“Help us to help you”, was the opening statement from Val Smith of the FCA last week at the APCC conference. Now this was my first time attending an APCC conference, and I’m sure it won’t be my last but I thought this introduction from Val emphasised exactly what the regulator is there to do for the firms it regulates.
This was a very open and honest session regarding the FCA authorisations process. We’re talking Variation of Permissions, Change in Control applications, Senior Manager applications… all those fun things I spend my time doing so I felt very well placed being in attendance.
The struggles the FCA have had with their authorisations department in terms of delays for applications have been well documented in the industry press, and anyone who has gone through a recent approval process will know that timescales have been increased. So what reasons does the FCA have for this? Well, Val supplied attendees with some further rationale, of which I don’t think many of these have come as a surprise. In 2020 the FCA received on average 5,000 cases a month, and in 2021 this increased to over 6,500, so the sheer volume of applications is one of the reasons cited for the backlog. In addition to this, the applications are being labelled as more complex. Match that with some staff turnover and you can see how the FCA are in the position they are in.
So what is the regulator doing to fix this?
Recruitment. The FCA has recruited over 100 staff on top of their existing authorisations department, and just yesterday it was announced that there were a handful of new senior recruits whose role is to have a direct impact on the authorisations standard and turnaround. But as we all know, the impact of recruitment is not immediate. Presently a high proportion of the current staff have less than 1 year of experience within the FCA, so the knock-on effect of recruitment is going to take some time to be felt by applicants.
The FCA has stated they are ‘cautiously optimistic’ and hope to be back on track with turnarounds in Q3 of this year. We shall see!
Now we know the problem, what can we do?
Well, first of all, all firms need to know their requirements for when they need to submit an application to the FCA for approval. As stated, the sheer volume is one of the reasons that the regulator is in the position they are in. Now, I think a lot of this is down to Covid / Brexit and firms changing their business model off the back of this, therefore changing permissions, senior managers and controllers. But are you aware of all of the notifications you need to submit to the FCA? And are you aware of what is expected of you?
The FCA calls this ‘Ready, Willing and Organised’. In practice, this means that regardless of what application you are submitting, at the point you hit submit on Connect you need to be as ready as if that application has been approved. The regulator looks poorly on incomplete applications, but also applications that just ‘do’ the bare minimum are always going to have further information requested, ultimately slowing down applications. I fully appreciate that Connect comes with its issues, but always feel free to use the comment boxes to expand further, or upload an additional document with an outline of exactly what is the motivations behind the application. Similarly, if the FCA does request more information, you should supply it as soon as possible. This is the ‘organised’ part of the expectation. If you need more time, speak to your case handler. The better relationship you have with them, the more they will understand your motivations for your application.
In addition to this, the FCA often quotes ‘optional’ documents to submit. For example, a business plan for a Variation of Permission. If you are adding a permission, submit a business plan, we don’t see this as optional.
Other things that we often see hold up applications;
- Senior Management Applications – Learning and Development plans. These are mandatory and they should be comprehensive. Be honest, talk about how you are going to develop in the role, but also any skills you are bringing to the role. The FCA recently came out with updated guidance on what it expects for the Compliance Oversight and Money Laundering Reporting Officer role, so any individuals applying for this role should consider the FCA’s expectations
- Change of Controller – Use the right form. There is a corporate controller (if a business is increasing its control), and then individual controller form.
- Change of Controller – Signature. These forms need signing!
We at Apricity constantly work with applicants in these notifications and are happy to assist where required. We can highlight areas for improvement but ultimately I’m with Val “Help us to help you”.