA authorisation arrangements, or with any other regulatory compliance issues, our specialist team is here to help.

Blog