FINANCIAL SERVICES AUTHORITY - HANDBOOK

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The Full Handbook

The most efficient method of browsing the FSA Handbook content is to use the table of contents below.  The table of contents will expand as you select chapters and sections of that module. To close the table of contents click on the section, chapter, module or block name.

To apply to become directly authorised by the FSA a firm needs to submit an application to us for a Part IV Permission. The FSA will assess the application against the Threshold Conditions and advise the firm of the decision.

Before Applying

Threshold Conditions:

Applications are assessed against the Threshold Conditions.  Applicants should review these carefully before applying to ensure that they meet these criteria.

For example, two of the Threshold Conditions are 'adequate resources' and 'suitability'. These conditions are only likely to be satisfied if you can demonstrate previous experience in the type of business for which you are applying. For a small IFA firm we would generally expect that at least one of the members of the governing body has at least three years in the financial services industry, with at least one of these years in the independent sector.

Applicants applying for certain controlled functions should also have appropriate qualifications. For example, the Financial Planning Certificate is an appropriate approved qualification for IFAs. There are a number of other appropriate approved qualifications.  Details of these qualifications can be obtained from the Financial Services Skills Council (020 7216 7366).

For details of qualification requirements please refer to the ‘Training and Competence’ sourcebook in the FSA Handbook.

Pre-application meetings

Normally the FSA would only hold pre-application meetings with potential applicants where the business concerned is complex or unusual.  Simpler businesses should not require such meetings and any pre application issues can be resolved by telephone or correspondence.

Further Assistance:

Queries relating to whether a firm needs to be authorised should be directed to Consumer Contact Centre on 0845 606 1234 (call rates may vary) or email consumerhelp@fsa.gov.uk

Application Packs

Types of application pack:

There are a number of different types of application pack. Which one you use depends upon the type of business you plan to undertake, and what type of legal entity you intend trading as. These packs are:

• Small Firms Application Pack (Part IV Permission)

• Sole Trader Application Pack (Part IV Permission)

• Simple Change of Entity Application Pack (Part IV Permission)

• Credit Union Application Pack (Registration and Part IV Permission)

• General Insurance Firm Intermediary Application Pack (Part IV Permission)

• Securities and Futures Small Firm Application Pack (Part IV Permission)

• The standard Application Pack (Part IV Permission)

The Small Firms Application Pack (Part IV Permission) is specifically tailored to smaller firms. This pack is focused at small firms wishing to conduct typical IFA business only, typical IFA business together with mortgage and/or general insurance business, mortgage business only, or mortgage and general insurance business only.

The Sole Trader Application Pack (Part IV Permission) is specifically tailored to sole traders with no other approved persons. It is for sole traders wishing to carry out IFA business, IFA business with mortgage and/or general insurance business, mortgage business only, or mortgage and general insurance business only. Sole traders with approved persons should use the Small Firms Pack (Part IV Permission).

An existing authorised firm wishing to change its legal status only may qualify to use the Change of Legal Status Application Pack. This pack enables the existing authorised firm to cancel its permission at the same time as the applicant applies for authorisation.

We recognise the volunteer nature of credit union personnel and the very limited nature of the range of activities undertaken - so those applicants wishing to be authorised as a credit union should apply using the separate Credit Union Application Pack. This includes the registration element of the process.

The General Insurance Intermediary Firm Application Pack is specifically tailored to general insurance firms who want to apply only to do general insurance business.

The Securities and Futures Small Firm Application Pack is specifically tailored to small securities and futures firms who want to apply only to advise and/or arrange in relation to Securities, Derivatives, Corporate finance business or to deal as a local.

Any applicant that does not qualify to use the Small Firms, Sole Trader, Credit Union, General Insurance or Simple Change of Entity Application Packs should use the standard pack, referred to as the Application Pack (Part IV Permission).

All applicants are assessed proportionately and fairly regardless of which pack they use.

The Authorisation cases bulletins can be used as a reference on interesting cases, queries and points of information related to applications.

Obtaining a pack:

More detail on the packs and downloadable versions can be obtained by following the links to the appropriate pack's web page.  Paper versions are available by contacting the Publications helpline on 0845 608 2372.  Copies of the standard pack are available by contacting the Authorisation helpline (020 7066 3954).

If you have ordered an application pack but it has not arrived, please telephone the publications helpline (0845 608 2372).

Completing the application pack

Before completing an application pack you should read the section entitled ‘Application Pack – Notes’. Not all parts of the pack will be relevant to your business, therefore it is important that you read the notes to help you to work out which are (and those which are not) and the amount of detail required for your application.

You may also need to refer to parts of the FSA Handbook . In particular you may wish to refer to ‘Authorisation’ (the authorisation manual).

Please complete the application to the best of your ability and make sure that any relevant attachments (listed at the back of each form) are enclosed. Failure to do so will result in your application being considered incomplete

Controlled Functions:

Information on which controlled functions a firm will need can be found in Chapter 10 of the Supervision manual (SUP 10) in the FSA Handbook. This provides information on all controlled functions. You would need to select which controlled functions are appropriate for your firm.  The process by which applications may be made for the approval of persons to conduct controlled functions are explained in Approved Persons.

Prudential Category:

The notes to each application pack under core details give guidance on this. Most small IFAs are likely to be in the prudential category of ‘personal investment firm’ and the subcategory of ‘low resource firm’ but you will need to check the notes to confirm this is correct for your business.

Permission Profile:

The Small Firm, Sole Trader and General Insurance Intermediary application packs contain pro-forma business profiles.

In the standard Application Pack you will need to list each regulated activity you wish to apply for, the specified investments for each activity, limitations (if applicable), requirements (if applicable) and customer types. You will need to refer to Chapter 2 of the Authorisation Manual (part of the FSA Handbook) for the regulated activities and investment types that you can apply for. The permission profile will need to be in the wording given in Annex 2 to Chapter 2 of the Authorisation Manual.

Other Information Requirements:

The information required from each firm varies according to the firm type and the  application pack being used. For details of the required information and forms to complete please consult the notes attached to your application pack.

Further Assistance:

Queries relating to completion of the application packs should be directed to the Authorisation and Enquiries Helpline, 020 7066 3954

Submission

Authorisation Fee:

Authorisation fee is a one-off fee to enable us to process the application. The amount will depend on whether the application is straightforward (£1500), moderately complex (£5000) or complex (£25000). Most independent financial advisers, mortgage brokers and general insurance intermediaries will be straightforward applications.

The authorisation fee

The amount of the appropriate authorisation fee is in part 1 of Chapter 4 Annex 1R of the Authorisation Manual (part of the FSA Handbook).

To apply for authorisation, you must send the relevant authorisation fee, without any deductions (by banker’s draft, cheque or other payable order), with the application form. No work will be done on processing your application form until the full fee is received.

This authorisation fee is not refundable so you need to be sure that you wish to go ahead with the application before applying.

Sending  the application:

Please send the application, with the appropriate fee, to:

Authorisation Department
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS

Processing Times:

This depends on the nature of the application and how quickly we can get the relevant information from the applicant and third parties. The FSA’s published service standard in respect of applications for authorisation states that the FSA aims to determine 70% of applications within 16 weeks.

Further information on the statutory timescales can be found in 3.9.30 of the Authorisation Manual (this can be found in the FSA Handbook).

Assessment

Acknowledgement:

Shortly after you have sent us your application, you will receive an acknowledgement. Soon after this you will receive a letter consisting of an initial assessment of the application and the name of the case officer who will be your contact during the application process.

If the application is incomplete, this will be stated in the initial assessment letter. That letter will also say what is required to make the application complete, so that the shorter 6 month statutory deadline for its determination applies.

Assessment:

Applications are assessed to ensure that the firm satisfies the necessary threshold conditions (in relation to status, location, close links, adequacy of resources and suitability) before we can give permission to carry on a regulated activity. Similarly we must be satisfied that persons applying to carry on controlled functions are fit and proper (that is, they meet honesty, competence and financial soundness criteria).

The case officer will request any clarification or further documentation from you. Once that person has enough information to assess whether or not the applicant satisfies the Threshold Conditions, the application will be determined.

Determination:

Successful applications will be sent an authorisation letter, which contains details of any conditions the authorisation is subject to, the scope of the firm's permission, and a list of the persons approved for controlled functions.

Following authorisation, these details will appear on the FSA Register.

Refusal:

If the FSA is minded to refuse an application then it must give the applicant a warning notice in writing, stating the reasons for the proposed refusal and giving the applicant the opportunity to make representations.  The FSA will then consider any such representations before issuing a decision notice giving its decision.  Following the issue of a decision notice, it is open to an applicant to refer the matter for consideration by the Financial Services & Markets Tribunal.

Queries and changes:

If you have any queries or changes to make during the application process, please contact your nominated case officer.

We now have statutory deadlines by which we must determine applications, so we are unable to defer applications and expect prompt answers from applicants. However, you do have the option of withdrawing your application and re applying at a later date. If, having submitted your application, it becomes clear you will need to delay the date you wish to be authorised, please contact your case officer to discuss what your best course of action is.

Post Authorisation

Annual Fees:

Once a firm has been authorised, there are ongoing fees that have to be paid on annual basis. These vary depending on the type of business the firm undertakes and the number of relevant approved persons. There is comprehensive guidance on fees on the FSA's website.

These are paid on an annual basis once the applicant has been given Part IV Permission and, like the application fee, vary depending on the nature of the business and number of relevant approved persons. The annual fees are in Annex 1 to Chapter 20 of the Supervision Manual (in the FSA Handbook), and comprehensive guidance on fees on the FSA's website.

For more information on the Annual Fee please ring 020 7066 1000 and ask for the Fees Helpline.

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