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Help with FCA authorisation and compliance support

January 13, 2022

What has happened?

In December 2021, the FCA issued the summary highlights of its new regulatory approach for 2021, intended to allow it to become a more innovative, adaptive and assertive regulator. A review of this summary shows a number of points of interest both for firms intending to apply for FCA authorisation and for those that are already authorised and so need to develop their compliance monitoring through internal or external FCA compliance support.

What are the implications for firms?

FCA authorisation

The FCA is applying standards more robustly when authorising firms. In the year to 2 December 2021, one in five firms (up from one in six when this was last reported) that applied for authorisation were refused, rejected or withdrew their application after discussions with the FCA.

Newly authorised financial firms will benefit from additional support following a pilot run by the FCA over the last year. When fully rolled out in 2022, this early oversight, with regular contact from the FCA, will help ensure firms treat their customers fairly during the early years of their development.

To ensure quicker action to protect consumers, the FCA reformed its decision-making processes in November 2021. These changes include allowing senior managers to decide on a firm’s authorisation and whether to impose requirements or to begin criminal or civil proceedings.

The FCA has enhanced its regulatory sandbox, which allows businesses to safely test innovative products or services. The sandbox is now accepting applications on a rolling basis rather than firms having to wait for application windows as they previously had to. This will support innovative firms by allowing them to test their ideas at the right point of their development.

FCA compliance support

The FCA’s new consumer investment strategy is designed to give consumers greater confidence to invest and to help them do so safely. The strategy’s measures include exploring changes to make it easier for consumers to invest in straightforward financial products, more assertive action to disrupt investment scams and strengthening rules around financial marketing.

The FCA has removed authorisation to undertake financial services from 176 firms that have not carried on regulatory activity in the last twelve months. The FCA’s ‘use it or lose it’ approach is designed to protect consumers who may be misled about the level of protection they have when buying products from firms that do not need to be authorised by the FCA.

The FCA has begun consulting on a new consumer duty to introduce a higher and more consistent standard of consumer protection for financial services consumers by July 2022. Guidance published in February 2021 also set out how firms should better protect customers in vulnerable circumstances when they design their products, market and explain them, and in the support they provide to their customers when things go wrong.

The FCA has continued to act to protect and enhance the integrity of the UK financial system. In December 2021, NatWest was fined £264m in the FCA’s first-ever criminal prosecution under anti-money laundering legislation. In total FCA actions have resulted in financial organisations in the UK being fined £568m in 2021, including £147m against Credit Suisse and £63.9m against HSBC. The FCA has also taken action against individuals for insider dealing, non-financial misconduct and carrying out regulated activities without FCA authorisation. In addition to enforcement cases, the FCA varied a firm’s or individual’s permissions over 100 times in 2021.

The FCA has continued to take a leading role on environmental, social and governance issues. It published a new strategy in November 2021 and began a discussion on how investment products should be labelled to give consumers confidence to invest. It also introduced new rules and guidance for listed companies and asset managers on climate-related disclosures.

How can we help you with FCA authorisation or compliance support?

If you’d like to know more about how we can help you with FCA authorisation or FCA compliance support, or with any other regulatory compliance issues, our specialist team is here to help.

Contact us today on 0207 436 0630 – or email info@thistleinitiatives.co.uk.