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Authorisation Delays: FCA Applications Backlog

9th June 2016

FCA Authorisation Backlogs

FCA Applications are taking ‘half a year to get authorised’ the Financial Times reported yesterday.

However, this is not news for those who are currently in the process of applying to the FCA and many in the markets will have seen the statement the FCA issued in March 2016, (with regards to P2P lenders) that revealed the regulator had a backlog of 86 firms awaiting authorisation to operate.

FCA Applications Timescales

Whilst the regulator advises it has up to 12 months to decide on applications for authorisation, the precise length of time it takes will depend upon the completeness of the application, the complexity of the business, and the applicant’s ability to demonstrate their compliance with their regulatory requirements.

In the P2P March 2016 statement, the FCA had said it was taking a “proportionate approach to regulation” and that they were “working closely with individual firms to ensure they meet the rigorous statutory standards and are authorised as quickly as possible.”

However, another couple of months on, it seems applications are still being delayed and more often than not during the very initial phase – when they have been submitted and are awaiting a case officer to be appointed to them by the regulator.

Consumer Credit Authorisations

On 21st April this year, the FCA issued a Data Bulletin supplement on Consumer Credit Authorisations providing application information to the industry on the authorisation process for consumer credit firms as at the end of last year.

The FCA’s bulletin reports that at that time 32,070 firms had applied for authorisation and a further 780 applied to be grandfathered. From this number the FCA had made a decision upon 27,093 with 25,645 (95%) having had a positive decision made with regards to their authorisation and 1,448 (5%) firms having either withdrawn their applications or having been refused.

There were also 17 instances where the regulator breached their statutory deadlines for determining an application outcome this being the time frame as set out in the FSMA 2000 being for full, limited and VOP cases that a determination for applications is made within six months of it being complete or 12 months from receiving it (whichever is earlier). Unfortunately the regulator anticipates that “Because of the volume of complex cases we are considering, we expect there will be further breaches.”

Full Consumer Credit Applications

It seems out of those making consumer credit applications, those applying for full permission will likely be most affected with the FCA stating “it takes longer to process a full permission application than other types of case” since “complex cases and business models that pose higher risks to consumers will inevitably take longer to assess.”

On average in Q4 of 2015, the FCA took eight to ten weeks to determine a limited permission case, 12 weeks for a variation of permission and 27 weeks for a full consumer credit permission application.

In comparison, for authorisations of other types of firms not primarily carrying out consumer credit activities, the FCA advised it “took around 22 weeks to process an authorisation case and 11 weeks for a VoP.”

The Road ahead:

Unfortunately, as informed by FT reporters yesterday the regulator “expects things to get worse before they get better, as over the next two quarters it trains staff it has recruited to deal with the high volume of caseload.”

In confirmation to the FT, a FCA Spokesperson said that they “are currently assigning these types of cases between eight to ten weeks after receipt”, which is a number of weeks faster than it had been six months ago and that “the time taken to assign cases to case officers should continue to improve over the rest of 2016.”

FCA Application Support: Getting Authorised

Compound Growth helps its clients to apply for FCA authorisation. If your firm is seeking to apply for Part IV Permission with the FCA, then get in touch with our helpful and friendly compliance team to discuss your requirements.

We will work closely with you to ensure that your application has the best chance of success.

For more information on Getting Authorised or if you are considering applying to the FCA and would like to discuss your FCA Application with us please feel free to contact us.

Read our latest articles, news and views affecting compliance and regulation in the UK Financial Services Industry.

The FCA on Consumer Credit Applications:

“it takes longer to process a full permission application than other types of case”

FCA, April 2016