What is FCA?
The Financial Conduct Authority (FCA), which oversees the financial services sector in the United Kingdom, ensures that the financial markets there operate smoothly. Ensuring honest and fair markets for people, corporations, and the economy as a whole is the organisation’s mission. This is accomplished by the Authority through consumer protection, financial market protection, and competition promotion. The United Kingdom Treasury and Parliament have jurisdiction over the FCA.
What does FCA do?
To achieve its strategic goal of protecting consumers and enhancing UK integrity, the Financial Conduct Authority (FCA) has set three operational goals. In the customers’ best interests, genuine competition amongst financial services providers should be encouraged. The FCA was founded on April 1st of 2013, and it took over the Financial Services Authority’s responsibilities for conduct and pertinent prudential regulation. The Financial Services and Markets Act of 2000 established the legislative goals of the FCA, which the Financial Services Act of 2012 altered.
The Act of 2012, which was implemented to guarantee that the financial industry manages and limits risks more effectively in the wake of the financial crisis, significantly altered how financial services businesses are regulated in the United Kingdom.
The FCA website states that the organisation controls the behaviour of 59,000 financial services companies and financial markets in the UK. For people, companies of all sizes, and the economy as a whole, honest and fair markets are the desired outcome. The Authority achieves this by fostering competition, defending the financial markets, and defending consumers. The British Parliament and Treasury are in charge of the FCA.
What can FCA do?
The FCA has broad authority to carry out its mission, including making rules and conducting investigations and enforcement actions. Since the FCA is an independent organisation without government backing, it must be able to increase fees. As a result, the FCA levies fees on approved businesses that engage in activities governed by the FCA and other organizations, such as recognised stock exchanges.
What you need to do to secure FCA Approval?
At financial services companies, significant responsibilities include heads of compliance [SMF16] and money laundering reporting officers (MLROs) [SMF17]. Many businesses must have senior management function (SMF) holders who have received FCA approval; for example, see SMF16 and SMF17 in The FCA Handbook.
Anyone playing the part of the SMF16 and SMF17 will require the abilities and expertise from training and experience to succeed. Their expertise and skill levels must be commensurate with the firm’s size and risk of harm.
The FCA looks for these qualities to determine a person’s competency before your business submits an application to authorise them for one of these jobs.
Required pieces of training and Qualifications by FCA
The majority of successful candidates will have finished the necessary training before applying. When applicants submit their applications, the FCA is less likely to accept them (even if one intends to after they become authorised).
Essential training entails taking classes that:
- applicable to the company’s line of employment for which the applicant is applying
- recent and current, that is, knowledgeable of the regulations in effect today and what is expected of them
- Where training occurred years ago, The FCA may inquire if the candidate has since added continuous professional development (CPD) courses to their training.
- brief “introductory” courses, on their own, do not contain sufficient content or depth to be effective for a head of compliance or MLRO, including the smallest organisations. Detailed enough to provide the person with the expertise to do the function.
The FCA does not support or advocate any training programs or service providers, nor does it specify the format training should take, including traditional classroom instruction, web-based learning, or instructional textbooks and resources. The FCA has discovered that programs that include a test or evaluation are superior for proving that a student has learned pertinent information. If you inquire, we can adequately advise you or, for some courses, set up and conduct training sessions for you.
What can your experience contribute as an applicant?
The Financial Conduct Authority (FCA) is aware of several ways to demonstrate an applicant’s professional experience as an SMF16 and SMF17. Candidates that have previously been hired have a variety of experiences and backgrounds, including work with regulatory and legal departments, attorneys, accounting professionals, and consulting firms.
Although applicants are not required to have previously held the head of compliance or MLRO positions, it might be advantageous if you have held more junior compliance positions, such as regulatory manager or deputy MLRO. The FCA may not approve them. However, it can assist if you have had a position that has previously been approved that is comparable to this one.
Candidates who have only held front-line positions in the past and who have had less exposure and training typically lack the abilities and expertise necessary to hold a governance committee. It could be reasonable and appropriate for the owner or chief executive to do these duties in some small and medium businesses. To guarantee that their company complies with their firm’s pertinent regulations and laws, the FCA still expects those people to have the necessary training and expertise.
Assistance from outside sources, such as regulatory consulting professionals or attorneys
Firms occasionally work with outside counsel, such as attorneys or compliance experts, to help their compliance efforts. These consultants may assist with their application or maintaining their compliance function. Although not required, several businesses find that it facilitates their internal arrangements.
Nevertheless, the FCA will undoubtedly reject one’s application if this kind of outside assistance is the only source of compliance for the company. Any employee at your company who is in charge of a compliance or MLRO role has to be knowledgeable and experienced enough to make judgments about compliance that are pertinent to the corporation, know when to ask for guidance, and know how to put that advice into practice.
How does an applicant’s capacity affect FCA’s Approval process?
Anyone who handles regulation or MLRO duties must devote enough time to them. Those who plan to work on it a few hours a week usually aren’t accepted.
Many companies employ full-time employees to do these tasks. Smaller businesses may suggest that a person performs the function part-time, and the FCA has occasionally agreed; nevertheless, their dedication to the function must be reasonable and adequate.
The FCA will also want to understand potential conflicts of interest if the proposed head of compliance or MLRO has additional responsibilities inside or outside the company. For instance, because one of their duties will be supervising the client-facing business, successful applicants typically exhibit independence from this company area.
The FCA also takes into account the following:
- Where the candidate will be working; ideally, they will do so from the company’s main office in the UK.
- Whether the applicant is a top leader inside the organisation, such as a corporate director, since if they aren’t, the FCA may challenge if they possess the incentives or power required to be competent in these jobs, even if they have expertise and skills.
- The FCA still might seek an interview even if a candidate feels they have the required education or experience.
Please get in touch with us at coredo.eu if you decide to proceed with your application for authorisation or registration.