30 Apr 24

Asset management - common errors when applying for UK authorisation and submitting VoPs

Asset management: common errors when applying for authorisation and submitting VoPs

The FCA has published information on its website setting out common errors it has observed in applications for authorisation and variations of permissions (VoP) from firms in the asset management sector. 

The FCA’s key concerns include:

Location of offices

One of the FCA’s Threshold Conditions is the location of offices.  The regulator has emphasised the importance of the ‘mind and management’ of a firm being in the UK.  Arrangements where senior management ‘fly-in-fly-out’ to the UK, even on a regular basis, are unlikely to meet this Threshold Condition.

Appropriate resources

The FCA has highlighted that proposed senior managers lacked the knowledge, experience or authority within the firm to undertake the senior management function, leading the regulator to question whether the firm has appropriate non-financial resources to run its business.

operational teams should be already recruited and sufficient capital ready to be put in place by the date of authorisation. 

Business model

The FCA has concerns around business models that pose unacceptably high risk to clients, especially retail clients.  Firms with retail exposure are unlikely to succeed with their application if they fail to demonstrate that they can fulfil their obligations under the Consumer Duty.  The FCA has also noted some firms incorrectly sought exemptions from FOS and FSCS because they will not have retail clients. However, it does not necessarily follow that professional clients will not have access to the FOS and/or FSCS, so a lack of understanding of the rules is a red flag to the regulator.

You can read the FCA’s publication here  - Link.

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