We are very excited and pleased to see the UK FCA issuing a statement on Regulatory Permissions and asking firms (and other regulated firms from outside the UK) to regularly review their regulatory permissions.
I wrote an article about this very issue in the RegTech Book titled Passporting in the EU – Is an Opportunity also a Problem.
We strongly recommend UK regulated firms to review their regulatory permissions closely and assess if they are holding onto permissions they no longer need or permissions they should have but cannot see on the register. For UK firms, is likely in the coming months to cancel regulatory permissions which are not earning any income. It would therefore be a good idea to contact the FCA if you need a license variation to remove regulatory permissions which you no longer need although they were part of your initial business plan.
It is actually rather interesting to note that in the UK, the FCA clearly splits the regulatory permissions into financial services, financial instruments and client categories, unfortunately, other regulatory authorities in the EEA or elsewhere do not specifically authorise a firm for a particular financial service, financial instrument and client category, they grant a firm all possible options even if the firm applied for one under each set.
We have been advocating for a clear permission split for the past eight years and we are happy to see movement on this front. Otherwise, how could a firm meet its regulatory threshold conditions if they have received a regulatory permission/ license for all financial services, all financial instruments and all client categories when they only asked for one under each category? We hope to see a clear permission split tied to the firm’s business plan.
This without doubt post-Brexit will become a necessity, where all regulatory authorities have to get much better at making a split between financial services, financial instruments and client categories and state specifically what each firm under their authority is regulated to offer based on their approved business plan and the threshold conditions attached to their license, and make such register easily accessible to the public. Perhaps this is also a good opportunity for ESMA to work with at least the EEA states and ensure that its register is fully up to date and include in addition to current activities, financial instruments as well as client categories which the relevant firm is allowed to services and offer its financial products to.
Originally published on Linkedin.