Applying For Permission To Carry On Regulated Activities

Question 1

For a person wishing to carry one or more regulated activities, what do they need?

Answer 1

1. They need to be authorised unless they are exempt.
2. Exempt persons include those from professional firms, such as solicitors or accountants whose main business is not a regulated activity
3. UK investment firms need to apply to the FCA for a Part 4A permission.

Question 2

Explain what the Part 4A Permission is and how it works?

Answer 2

1. Part 4A permission - to carry out regulated activities
2. The application should determine the precise scope of the permission the firm wants to apply for in terms of the specific activities and investments involved.
3. Once the permission is granted by the FCA, they will specify the activities and investments the firm is permitted to carry out. (There can be limitations/ extra requirements here)
4. Permission is only granted once. If an authorised person wants to carry additional activities to what’s listed in their original permission, they need to apply to the FCA to vary their permission.
5. To gain the permission - they need to satisfy the threshold conditions (Block 1 - High level standards (COND)) or minimum standards to remain authorised.

Question 3

What is the FCA COND and PRA COND?

Answer 3

These are the threshold conditions for obtaining Part 4A Permission for regulated activities in the UK.

1. Some FCA COND apply to all firms, including dual regulated firms
2. The PRA COND apply only to banks, insurance firms and PRA authorised firms

Question 4

What are the different threshold conditions set out in order to obtain the Part 4A Permission?

Table 3.1 page 110

Answer 4

1. Legal status.
2. Location of Office
3. Effective supervision.
4. Appropriate resource resources.
5. Appropriate non-financial resource.
6. Suitability.
7. Business model.
8. Business to be conducted in a prudent manner
9. Appointment of claims representative.

Question 5

How did dual regulated firms get authorisation?

Answer 5

1. They must apply to the PRA to vary or cancel their Part 4A Permission
2. The PRA may determine an application to vary permission only with the consent of the FCA.
3. An FCA-only regulated firm has to apply to the FCA to vary or cancel its Part 4A Permission UNLESS it seeks to vary its permission to now include a PRA-regulated activity in which case it must also apply to the PRA

Question 6

What are Exempt Persons?

Answer 6

1. These are certain categories of persons carrying regulated activities that DO NOT NEED AUTHORISATION
2. Exempt persons include:
   A. Appointed representatives of an authorised person. (Already under an authorised firm)

B. REIs and RCHs - these are already heavily regulated

C. Members of Professional Bodies (e.g., Solicitors & Accountants) –
i. If a solicitor or accountant carries out regulated activities as part of their main profession, they don’t need authorisation.
ii. However, if they run a separate financial business, they must get FCA approval.

D. Members of the Lloyd’s - they have their own regulatory framework, so they don’t need separate FCA authorisation.