Following a consultation which closed in November last year, the FCA has confirmed its approach the authorisation and supervision of international firms.
A document published on 3 February sets out how the FCA will assess overseas firms applying to operate in the UK market, including EEA firms currently encompassed within the Temporary Permissions Regime.
The FCA’s Executive Director of International, Nausicaa Delfas, said its approach was focused on mitigating the risks of harm to UK customers and ensuring market integrity. ‘Any firm intending to apply for FCA authorisation,’ she said, ‘should take note of the expectations set out in our approach document and be ready to meet our standards.’
At the same time, the FCA has also published a selection of the more important or representative responses to last year’s consultation paper CP20/20, and its own responses to these.
The FCA now expects international firms applying for authorisation to have an ‘active place of business’ in the UK above and beyond a simple registered address.
It will be looking closely at whether international firms have effective governance structures and management oversight in place, with clearly-defined individual senior management accountability
The regulator also expects any firm authorised to operate in the UK to have appropriate non-financial resources – including systems, controls, and human resources.
Authorisation applies to an entire firm, including its overseas offices. So, for international firms, FCA authorisation applies to the legal entity incorporated outside the UK, including both its UK branch and its overseas head office.
The FCA says it will look at firms holistically to assess potential harms. These would include
- Retail harm
The risk of harm from nonpayment of redress applicable under UK rules
- Client assets harm
The risk of harm from a mismatch between CASS rules and ‘home state’ laws
- Wholesale harm
The risk of harm to UK financial markets and the UK economy.
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