One of the biggest hurdles in starting a financial firm is getting FCA approved. The current governing body, the Financial Conduct Authority, has strict regulatory rules in place to ensure that compliance is met across the industry. Failing to comply with regulations in the financial industry has long-lasting and reaching consequences, not just for the firm or employee in question, but for the customer, the everyday man, and the economy in general.
So, how do you get FCA approved? We’re looking at the process of getting yourself FCA approved to either start your own firm or work in finance. Take a look at our guide.
What is the FCA?
The Financial Conduct Authority, or the FCA, is the governing authority of the financial industry in the UK. Following the 2008 financial crisis, and the discovery that the banks conduct contributed and was not well regulated by the authority of the time, the Financial Services Authority, it was agreed that the authority needed a drastic restructuring.
So, with the abolishing of the FSA, the Financial Conduct Authority took over, assessing firms and assigning approval for a fee in order for firms to provide their services and operate in the financial industry.
A lot of structural changes came with the FCA, including bigger powers of regulating the conduct of financial products, setting standards of approval, and investigating firms and staff members.
Getting approved by the FCA is a requirement of starting a financial firm or working within a financial firm. This is so that the FCA can be sure that you will adhere to compliance and regulations, so that there are no wider consequences of failing to comply.
How do you become FCA approved?
There are different processes for different genres of financial firms, so the process of the consumer credit firm might look different from the investment firms’ process.
The first step is to check that the services you intend to offer in your firm are covered in the regulated activities that will require authorization from the FCA. This might save you some time, as your services might not need authorisation from the FCA and the process can take a while, sometimes weeks. It’s recommended that you get this out of the way long before you launch your firm. You can make the process easier by using a service for compliance consulting.
You will then need to register with the FCA system, Connect, in order to make your application online. You can find a link to it on the UK Government website. It will take a lot of questions, information, and evidence around the operations of your firm. You will have to pay a fee to apply, and you might be required to meet your case officer to clarify any evidence given. The timeline offered by the FCA is between six and 12 months.
Requirements once you are approved
Because the FCA is the authority on financial industry conduct, they are consistently checking that their requirements for an approved person or firm is adhered to. They ask that approved firms adhere to the FCA Conduct Rules, which are outlined in detail in the FCA handbook, but generally speak to approved behaviours in finance.
They also ask that you abide by the rules of the FCA “fit and proper test”, which is outlined in the handbook as the three main elements being staff or staff members as honesty, integrity and reputation, competence and capability, and financial soundness.
And finally, the FCA looks to persons or firms to report anything that might impede the three main pillars of the fitness and propriety of the person or firm to the FCA. This ensures that financial compliance is adhered to and that the financial firms, and even the economy, is maintained and regulated.
You may be interested in: 8 Things to Understand About Taking Out Secured Personal Loans