These considerations are relevant to firms that intend to seek authorisation in the UK and thereby leave the temporary permissions regime (TPR).
The Investment Firms Prudential Regime (IFPR) will come into force on 1st January 2022, impacting all UK investment firms authorised under MIFID. Any application submitted by a firm in the TPR, where the applicant would be in scope of IFPR, should consider the requirements that would arise, if approved, under this new regime.
During the application process we will expect firms to demonstrate to us how they will meet their ongoing requirements under the current and new prudential regimes, as part of our threshold conditions assessment.
Find out more about IFPR.
We cannot guarantee that any application received at this stage will be determined before the expected start date of IFPR. We remind firms that the application of some of the transitional provisions in the IFPR will be determined by the prudential categorisation of a firm as of 31 December 2021. Firms should therefore consider the transitional provisions in the IFPR rules.
Please note: if your firm does not intend to seek authorisation in the UK and intends to cancel its temporary permission, read our cancelling a temporary permission page.
On this page:
- Applying for full authorisation (Part 4A permission under FSMA)
- Firms that previously passported into the UK under Schedule 3 or Schedule 4 to FSMA
- Payments and e-money firms
- Our approach to international firms
- Authorisation application fees
We expect firms to take regulation seriously and plan how they will meet the standards of the regulatory system before they apply.
When we receive your application for Part 4A permission, and throughout our assessment of it, we’ll consider whether you are ready, willing and organised to comply with the requirements and standards under the regulatory system as they apply to entities seeking Part 4A permission. You must be able to do this at all times.
Many of these standards and requirements already apply to firms while they are in the TPR.
In order to obtain Part 4A permission, your firm will need to demonstrate that it meets and will continue to meet the threshold conditions for each of the regulated activities that it proposes to carry on in the UK.
These threshold conditions are set out in Schedule 6 to FSMA and cover, for example, the:
- need to have appropriate financial and non-financial resources
- fitness and properness of the firm
- suitability of the firm’s business model
If your firm doesn’t meet a threshold condition, we can take regulatory action such as removing your firm’s permission. You will also need to apply for approval of the individuals that will fill the relevant senior manager roles.
Once in the TPR, we will allocate firms that will be solo-regulated by us a period (which we call a ‘landing slot’) during which they will need to submit their application for UK authorisation, if required.
Firms with existing UK top-up permissions will need to submit a Variation of Permissions (VoP) application to vary their existing top-up permissions rather than an application for authorisation.
In line with our direction, your firm should not submit your application for UK authorisation until you have your landing slot.
In your application for authorisation you’ll need to demonstrate:
- how you will meet our threshold conditions
- how your UK business will be structured, and why the structure you propose will mitigate the risks of harm (see the section below on our approach to international firms)
- you should also take into account the UK’s Senior Managers and Certification Regime (SM&CR) which covers people working in financial services and aims to reduce harm to consumers and strengthen market integrity by making individuals accountable for their conduct and competence
If your firm changes its plans, you will be able to apply to cancel your firm’s temporary permission once you have ceased all UK business, or move to the UK’s financial services contracts regime (FSCR) if you wish merely to run off your UK business.
If your firm fails to apply for authorisation during its landing slot, we have the power to remove it from the TPR and, if it still has regulated business in the UK to run off, move it into the FSCR.
If your firm applies for authorisation when leaving the TPR but the application is unsuccessful, it will enter the FSCR if it still has regulated business in the UK to run off.
The process of leaving the TPR is different for payments and e-money firms because they have different authorisation and registration conditions. These firms will need to consider whether an authorisation or registration model best suits their business and may need to establish a UK subsidiary.
In particular, if your firm decides to seek:
- authorisation as an authorised payment institution
- authorisation as an authorised electronic money institution providing payment services unrelated to the issuance of electronic money
- registration as a small electronic money institution
you’ll need to set up a UK subsidiary to provide payment and/or e-money services in the UK when the EEA firm’s temporary permission ends.
Payments and e-money firms must send us a ‘notice of intention’ within 1 year of the end of the transition period (ie during the course of 2021). In this notice, your firm must tell us whether it or a UK subsidiary (whichever is applicable) intends to:
- apply for authorisation
- (for RAISPs only) apply for registration, or
- cease providing payment services in the UK
To make the authorisation/registration process run smoothly, we will be allocating firms a period of time (or ‘landing slot’) during which they will be asked to apply for UK authorisation or registration. This request may come before a firm has submitted a notice of intention, potentially before a firm may be planning to submit an application.
Please bear in mind the statutory deadlines for us to determine authorisation or registration applications.
The maximum duration of temporary permission is 3 years. Make sure you allow enough time for us to consider your application and you can operationalise the new entity where this is required so that you can continue providing payment or e-money services in the UK when the TPR ends.
Payments and e-money firms firm that are unsuccessful in securing authorisation or registration when leaving the TPR but that still have regulated business in the UK to run off, will enter the FSCR from where they can wind down their UK business.
In our approach to the authorisation and supervision of international firms, we set out the factors we will consider when we assess international firms against our minimum standards.
This is relevant for firms from both EEA and non-EEA jurisdictions who intend to apply for authorisation in the UK through a branch, those who have already applied for authorisation through a branch, and those who are already authorised as a branch.
The document will help international firms understand our expectations and how to manage risks when providing regulated financial services in the UK. Dual-regulated firms should also read the relevant supervisory statements and consultations from the PRA.
This will supplement our existing approach to authorisation and approach to supervision documents and, for dual regulated firms, it will sit alongside the PRA’s Supervisory Statements for International Banks (SS1/18) and Supervisory Statements for International Insurers (SS2/18).
The approach document:
- sets out where we see the key risks that have potential for harm in different scenarios
- outlines potential ways in which these risks of harm could be mitigated
- outlines our expectations around firms seeking authorisation, including firms having:
- a physical presence in the UK
- personnel and adequate systems in the UK to enable effective supervision
- outlines our expectation that firms consider whether it is more appropriate for them to operate through a UK-incorporated entity and seek authorisation on that basis
Firms should also consider our guide to the Senior Managers and Certification Regime (SM&CR) to understand how it will apply to FCA solo-regulated firms.
In addition to annual fees, your firm will need to pay a fee when you submit your application for authorisation. There’s more information on our TPR fees page.