FCA Authorisation: Submitting an Application
If you’re starting a finance firm submitting an FCA application can be a dauting task. Typically, it takes months of planning for an entrepreneur to get to this stage. A misstep here can delay a project for over a year, if not derail it completely. But don’t worry too much significantly over 90% of applications are successful. You can ensure you are in this happy majority by thorough analysis of how your business will work in practice and a working knowledge (or sound advice) of the UK regulatory system. Indeed, a good compliance team can make this process relatively painless but the length of the process is often still in the hands of the regulator.
NB for this reason, many startup firms look to become an Appointed Representative of an established fim. A service that RiskSave offer – you can learn more about that here
The big things you’ll need.
A Regulatory business plan (RBP). Many applicants won’t have seen a regulatory business plan before, so working out where to start can be difficult. We’ve heard the RBP described as a normal business plan mixed with some compliance jargon. This is a reasonable description of its appearance, if not its purpose. An RBP matches the economic activities of the applicant to the FCA’s world and highlights which regulated activities are occurring and with which clients. There is no right or wrong length for an RBP and for relatively simple businesses we’ve seen 5 pages of concise regulatory mapping deemed sufficient. But also hundred plus page magnum opuses also being accepted. A compliance firm would be able to assist creating this document or provide a template. Unless you’re re-inventing the wheel, both the compliance consultant and your FCA case officer will know what to expect and the creation of this document needn’t overly elongate timeframes.
Financial Projections — Be sure that your projections match both the capital you have to hand and are realistic given economic conditions. Many entrepreneurs have an optimistic streak that is attractive to investors, but could be worrying to regulators. Ensure that the assumptions in your model are understood and sensible before submitting.
Business continuity plan — Given the sheer number of unknown unknowns in the post-Covid economy, expect the regulator to take special notice of continuity and disaster recovery plans in the months to come.
Other matters:
The FCA has relevant checklists for each business type that are pretty rigorous and easy to follow. Once collated its time to submit. Currently the FCA is expected to give a definitive answer to an application within 6 months – although for various reasons this doesn’t always happen. Once submitted your application will join a queue and approximately three months after submission you’ll be assigned a case officer who will work closely with you as you move towards authorisation.
The FCA treats the authorisation process (rightly) very seriously and the case officer will need to be happy that your business is robust, well capitalised and has competent staff. Expect a lot of questions as the FCA becomes more involved. The case officer will delve into various aspects of your business and seek clarity on issues that are unclear. For a complex proposition running into deadlines can be an issue – with the FCA expecting a quick response to their questions – but not always reciprocating.
The FCA will ask to see a selection of policy documents, confirm the existence of your capital and take a keen interest in training and performance programmes for key staff. It is worth having these on hand / up-to-date so as not to impede the process.
Provided the data you provide is accurate, the business plan realistic and your staff competent. You can expect to be authorised and begin trading six months after submission. Then unfortunately the real work begins.
If you have any questions about submitting an application or wish to discuss any of the issues raised, please contact us at team@risksave.com