Welcome to the UKGI weekly regulation update service for Aviva ABC brokers

Context

The FCA has published Handbook Notice 125, which amongst other things formally introduces a change to Controller forms (most likely just to the Individual Controller Form) to “introduce criminal backgrounds checks on owners and controllers at the Authorisations gateway”.  The new forms will be introduced with effect from 17 January 2025.

Key points to note and next actions

• This change was first proposed by the FCA in Consultation Paper CP23/23 in November 2023, when the FCA and PRA announced plans to replace the EU guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector (the ‘3L3 Guidelines’) with non-Handbook guidance on the prudential assessment of acquisitions and increases in control (the ‘Change in Control Guidelines’) and an equivalent PRA supervisory statement.
• The proposed FCA Guidance was then the subject of an item in the Quarterly Consultation CP24/11 in July 2024, which set out that the Change in Control Guidelines largely replicate the 3L3 Guidelines but include some re-phrasing, simplification and changes to align with the UK approach and reflect the new power to impose conditions introduced by the Financial Services and Markets Act 2023 (FSMA 2023).
• The Guidelines set out guidance and expectations on a number of issues, including submitting the change in control notification and the additional information the FCA may require, and the assessment criteria used to assess notifications to acquire or increase control in FCA authorised firms operating in the UK.
• The Quarterly Consultation included a commitment to issue the final Guidance in Q4 2024, and the Finalised Guidance on the Prudential Assessment of Acquisitions and Increases in Control (FG24/5) was published in November 2024.
• The current Handbook Notice confirms that the FCA has now approved a form change to introduce criminal background checks on owners and controllers at the Authorisation’s gateway.  In summary, in line with the Financial Action Task Force (FATF)’s recommendation, the FCA (in agreement with the PRA) will now require controllers and beneficial owners to obtain criminal background checks from the Disclosure and Barring Service (DBS), or equivalent for persons outside England and Wales. This requirement applies to those making an application for authorisation or registration with the FCA and for a notice of an intended acquisition or increase in control. This form change has effect from 17 January 2025.
• The FCA’s Change in Control web page was updated in November 2024 to refer to the updated Finalised Guidance, and the Individual Change in Control Notification Form (which can be found via the FCA’s Change in Control Notification Forms web page) was last updated in November 2024.  At the moment, there is no specific reference in the Individual Controller Form to any requirement to include a DBS check as a supporting document.  This may change in January next year.