Authorisation: How Long & How Much?

fca approved persons fca handbook

Authorisation: How long does it take?

In connection with a MiFID firm, if the application is thorough, the FCA is required to respond within six months (26 weeks). If the application is inadequate it is permitted up to 12 months.

Although we show MiFID & Investment Firms in this series of blogposts, other firm types are available on request.

Where the application is for approval to manage an AIF, the FCA must reply within three months, extendable up to six months if it is notified to the applicant firm. In practice for most submissions to carry on MiFID investment advisory or investment management activities, these are being taken care of by the FCA within five months from the date of application. This includes how long it takes the FCA to process AIFM applications.

How much money will it cost?

There are various levels of cost; initial and ongoing.

Application and start-up costs: the costs of employing a competent to facilitate with the application process and the costs of forming the legal entity and if there is a need in arranging any LLP agreement for any applicant which is a limited liability partnership.

FCA costs: the FCA charges a fixed application fee, which is ₤ 5,000 for a portfolio manager (which will feature any firm whose permission includes managing an AIF) submitting a “moderately complex” application. Please note that additional fees may apply for each AIF registered or notified to the FCA for managing and/or marketing under AIFMD.

Expert adviser costs: with reference to your business, you may need assistance to complete/review an IT Controls form for the FCA and help with preparation of financial projections and calculation of regulatory capital requirements.

We provide FIXED PRICE authorisation packages as well as supplementary governance (policies) you may need.

Whoever you choose you need to be clear on these issues. Does the price include;
  • Qualified Compliance specialists handling your application (at least QCF Level 6)
  • All policies as required by the regulator?
  • All forms completed on your behalf (excluding electronic signatures etc)
  • All questions before submission at no extra cost
  • Recommendations on wording for text answers to explain your firm’s operations when the FCA asks,
  • All regulator questions and requests for explanations throughout the approval process at no extra charge
  • Professional project management of the process
  • Your questions answered post submission and throughout the approval process at no extra cost.
Why Is This Important?
BECAUSE OURS DO.

Regulatory capital costs: the FCA rules mandate firms to carry a minimum amount of capital which depends upon the activities of the business and the size of the business:

If the firm is a MiFID firm, the capital requirement is most likely to be a minimum of €50,000 and unless it is an exempt CAD firm, the business will also be required to carry, if greater, an amount equal to at minimum 13 weeks’ expenditure, based on projected outlay forecasts offered to the FCA. (An exempt CAD firm is limited to carrying on advisory and arranging activities; it can not carry on discretionary management activities or deal in investments for its clients).

Where a firm is an AIFM, the capital requirements will be directed by and calculated in accordance with AIFMD (and will be dependent on its fixed overheads, and the value of the assets under management). An AIFM must hold, at a minimum, the sum of (i) €125,000; (ii) the greater of (a) one quarter of its projected annual fixed overheads amount or (b) own funds equal to 0.02% of the amount by which the value of the funds under management (calculated according to AIFMD) exceeds €250m; and (iii) an additional amount to cover professional liability risks or appropriate PII cover.

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You may also be interested in;

  1. Why Do I Need To Be Authorised?
  2.  How do I become FCA authorised?
  3. What Are The Threshold Conditions?
  4. What Legal Entity Do I Use?