Our blog in January focused on the FCA’s reminder to firms of their obligation to regularly review their regulatory permissions to ensure they are up to date and are removed where they are not needed. The issue was emphasised again in a speech delivered in April by Charles Randell, the Chair of the FCA and PSR, to the Finance & Leasing Association.
Charles Randell underlined in his speech that the FCA needs to make sure that authorised firms are good enough. Over the last seven years, the number of firms regulated has more than doubled and it continues to grow as the FCA’s responsibilities are widened. The recent review into failed mini-bond issuer London Capital & Finance highlighted the risks to investors from firms that exploit the “halo effect” of FCA authorisation. This means that when the FCA does authorise firms, it needs to know whether they are using their authorisation and what for and that it needs to remove quickly the authorisations of firms that are not using them or which are misusing them.
Charles Randell confirmed that the FCA is already acting in this area so that a firm with FCA authorisation will have to “use it or lose it”.
The FCA expects firms to notify material changes to their activities and to apply to make any necessary changes in a timely way. It has the power to cancel a firm’s Part 4A permission if it has not carried on a regulated activity for at least twelve months, and it has pointed out that reviewing permissions and maintaining only those that firms need helps to assure firms that they will continue to meet the threshold conditions, are demonstrating effective oversight of their business, meet their obligations under the Senior Managers Regime and are providing accurate information to consumers. Firms are also required to provide an annual attestation that the information held on the Financial Services Register (which includes permissions) is accurate.
If you’d like to know more about how we can help you with your regulatory permissions arrangements, or any other regulatory compliance issues, our expert team is here to help.
Contact us today on 0207 436 0630 or email info@thistleinitiatives.co.uk.