SIFA 5
Authorisation
SIFA 5.1
Authorisation
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SIFA 5.1.1
See Notes
The Authorisation manual (AUTH) sets
out the background and provides guidance on how we authorise firms. All firms
and individuals enter the regulatory environment through an authorisation
or approval process. Our assessment at entry aims to allow only those firms
and individuals satisfying the necessary criteria (including honesty, competence
and financial soundness) to engage in regulated activity.
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The authorisation / approval process: our duties
SIFA 5.1.2
See Notes
Our duties are to:
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SIFA 5.1.3
See Notes
Table:
| • | Authorise firms that satisfy the necessary conditions (the threshold conditions) by granting permission to carry on specified regulated activities; |
| • | Approve individuals to carry on controlled functions in firms as being fit and proper to carry out these functions; |
| • | Answer technical enquiries about whether firms require authorisation or individuals require approval; |
| • | Seek to ensure that investment business is not being carried out by unauthorised firms; and |
| • | Collect and maintain intelligence information about authorised firms and individuals. |
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Threshold conditions
SIFA 5.1.4
See Notes
Before granting Part IV permission (permission
for a firm to carry on regulated activities under the Financial Services and
Markets Act 2000 (the Act)) we must ensure that the applicant satisfies and
will continue to satisfy the threshold conditions. These are as follows:
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SIFA 5.1.5
See Notes
| Threshold Conditions | |
| • | Legal status - can be a sole trader, partnership, limited liability partnership or a limited company. |
| • | The head office and registered office must be in the UK if your firm is a body corporate formed in the UK. |
| • | Close links with connected persons such as directors, controllers or partners must not impede FSA supervision. |
| • | A firm must have adequate financial resources. |
| • | Suitability - the applicant must be fit and proper. |
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SIFA 5.1.6
See Notes
The threshold conditions are set out
in Schedule 6 of the Act. There is guidance on the conditions in COND. You
are responsible for ensuring that you continue to meet the threshold conditions
in order to retain your authorisation and scope of permission.
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Scope of permission
SIFA 5.1.7
See Notes
Following a successful application, we
will grant an applicant Part IV permission. The scope of your firm's permission
is set out in a Scope of Permission Notice that defines the scope in terms
of regulated activities together with any limitations on customer type or
product and any other requirements or restrictions.
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SIFA 5.1.8
See Notes
Table:
| Typical investment business regulated activities for IFAs are: | |
| • | Arranging deals in investments. |
| • | Making arrangements with a view to transactions in investments. |
| • | Advising on investments. |
| • | Advising on pension transfers and opt-outs. |
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SIFA 5.1.9
See Notes
Your permission will specify the regulated
activities and the investments where you can do business with private customers.
A permission may also include one or more limitations or requirements as explained
in section 5.1.13 below.
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SIFA 5.1.10
See Notes
You are responsible on a continuing basis
for ensuring that your firm holds the correct permission that includes the
investment business activities that you wish to carry out.
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Which parts of the Handbook apply
SIFA 5.1.11
See Notes
Both the Authorisation and Supervision
manuals are relevant.
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SIFA 5.1.12
See Notes
In the Authorisation manual (AUTH) there
is:
(1) An overview of the sourcebook in AUTH
chapter 1.
(2) An explanation of the authorisation process
and the permission regime in AUTH chapter 3. This includes the following sections:
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SIFA 5.1.13
See Notes
Table:
| • | Permission to carry on regulated activities: AUTH 3.4 |
| • | Information on specified investments: AUTH 3.5 |
| • | Information on limitations: AUTH 3.6. An example of a limitation is where we limit the number of clients a firm can deal with during an initial period until its systems are proven. |
| • | How we may impose requirements: AUTH 3.7. For example, some firms have a requirement to submit independent compliance reviews or not to hold client money. |
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SIFA 5.1.14
See Notes
After Part IV permission has been granted,
a firm can apply to vary or cancel that Part IV permission including any limitation
or requirement, at any time. The procedures that need to be followed are set
out in SUP chapter 6.
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SIFA 5.1.15
See Notes
Chapter 15 of this Overview covers Variation
and Cancellation of Permission.
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Further information
SIFA 5.1.16
See Notes
The Application Pack and Guidance notes
are available from our:
(1) Publications Helpline or our Enquiries
and Applications Department at a charge of £25.00 plus VAT; or
(2) from our website. (We plan to produce
enhanced guidance and a shorter version of the Application form to help smaller
firms with their applications. This should be available for firms to use in
the first quarter of 2004.)
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SIFA 5.1.17
See Notes
When we grant an application for Part
IV permission, we will update the FSA Register with the activities the firm
has permission to carry on. You can access the Register on our website.
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Further issues
SIFA 5.1.18
See Notes
There are the following further issues
relating to authorisation:
(1) The scope of your firm's permission affects
the fees you pay us. Broadly, the wider the scope the higher the fees.
(2) The scope of your permission may also
affect the category of business into which your firm falls for financial resources
purposes.
(3) We consider the scope of a firm's permission
when deciding which risk category the firm falls into. We monitor firms in
a higher risk category more closely.
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SIFA 5.1.19
See Notes
Table:
|
The
following sections of this Overview are also relevant: •'FSA supervision of small firms' - Chapter 6; •'Approved persons' - Chapter 7; •'Variation of permission' - Chapter 15.1; •'Cancellation of permission' - Chapter 15.2; and •'Fees' - Chapter 18. |
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