SIFA 6
Authorisation
SIFA 6.1
Authorisation
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SIFA 6.1.1
See Notes
The
Authorisation manual (AUTH) sets out the background and provides guidance
on how we authorise firms. All firms and individuals enter the regulated 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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SIFA 6.1.2
See Notes
If you carry on an activity regulated
by the FSA (a regulated activity) in the UK, then you must either be authorised,
be an appointed representative or have some other exemption - for example,
if you are a professional firm (solicitors, accountants or actuaries) carrying
on investment business that is incidental to your main business.
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SIFA 6.1.3
See Notes
To apply to
become directly authorised by the FSA, you need to submit an application to
us for what is called a Part IV permission (permission for a firm to carry
on regulated activities under the Financial Services and Markets Act 2000
(FSMA)). We will assess the application against the Threshold Conditions and
advise you of our decision.
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SIFA 6.1.4
See Notes
There are several
different types of application pack depending on the type of business you
plan to undertake and the type of legal entity you intend trading as. The
packs that have been tailored for smaller firms are the Small Firms Application
Pack and the Sole Trader Application Pack for sole traders with no other approved
persons. Applicants must also submit the appropriate Small Firms Controller
Forms for each of the firm's controllers (the people who own the firm). These
packs and forms are available on our website.
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SIFA 6.2
The Authorisation Approval Process: Our Functions
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SIFA 6.2.1
See Notes
Our functions are as follows.
| We: | |
| • | Authorise firms that satisfy the necessary conditions (the threshold conditions) by granting permission to carry on specified regulated activities. |
| • | Approve individuals as being fit and proper to carry out controlled functions in firms. (Controlled functions are functions that enable the person responsible for them to exercise a significant influence on a firm's affairs or which involve that person in dealing with customers or customers' property). |
| • | Answer technical enquiries about whether firms require authorisation or individuals require approval. |
| • | Seek to ensure that investment business is not being carried out by either unauthorised firms or firms acting outside of their permitted activities. |
| • | Collect and maintain intelligence information about authorised firms and individuals. |
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SIFA 6.3
Threshold Conditions
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SIFA 6.3.1
See Notes
Before granting Part IV permission we
must ensure that the applicant firm satisfies and will continue to satisfy
the threshold conditions. These are set out below:
| Threshold Conditions | |
| • | A firm's legal status can take any form e.g. 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, other group companies or partners must not impede FSA supervision. |
| • | A firm must have adequate financial resources in relation to the regulated activities it carries on. |
| • | Suitability of the applicant firm: must be fit and proper. |
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SIFA 6.3.2
See Notes
The threshold conditions are set out
under Schedule 6 of FSMA. There is guidance on the conditions in COND. You
are responsible for ensuring that you continue to meet the threshold conditions
to retain your authorisation and scope of permission.
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SIFA 6.4
Scope of Permission
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SIFA 6.4.1
See Notes
Following a successful application, we
will grant a Part IV permission to the firm. 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.
| Typical investment business regulated activities for investment intermediaries are: | |
| • | Arranging deals in investments. |
| • | Making arrangements with a view to transactions in investments. |
| • | Advising on
investments. Providing basic advice on stakeholder products is a separate regulated activity. This does not prevent a person from selling stakeholder products in other circumstances provided he has the relevant permission, for example, by giving full advice in a way that amounts to advising on investments. |
| • | Advising on pension transfers and opt-outs. |
| • | Agreeing to carry on most regulated activities is itself a regulated activity (you will need to make sure that you have appropriate permission at the stage of agreement and before you actually carry on the underlying activity such as arranging or advising). |
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SIFA 6.4.2
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 - for
example, not holding client money.
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SIFA 6.4.3
See Notes
You are responsible on a continuing basis
for ensuring that your firm holds the correct permission that includes the
regulated activities that you wish to carry out. If you hold permission for
activities you do not carry out you may pay higher fees than necessary.
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SIFA 6.4.4
See Notes
To carry on mortgage or general insurance
business you must have the correct permission to do these types of business.
For example, you will need to vary your Part IV permission to include permission
to carry on general insurance if you sell, advise on, arrange, deal as agent
in or assist in administering and carrying out term assurance or other types
of insurance such as home contents, motor or mortgage protection. You can
vary your permission by completing our standard variation of permission form.
This is available on our website through Firms Online.
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SIFA 6.5
Which Parts of the Handbook Apply
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SIFA 6.5.1
See Notes
Both the Authorisation and Supervision
manuals are relevant. The Perimeter Guidance manual, whilst not part of the
Handbook, provides guidance about circumstances in which authorisation is
required, or exempt person status is available. It also includes guidance
on the activities which are regulated under FSMA and the exclusions which
are available.
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SIFA 6.5.2
See Notes
In the Authorisation manual (AUTH) there
is:
•a guide to the
sourcebook in AUTH 1; and•an explanation
of the authorisation process and the permission regime in AUTH 3. This includes the following sections:
| • | When is Part IV permission required and what does it contain: AUTH 3.3 |
| • | 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 have demonstrated they are effective. |
| • | How we may impose requirements: AUTH 3.7. For example, some firms are required not to hold client money. |
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SIFA 6.5.3
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 Chapter 6 of the Supervision manual (SUP). The forms for variation
and cancellation of permission are available on our website through Firms
Online.
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SIFA 6.5.4
See Notes
The Perimeter Guidance Manual (PERG)
is closely based on the text which previously appeared as AUTH Chapters 2
and 7 and AUTH Appendices 1 to 6.
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SIFA 6.5.5
See Notes
Chapter 15 of the Guide covers Variation
and Cancellation of Permission.
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SIFA 6.6
Further Information
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SIFA 6.6.1
See Notes
Firms that are not authorised and are
enquiring about applying for authorisation should contact the Authorisation
& Approvals Helpline on 020 7066 3954 or by email to corporate.authorisation@fsa.gov.uk.
All queries about whether an activity is a regulated activity and whether
a firm needs to be authorised should be sent to the Authorisation Enquiries
Department at AuthorisationEnquiries@fsa.gov.uk or by calling 020 7066 0082.
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SIFA 6.6.2
See Notes
You can download the Application Packs
and Guidance notes from the 'Doing business with the FSA' part of our website
free of charge or you can order a printed copy from our Publications Helpline
on 0845 0608 2372 (at a charge). Please see Chapter 19 of the Guide for further
details.
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SIFA 6.6.3
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 from our website and,
as it contains publicly available information, you can use it to check whether
firms you are dealing with are authorised or appointed representatives.
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SIFA 6.7
Further Issues
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SIFA 6.7.1
See Notes
There are the following further issues
relating to authorisation:
•The scope of
your firm's permission affects the fees you pay us. Broadly, the wider the
scope, the higher the fees.•The scope of
your permission may also affect the category of business into which your firm
falls for financial resources purposes.•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.
| The following sections of the Guide are also relevant: | |
| • | 'Approved persons' - Chapter 7 |
| • | 'Variation of permission' - Chapter 15.1 |
| • | 'Cancellation of permission' - Chapter 15.2 |
| • | 'Fees' - Chapter 18 |
| If you do mortgage or general insurance business you should also refer to MIGI 4. | |
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