The journey to direct authorisation is beset by myths and misconceptions.
Helping financial advisers and mortgage brokers obtain their FCA authorisation, is one of our key areas of expertise. Who better then to dispel some of these myths, whilst answering the most commonly asked questions?
#1: “What permissions do I need to apply for?”
That depends on several factors, but the key Controlled Functions are as follows:
CF1: Required if you will be a director of an authorised firm or will otherwise have a significant influence over it
CF4: Required if you will be a partner in an authorised firm
CF10: Compliance oversight function
CF11: Money laundering reporting function
CF30: Customer function; in other words, an adviser
Whilst these are the most common Controlled Functions others exist for other roles such as non-executive director.
If you would like to know exactly which you will need to apply for, please get in touch.
#2: “What will the FCA need from me?”
Just some of the documents the FCA will require to support your application are:
- A business plan: In our experience this is probably the area advisers find most difficult. Business plans need to be comprehensive and demonstrate to the regulator your practice is financially viable. We help advisers produce a comprehensive business plan, which will not only aid their application, but also help from a planning perspective
- A cashflow forecast: Again, this document is required by the FCA, but is also useful for the management team of the new business. We are experienced in helping firms put together a comprehensive cashflow, which will ensure their business is financially on track, as well as satisfying the regulator’s requirements
- Organisational chart: This is usually a relatively simple requirement, showing who’s who in your business and the roles they undertake. Nevertheless, it’s important to get it right first time
- Conflicts of interest: The FCA will expect you to provide full details of any conflicts of interest which may occur upon the authorisation of your new business
- CVs for all directors: Again, a relatively easy requirement to provide, but another which will hold up your application if it is missed
- Accounts: Existing businesses, for example those moving from a network, will need to provide up to date accounts with their application
In addition to the above, the FCA will of course need the appropriate application forms fully completed. We can help here too, checking the forms for completeness and highlighting areas where additional information may be needed; which of course could help reduce the time it takes for your new business to be authorised.
#3: “How do I submit an application?”
There are two stages to this process; building your application pack, followed by submission to the FCA.
Of course, you could do both tasks yourself.
However, we would naturally recommend that you consider using a compliance consultant, such as ourselves, to build the application pack. We have helped firms through this process on many occasions, whereas this is probably the first time you have done it. Our experience will help ensure the pack is more comprehensive on the first submission, saving time and getting you authorised sooner than may otherwise be the case.
#4: “How long will it take before I am authorised?”
This is the most commonly asked question and the hardest to answer!
The rule of thumb is between six and nine months.
The FCA has to give an answer within 12 months. In reality though, this period could be extended though, as the 12-month clock stops ticking when the FCA are waiting for your responses to their questions and queries.
That’s a long time and emphasises the importance of ensuring that the initial application pack is completed as comprehensively as possible. There is nothing as infuriating as a delay in your application, which could have been avoided.
#5: “What does it cost?”
An application fee of £1,500 is payable for a straightforward application.
The fee is the same, irrespective of the number of advisers within your business.
You should note though that the fee may be increased for complex or non-standard applications to between £5,000 and £25,000.
Naturally, we also make a charge to help advisers with their application. However, we would encourage our clients to see this as an investment rather than a cost. After all, if we can speed up the authorisation process, if only because the initial application will be more comprehensive, income into your business will start sooner than may otherwise have been the case.