So, What Are The Threshold Conditions?

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Precisely what are the threshold conditions?

The Threshold Conditions present the minimum conditions which a firm is obligated to fulfil, and constantly meet, for you to be given, and to retain authorisation.

Primarily these are;

Location of offices: the authorised firm’s head office is required to reside in the UK. This is not an option. This is regarded by the FCA as where the directors and other senior management (ie those who make decisions with regard to the UK firm’s central path and the important management decisions of the firm on a day to day basis) and where the principal supervising operations of the firm (such as, central compliance, internal audit) are housed. This is a condition that subsidiaries of non-UK based business managers can often find difficult to fulfil if there is no person of ample seniority in London.

Effective supervision: the UK firm will need to be capable of being efficiently supervised by the FCA having regard to the nature and complexity of its business and should not have any close links (ie controllers or other affiliates) which would avert the FCA’s effective supervision.

Appropriate resources: the useful resources of the firm (including non-financial resources which include personnel) must, in the opinion of the FCA, be appropriate in relation to the regulated activities that it seeks to execute, or carries on. This element is more general and is separate to the strict capital requirements described further below.

Suitability: the firm must satisfy the FCA that it is a fit and proper person having regard to all the circumstances including nature of the business and experience of the personnel running the business.

Business model: the strategy of the firm for conducting business must appropriate for the regulated activities that it seeks to carry on, and in this particular context the FCA will evaluate whether the business model is consistent with the business being conducted in a sound, expected and prudent manner, the interests of consumers and the integrity of the UK financial system.

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