Context
The FCA has published its approach to the authorisation and supervision of international firms. The publication (https://www.fca.org.uk/publication/corporate/approach-to-international-firms.pdf) explains how the FCA will assess international firms when an application to operate in the UK market is made.
Nausicaa Delfas, Executive Director of International at the Financial Conduct Authority, said: ‘Our approach to authorising international firms, including EEA firms currently in the Temporary Permissions Regime, is to mitigate the risks of harm to UK customers and ensure market integrity. Any firm intending to apply for FCA authorisation should take note of our expectations set out in the approach document and be ready to meet our standards.’
Key points to note
- Alongside the publication, the FCA has also set out the main responses received from firms in response to CP20/20: https://www.fca.org.uk/publication/feedback/fs21-3.pdf
- The FCA expects a firm to have an active place of business in the UK. It will typically not suffice if a firm’s local presence has little or nothing more than a UK registered address.
- The FCA will consider whether a firm has effective governance structures and management oversight in place, with clearly defined individual senior management accountability
- The FCA will expect any firm authorised to operate in the UK to have appropriate non‑financial resources including systems, controls, and human resources.
- The authorisation of a firm applies to the entire firm including its overseas offices. This means for an international firm, the authorisation will apply to the legal entity incorporated outside the UK, including its UK branch and its overseas head office.
- The FCA will also assess firms holistically to take a view on the potential harms that may be caused:
- Retail harm – the risk of harm from the non‑payment of redress applicable under the relevant UK rules;
- Client assets harm – the risk of harm of a mismatch between the CASS rules and the ‘home state’ laws;
- Wholesale harm – potential risk of harm to UK financial markets and the UK economy that could be caused by an international firm operating in, intending to operate in, or otherwise connected to these markets.