Blog

In this blog, we look at some of the key issues facing firms today – and those currently attracting the fiercest scrutiny from the FCA. We also suggest some solutions that could help you address these issues.

• • The FCA is looking increasingly hard at governance, and in particular at all firms’ policy implementation, board meetings and risk identification, mitigation and review.
  • Another area of focus is whether individuals can demonstrate sufficient knowledge and experience in relevant fields to prove they are fit and proper for their roles. Meanwhile, additional internal processes required by the SM&CR’s Statements of Responsibility and suitability assessments continue adding to most firms’ workload.
  • The FCA is looking for evidence that firms can implement and test their wind-down plans as well as identifying key third parties, such as a living will provider, that you have engaged with for the eventuality of a wind-down. The FCA wants to see that this is effectively communicated to clients and offers all potential investors or users a high-level overview ahead of their decision to engage with the firm.
  • Stand-alone financial promotions are also coming under increasing scrutiny, and firms must ensure appropriate risk warnings feature prominently in all promotions.
  • For client money, it can take a long time to get a safeguarded and/or segregated account organised and E-money and Payment Services firms must ensure that an appropriate credit institution is in place to hold the funds – and that any letter of intent or service agreement states the full scope of the account provided. There must also be written processes in place, including a detailed description of reconciliations, processing, and timescales for holding money.
  • Firms also need to be mindful of the European Banking Authority’s updated guidance on outsourcing and the requirements for checks and reviews of outsourcing relationships that apply for Payment Services Directive (PSD) and e-money firms.
  • The regulatory landscape is constantly changing. It’s important for all firms to be aware that the rules that affect your business extend far beyond what’s contained within the FCA Handbook. Applicable rules and guidance can emanate from a range of other sources, including the EBA and the Joint Money Laundering Steering Group.

What are some of the solutions?

Dependent on the sector you are looking to enter, there are a number of ways to navigate the ever-changing regulatory landscape.

• • One of the most helpful ways to step into the market, whilst also successfully navigating the increasing requirements of the FCA, is to do so under another firm’s permissions. Many firms are looking towards becoming an EMI Agent, PSD Agent or Appointed Representative as a way of providing a quicker route to market whilst learning the ropes on how to operate a firm in the current regulatory landscape.

1. 1. 1. As an EMI or PSD agent, you will be utilizing the technology and permissions of a fully authorised EMI or PSD firm. This route allows firms that are just starting out to take a ‘toe in the water’ approach, supporting their growth while they’re building confidence and putting appropriate procedures in place. You’ll be onboarded, monitored and reviewed by your principal, and this can put you in good stead once it comes time to apply for your own permissions. The process of becoming an EMI or PSD Agent can differ from firm to firm, and firms will need to have a thorough understanding of their business plans. However, we can help firms looking to be EMI and PSD agents by reviewing some of the more intensive aspects of the EMI/PSD Agent application process, including support building out the firm’s business plan andAML/KYC policies.
      2. Becoming an appointed representative (AR) can help fintech firms who are unsure about their next steps in the regulatory field, or who cannot yet field a senior management team with the appropriate knowledge and experience. This offers a quicker route to market than direct authorisation, bridges gaps in knowledge, and enhances governance and policy, with the reassurance of professional support. Our associated FCA-regulated principal firm Resolution Compliance can provide structured oversight of your business, with a dedicated Compliance and Supervision Manager who can help you with its set-up and initial running. Resolution Compliance will set requirements and perform regular audits to make sure you’re in line with all relevant regulations – and that you’re well-positioned for direct authorisation when the time is right.

• • Another route is to look at further resources available to you. There are a number of small publications and websites which keep up to date with the current state of regulation, as well as providing information about the sector in general. There is also guidance available on the websites and over the phone from some of the key regulatory bodies, including FCA, EBA and JMLSG.
  • Firms can also seek out the advice of a regulatory compliance consultant, like us. For example, we can provide you with an experienced compliance support team who’ll be constantly on call to help you make sense of the ever-changing requirements across the regulatory landscape with the aim to help you to develop policies and implement regulatory change.

How can we help you?

Our specialist teams can provide you with effective guidance on – and assistance with – any of the issues or solutions highlighted above. We also can introduce you to Resolution Compliance if you would like to explore the appointed representative route. To find out more, contact us at info@thistleinitiatives.co.uk or call us now on 0207 436 0630.