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.
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:
The actions the FCA may take against these firms may involve:
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:
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:
Firms whose FCA authorisation application is refused or withdrawn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fails to meet the Threshold Conditions/Conditions for Authorisation will have its application for FCA authorisation withdrawn if the firm does not voluntarily withdraw it.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.
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.
Contact us today on 0207 436 0630 – or email info@thistleinitiatives.co.uk.