FSMA states that no individual or firm can legally carry on FSMA-regulated activities in the UK unless they are authorised by us to do so or exempt. An individual or firm must apply to us for a ‘Part 4A permission’ to carry on those activities.
We use authorisation to prevent harm. We do this by ensuring that all authorised firms meet common sets of minimum standards at the start. We refer to these standards as the Threshold Conditions (the conditions).
We will only authorise firms where they meet the conditions and continue to do so. If they do not, we will not allow them to enter the relevant financial market.
Our performance continues to improve this year, after streamlining our processes and training new case officers. In some complex cases, it is right that we take time for greater scrutiny and engagement with firms. To allow this our red, amber, green (RAG) status is set to report >98% as green for several metrics.
We publish quarterly operating service data[1] for each authorisation category. The data shows the lower quartile, median and upper quartile of the range of calendar days taken for determination. Most applications are determined significantly ahead of the statutory deadline. Complete and comprehensive applications are likely to be determined in good time. We continue to see too many incomplete and poor-quality applications.
Our website has detailed guidance for applicants in several sectors. We give examples of good practices and areas for improvement.
Contents
- Authorisation applications
- Approved persons status
- Money laundering registrations
- Authorised unit trusts (AUT), open-ended investment companies (OEIC) and authorised contractual schemes (ACS)
- Payment Services Regulations and Electronic Money Regulations
- Applications for agents to be included on the register
Chart tips: hover over the data series to view the data values and filter the data categories by clicking on the legend.
Authorisation applications
A firm supplying the information requested on the application form will not necessarily ’complete’ the application . An application is complete only when we have all required information and evidence for us to be able to determine the application.
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In most cases, we have a statutory requirement to process a complete application for Part 4A permission within 6 months of receipt of a complete application (s55V(1) FSMA 1) or within 12 months of receipt of an incomplete application (s55V(2) FSMA). We are committed to achieving this where possible. A small number of cases may need additional time for greater scrutiny or engagement, for example where required to meet our objectives effectively.
This year we achieved 95.9%. Of 1,761 cases, 72 missed the target. Most applications missed the target for regulatory reasons. These applications were legally or technically complex or involved enforcement or pending firm actions.
A small number of applications missed the target due to operational reasons. In those instances, we reviewed each case in detail and implemented improvements to case management.
Approved persons status
A firm applying to carry on regulated activities must also apply under Part V of FSMA for approval of one or more individuals to perform the controlled functions on its behalf once authorised (its ‘approved persons’). We must be satisfied that approved persons have the honesty, integrity, reputation, competence and capability and financial ability to perform their role and comply with the code of conduct in the Handbook.
Processing an application for ‘approved person’ status
Our statutory requirement is to determine approved person applications within 3 months unless it is attached to an application for part 4A permission.
SM&CR, CF and SIF applications
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Graph R1.1a shows further improvement in this standard compared to previous years. We met the standard for 97% of applications.
Our performance against this standard has steadily improved across the year. For the last 6 months we have met our 98% target.
Authorised Representatives Regime applications
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From April 2023 we began reporting against our statutory requirement to process an application for ‘approved person’ status for an application submitted by an authorised firm under the Appointed Representative regime within 3 months.
This year we determined 6,020 applications for approved person status under the Appointed Representatives Regime. Our performance met the standard for 95.8%, missing the standard for 254 applications. Most of these were due to regulatory reasons, for example where additional or ongoing scrutiny was required.
System issues at the start of this year led to a small number of applications missing the target. We identified and addressed these issues and improved our performance in the second half of 2023/24.
After recruiting new case officers, we reduced pending caseload and continue to improve performance with this standard.
We publish our performance against these metrics on a quarterly basis[1].
Money laundering registrations
Provisions for the assessment period for registration of ‘Annex 1 financial institutions’ under the Money Laundering, Terrorist Financing and Transfer of Funds (Information of the Payer) Regulations 2017 (MLRs) broadly set out that, within 45 days of either (1) the date on which we receive an application for registration from an Annex 1 financial institution, or (2) where the application is incomplete, the date on which we receive any further information, we must give the applicant notice:
- of our decision to register the applicant, or
- that we are minded not to register them, the reason for this and the right to make representations to us within a specified period (which may not be less than 28 days)
We have a statutory requirement of 100% to process registration applications for firms who want to carry on business in the UK as an Annex 1 financial institution. We are required to do so within 45 calendar days of receiving an application or any further required information (Reg59(3) MLRs).
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Graph A1.2 shows that we achieved 96%, a slight reduction from last year. This is largely due delays in registering a small number of Annex 1 financial institutions. Most applications not determined within the statutory deadline relate to the first half of 2023/24. Performance has improved over the year through training additional staff on these applications and building their capabilities. We expect this improvement to continue.
Authorised unit trusts (AUT), open-ended investment companies (OEIC) and authorised contractual schemes (ACS)
This covers all applications for us to authorise all types of UK-based collective investment schemes.
The legislation requires us to process applications for the authorisation of new schemes under section 242 FSMA for AUTs, regulation 12 of the OEIC Regulations 2001 and 261C FSMA for ACS within 6 months of receiving a complete application or within 12 months of receiving an incomplete application. These time limits also apply to Long-Term Asset Funds (LTAFs).
However, if we receive an application for authorisation as an Undertaking for Collective Investments in Transferable Securities (UCITS) we are required to process it within 2 months.
New scheme applications (statutory)
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Graph A2.1 shows that we have achieved 100% for the last 3 years.
New scheme applications (voluntary)
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We also aim to process complete applications to authorise Non-UCITS Retail Schemes (NURS) within 2 months and within 1 month for Qualified Investor Schemes (QIS). These are voluntary standards.
Graph A3.1 shows we achieved 100% in 2023/24 and 2022/23, an increase from 89.7% in 2021/22. In the 2022/23 period we amended our red/amber/green (RAG) targets in line with other RAG targets we have for our standards, but to also consider the complexity of these applications and the stretching voluntary timescales we have set ourselves for these applications.
In 2023 we approved the first Long-Term Asset Fund (LTAF), a category of open-ended authorised fund. These applications are not included in voluntary standards, but if we determine that a standard is appropriate this will be introduced in the 2025/26 report.
Payment Services Regulations and Electronic Money Regulations
Firms that intend to provide payment services by way of business in the UK must apply to become:
- an ‘authorised’ payment institution
- or ‘registered’ as a small payment institution
- or account information service provider
unless they are already another type of payment service provider or exempt. This is a requirement of the Payment Services Regulations 2017 (the PSRs).
Firms that intend to issue electronic money by way of business in the UK, must apply to become:
- an ‘authorised’ electronic money institution
- ‘registered’ as a small electronic money institution, unless they are already another type of electronic money issuer. This is a requirement of the Electronic Money Regulations 2011 (the EMRs)
Find out more about electronic money and payment institutions[2]
We have multiple standards for Payment Services for the PSRs and EMRs, and they each have their own statutory requirements.
For the following application types, we have a target to process 100% of complete applications within 3 months of the received date or within 12 months of the received date of an incomplete application:
- PSRs and EMRs authorisation applications
- PSRs and EMRs registration applications
- PSRs and EMRs variations of registration
- PSRs and EMRs variations of authorisation
Authorisation and registration applications
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Graph PS1-4 shows improvement in the authorisation and registration of firms under the PSRs, authorisation of firms under the EMRs and remained at 100% for firms applying to be registered under the EMRs. We increased resource in the previous year to ensure no delays in allocation in 2023/24.
We are committed to achieving our targets. However, a small number of cases may need additional time for greater scrutiny or engagement. PSR Authorisation increased to 87% but remains under target. EMR Authorisation increased from 83.3% (red) last year to 90.1% (amber) this year, though remains slightly under target.
Most of the applications not determined within the statutory deadline were closed in H1 2023/24. These applications were more complex, requiring significant engagement with applicants. In the second half of the year, we significantly improved performance. We expect to build on these improvements next year.
Variation of registration and authorisation applications
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Graph PS5-8 shows all targets were achieved for PSR and EMR Variation of Registration and Authorisation.
We publish our performance against this metric on a quarterly basis[3].
Applications for agents to be included on the register
There is a statutory requirement of 2 months for processing 100% of applications for UK agents of payment services firms to be included on the register.
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Graph PS9 shows that performance in processing notifications for UK agents within 2 months improved from last year, with 98% of cases determined within SLA.