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AUTH 1

Introduction to the Authorisation manual

AUTH 1.1

Application and purpose

01/12/2004

Application

AUTH 1.1.1

This manual applies to:

(1) a person which is considering carrying on activities in the United Kingdom which may fall within the scope of the Act and is seeking guidance on whether it needs to be an authorised person;

(2) a person which seeks to become an authorised person under the Act and which is, or is considering, applying to the FSA for Part IV permission to carry on regulated activities in the United Kingdom;

(3) an EEA firm, a Treaty firm or a UCITS qualifier that wishes to establish a branch or provide cross-border services into the United Kingdom using EEA rights, Treaty rights or UCITS Directive rights, or apply for a top-up permission;

(4) a candidate for approval under Part V of the Act, but only in respect of AUTH 6 (Approved persons), which is of general relevance, and AUTH 8 (Determining applications); and

(5) persons generally.

03/09/2001
Future version of AUTH 1.1.1 after 20/10/2005

Purpose

AUTH 1.1.2

The purpose of:

(1) authorisation is to allow only persons which satisfy the necessary conditions (relating, for example, to adequate resources and suitability - see COND) to engage in a regulated activity; and

(2) approval of persons (generally individuals) is to seek to ensure that only fit and proper persons perform controlled functions in the financial services industry.

03/09/2001

AUTH 1.1.3

The purpose of this manual is to give guidance about:

(1) the circumstances in which authorisation is required, or exempt person status is available, including guidance on the activities which are regulated under the Act and the exclusions which are available; see PERG 2 (Authorisation and regulated activities);

(2) the procedures by which a person can apply for, or obtain, permission under the Act to carry on these regulated activities and become an authorised person and any fees payable; see AUTH 3 (Applications for Part IV permission), AUTH 4 (Authorisation Fees) and AUTH 5 (Qualifying for authorisation under the Act).

(3) the procedures by which a person seeking to become an authorised person can obtain approval for persons to perform controlled functions under the approved persons regime; see AUTH 6 (Approved persons); and

(4) the FSA's powers in relation to authorisation and how it will use them (see AUTH 3 and AUTH 5), including a summary of how applications will be determined; see AUTH 8 (Determining applications).

AUTH 1.2

Introduction

01/12/2004

AUTH 1.2.1

(1) The Financial Services and Markets Act 2000 (the Act) is the UK legislation under which bodies corporate, partnerships, individuals and unincorporated associations are permitted by the FSA to carry on various financial activities which are subject to regulation (referred to as regulated activities).

(2) The activities which are regulated activities are specified in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (the Regulated Activities Order): for example, accepting deposits, managing investments, effecting contracts of insurance, dealing in investments as agent. In general terms, a regulated activity is an activity, specified in the Order, carried on in relation to one or more of the investments specified in the Order. PERG 2 gives further guidance on regulated activities and specified investments.

01/07/2005
Past version of AUTH 1.2.1 before 01/07/2005

AUTH 1.2.2

In order to carry on a regulated activity in the United Kingdom, or even "purport to do so", section 19 of the Act (The general prohibition) provides that a person must be either authorised under the Act (an authorised person) or exempt from its provisions (an exempt person). In this context, a "person" includes both a legal person, for example a body corporate, and a natural person, that is, an individual.

03/09/2001

AUTH 1.2.3

Exempt persons are persons falling within the following groups:

(1) an appointed representative;

(2) a person, or class of persons, specified in secondary legislation; for example, the Bank of England is specified in the Financial Services and Markets Act 2000 (Exemption) Order 2001 (the Exemption Order);

(3) a recognised investment exchange or a recognised clearing house (for more information on being a recognised body see REC).

Further information on exempt persons is given in PERG 2.10G (Persons carrying on regulated activities who do not need authorisation).

01/07/2005
Past version of AUTH 1.2.3 before 01/07/2005

AUTH 1.2.4

Members of the Society of Lloyd's are not required to obtain authorisation to carry out certain insurance market activities unless so directed by the FSA (see PERG 2.10.9G). In addition, certain professional firms (solicitors, accountants and actuaries) are allowed under Part XX of the Act (Provision of Financial Services by Members of the Professions) to carry on certain regulated activities without authorisation subject to their complying with specified conditions (see PERG 2.10.12G and PROF).

01/07/2005
Past version of AUTH 1.2.4 before 01/07/2005

AUTH 1.2.5

Before any person carries on in the United Kingdom, by way of business, activities that are regulated activities, it will generally need to be an authorised person (see PERG 2.2). There are two main kinds of authorised person under the Act: a person who is authorised because it has a Part IV permission (see AUTH 1.2.5 G (2)) and a person which qualifies for authorisation (see AUTH 1.2.5 G (1)). It is important that a person considering carrying on a regulated activity in the United Kingdom determines which type of authorisation is required.

(1) A person from another EEA State which is authorised in its Home State may be entitled to establish a branch in, or provide cross border services into, the United Kingdom under the Single Market Directives, the Treaty or the UCITS Directive (this is often known as passporting). The process by which that person can qualify for authorisation under Schedules 3, 4 and 5 to the Act is described in AUTH 5 .

(2) Other persons wishing to carry on regulated activities in the United Kingdom must obtain permission from the FSA under Part IV of the Act (this is known as Part IV permission). Such persons will become authorised persons if the FSA gives them permission. AUTH 1.6 outlines the process of applying for Part IV permission, the formal elements are described in more detail in AUTH 3. At the same time, the applicant will need to apply for certain persons to become approved persons (see AUTH 6).

AUTH 1.2.6

(1) Electronic commerce activities, other than insurance business falling within the scope of the Insurance Directives, carried on by an incoming ECA provider are excluded from being regulated activities. The provider does not require authorisation if it does not carry on any other regulated activities in the United Kingdom (see PERG 2.9.18G).

(2) An outgoing ECA provider providing electronic commerce activities that are regulated activities from an establishment in the United Kingdom is regarded as carrying on such activities in the United Kingdom regardless of whether they are provided to an EEA ECA recipient or a UK ECA recipient (see PERG 2.4.3G(5)). The provider should be authorised before it starts providing the services.

(3) ECO sets out rules and guidance that apply to both incoming and outgoing ECA providers.

01/07/2005
Past version of AUTH 1.2.6 before 01/07/2005

AUTH 1.3

The Authorisation manual

01/12/2004

AUTH 1.3.1

(1) The Authorisation manual (AUTH), the Supervision manual (SUP), the Enforcement manual (ENF) and the Decision making manual (DEC) form the Regulatory Processes part of the Handbook.

(2) AUTH sets out the relationships between the FSA and applicants for Part IV permission and persons wishing to exercise EEA rights, Treaty rights or UCITS Directive rights. SUP sets out the relationship between the FSA and authorised persons (referred to in the Handbook as firms). As a general rule, material that is of continuing relevance after authorisation is in SUP.

(3) ENF describes the FSA's enforcement powers under the Act and sets out its policies for using these powers.

(4) DEC is principally concerned with, and sets out, the FSA's decision making procedures for decisions that involve the giving of statutory notices.

03/09/2001

AUTH 1.3.2

The procedures for applying for Part IV permission, for approval of a person under section 59 of the Act and for qualifying for authorisation under Schedules 3, 4 and 5 to the Act are derived from the Act. AUTH gives guidance on the Act and the FSA's procedures. It also contains directions to applicants on the manner of making applications (see AUTH 3.9.3 D and AUTH 6.3.2 G) and rules on fees (see AUTH 4 (Authorisation fees)).

18/10/2001

AUTH 1.3.3

(1) A Reader's Guide gives an introduction to the Handbook and is a key navigational aid for Handbook users. The guide explains the format, layout and workings of the Handbook, including the status and definitions of its components such as directions, rules and guidance.

(2) We recommend that readers consult this Guide before or while reading AUTH.

01/04/2005
Past version of AUTH 1.3.3 before 01/04/2005

AUTH 1.3.4

(1) The Act, and the secondary legislation made under the Act, is complex. Although AUTH gives guidance to those considering or seeking authorisation, it does not aim to be exhaustive.

(2) References have been made to relevant provisions in the Act or secondary legislation. However, since reproducing an entire statutory provision would sometimes require a lengthy quotation, or considerable further explanation, many provisions of the Act, or secondary legislation made under the Act, are summarised. For the precise details of the legislation, readers of the manual should, therefore, refer to the Act and the secondary legislation itself, as well as the manual.

(3) The Act and the Explanatory Notes are available from the Stationery Office (the Act, ISBN 0-10-540800-X, £21.70; and the Explanatory Notes, ISBN 0-10-560800-9, £14.50). Secondary legislation made by the Treasury under the Act can be obtained from the Stationery Office or can be accessed through the Treasury's website (www.hm-treasury.gov.uk).

03/09/2001

AUTH 1.3.5

Guidance on the Act or secondary legislation made under the Act represents the FSA's view and does not bind the Courts. In the event of any discrepancy between the manual and the Act or that secondary legislation, the provisions of the Act or the secondary legislation prevail. It remains each person's responsibility to ensure that, at all times, his activities comply with the Act and with other relevant provisions (including general requirements such as company law or consumer credit) and to take all necessary steps to satisfy himself of this, including where necessary by seeking his own legal advice.

03/09/2001

AUTH 1.3.6

AUTH uses words and phrases that have specific meanings in the Handbook or in legislation; these may be different from, or more precise than, their usual dictionary meanings. Defined terms used in the text of the Handbook are shown in italics. For the meanings of defined terms used in AUTH, see the Glossary (either the extracts at the end of AUTH or the consolidated Glossary). It is essential that readers refer to these definitions.

01/04/2005
Past version of AUTH 1.3.6 before 01/04/2005

AUTH 1.3.7

AUTH 1.3.9 G summarises AUTH and parts of PERG. Readers should note that in a cross-reference, as explained in Chapter 6 of the Reader's Guide, the code letters of the manual or sourcebook immediately precede the chapter number. For example, AUTH 1 is the first chapter of the Authorisation manual.

01/07/2005
Past version of AUTH 1.3.7 before 01/07/2005

AUTH 1.3.8

The FSA is keen to encourage an interactive authorisation process. With this in mind, AUTH gives specific contact points in the FSA from which an applicant can get help with questions about its application. To help readers, the contact points are listed at AUTH 1.9.2 G.

03/09/2001

AUTH 1.3.9

Summary of AUTH and parts of PERG

This table belongs to AUTH 1.3.7 G

Chapter:

Applicable to:

On:

PERG 2:

Authorisation and regulated activities

a person wishing to find out whether it needs to be authorised (or is an exempt person).

the Act, the Regulated Activities Order and the Exemption Order.

AUTH 3:

Applications for Part IV permission

an applicant for Part IV permission.

how the FSA will exercise the powers granted to it in Part IV of the Act to determine and, if appropriate, grant an application for Part IV permission.

AUTH 4:

Authorisation Fees

an applicant for Part IV permission.

the fees the FSA will levy on applicants for Part IV permission.

AUTH 5:

Qualifying for authorisation under the Act

1. an EEA firm wishing to exercise its EEA right and establish a branch in, or provide cross border services into, the United Kingdom;

how an EEA firm, a Treaty firm or a UCITS qualifier can qualify for authorisation under the Act.

2. a Treaty firm wishing to exercise its Treaty rights;

3. a prospective UCITS qualifier.

AUTH 6:

Approved persons

1. an applicant for Part IV permission seeking approval for a person to perform a controlled function under arrangements to be entered into by the firm or its contractors (including appointed representatives);

2. a candidate.

1. the controlled functions that the FSA has specified; and.

2. how the FSA will exercise the powers given to it in Part V of the Act to require firms to obtain prior approval for persons who will perform controlled functions.

Note: EEA firms, Treaty firms and UCITS qualifiers should refer to SUP 10 (Application).

PERG 7:

Periodical publications, news services and broadcasts: application for certification

anyone involved in publishing periodicals, or in providing news services or broadcasts, who gives (or proposes to give) advice about securities or contractually based investments.

1. whether the person will be carrying on the regulated activity of advising on investments; and

2. how the FSA will exercise its power to give certificates.

AUTH 8:

Determining applications

1. applicants for Part IV permission generally;

1. the procedures which the FSA will follow when granting an application; and

2. an EEA firm or a Treaty firm that has submitted an application for approval of a person under the approved persons regime;

2. a summary of the FSA's decision making procedures for:

(a) refusing, or proposing to refuse, an application for Part IV permission or an application for approval under the approved persons regime; or

3. a candidate.

(b) granting, or proposing to grant, an application for Part IV permission subject to limitations or requirements not applied for or with a narrower description of regulated activity than that to which the application relates.

AUTH 1.4

The FSA's approach to applications for Part IV permission: an overview

01/12/2004

AUTH 1.4.1

(1) Under the Act, there is a single process for applications for Part IV permission. However, the amount of detailed information that an applicant will have to submit as part of its application will be related to the risks posed to the FSA's regulatory objectives by the regulated activities and any unregulated activities that the applicant intends to carry on. Thus the information requested will depend on, and be proportional to, the nature of the application.

(2) This proportionality is reflected in the design of the application pack. Although all applicants have to complete certain standard sections, other sections of the pack are specific to certain types of business such as insurance business. In completing the relevant sections of the pack, the level of detailed information an applicant will be required to provide varies according to the nature of the application. Thus, for example, the FSA will require an applicant which seeks to carry on low-risk designated investment business activities to submit, among other things, a business plan and other information which is proportional and relevant to the applicant's size and the scope of its proposed business.

03/09/2001

AUTH 1.4.2

(1) To gain, and retain, the status of an authorised person, an applicant must satisfy and continue to satisfy certain minimum requirements, laid down in the Act. These are known as threshold conditions and further guidance is given in AUTH 3.8 and COND.

(2) The FSA will assess each application against the threshold conditions. During this assessment, the FSA may require further information from applicants to address any concerns. If an applicant can satisfy the threshold conditions in part only, the FSA may impose a limitation or a requirement on the Part IV permission applied for to enable the applicant to satisfy the threshold conditions.

03/09/2001

AUTH 1.4.3

(1) An applicant for Part IV permission will be expected to demonstrate to the FSA that it is ready, willing and organised to comply, and continue to comply, with the regulatory obligations that are relevant to the regulated activities it seeks Part IV permission to carry on.

(2) To do this, an applicant will need to familiarise itself with the relevant Principles, other rules and guidance that apply to the regulated activities it proposes to carry on. AUTH is designed as a guide, but it cannot alone equip applicants with all the detail of the regulatory obligations for a proposed business. Such detail is in the other parts of the Handbook.

03/09/2001

The FSA's approach to risk assessment

AUTH 1.4.4

(1) Alongside the assessment of the threshold conditions, described in AUTH 1.4.2 G (2), the FSA will operate its risk assessment process. This process enables the FSA to be proportional in its procedures, both in terms of the information which it seeks from an applicant and in the allocation of its own resources. The outcome of this process will help determine the relationship the FSA will seek to have with the applicant if it gives it Part IV permission.

(2) The process will include assessing the risks posed by the applicant against a number of probability and impact factors. The probability factors relate to the likelihood of an event happening, and the impact factors indicate the scale and significance of the problem if it occurred. For further details of the process see SUP 1.3 (The FSA's risk based approach to supervision). The FSA intends to communicate the outcome of its risk assessment to the firm (see SUP 1.3.10 G).

03/09/2001

AUTH 1.5

Understanding the requirements and standards of the regulatory system

01/12/2004

AUTH 1.5.1

The requirements and standards of the regulatory system, with which an authorised person must comply, vary depending on both the nature of the firm and the regulated activities it has permission to carry on. As part of preparing an application for Part IV permission, an applicant will need to familiarise itself with the rules, regulations and standards that would apply to the business it proposes to carry on. An applicant will then have to demonstrate how it proposes to comply, for example, with the high level systems and controls requirements in SYSC and, where relevant, the applicable rules in COB. EEA firms, Treaty firms or UCITS qualifiers which qualify for authorisation should also familiarise themselves with the relevant regulatory obligations before carrying on regulated activities in the United Kingdom.

03/09/2001

AUTH 1.5.2

(1) An EEA firm will be informed of any relevant regulatory obligations (known as applicable provisions) by the FSA or, in the case of an EEA firm which is an insurer, its Home State regulator, as part of the process of qualifying for authorisation.

(2) An applicant for Part IV permission should consult the notes to the application pack. They cross-refer to relevant parts of the Handbook, and this will help applicants to respond to certain questions.

03/09/2001

AUTH 1.5.3

As a general guide, all applicants for Part IV permission should be familiar with the threshold conditions (COND) and the Principles for Businesses (PRIN) in the High Level Standards part of the Handbook. To complete an application for Part IV permission, an applicant will also need to have regard to the following matters:

(1) Prudential requirements:

(a) the high level requirement for adequate resources, which is applicable to all firms, described in COND; and

(b) the detailed prudential requirements in the Interim Prudential Sourcebooks (collectively referred to as IPRU) and in the Integrated Prudential Sourcebook (PRU) in the Business Standards part of the Handbook. In addition to PRUThere are five interim sourcebooks that apply, respectively, to banks (IPRU(BANK)), building societies (IPRU(BSOC)), friendly societies (IPRU(FSOC)), insurance companies (IPRU(INS)) and investment business firms (IPRU(INV)). Guidance is given to applicants in AUTH 3 Annex 2 on determining which prudential category, and which sourcebook of IPRU, or section of PRU will apply.

An applicant will need to confirm that it will have adequate resources in place to meet the applicable requirements.

(2) Systems, controls and internal arrangements:

(a) the high level requirement for all firms to maintain adequate resources (including systems and human resources) described in COND and the high level standards for all firms in Senior management arrangements, systems and controls (SYSC); and

(b) the detailed requirements, many of which are regulated activity specific, in the sourcebooks in the Business Standards part of the Handbook; for example, in IPRU, PRU, the Training and Competence sourcebook (TC), the Money Laundering sourcebook (ML) and Conduct of Business sourcebook (COB); and the reporting requirements for firms in SUP 16 (Reporting requirements) and SUP 17 (Transaction reporting).

Before the FSA gives a Part IV permission, an applicant will need to confirm that it will have the necessary systems and controls in place.

(3) Approved persons:

(a) the high level standards contained in the Fit and Proper test for approved persons (FIT) and the Statements of Principle and Code of Practice for Approved Persons (APER); and

(b) the detailed rules about controlled functions and other matters in SUP 10 (Approved persons).

An applicant will need to identify the persons that will require approval from the FSA in conjunction with its application for permission. This approval is required before a person may perform a controlled function.

(4) Other regulatory obligations:

(a) the detailed regulatory obligations that apply to certain types of firm or regulated activity in COB, ICOB, MCOB, CASS, the Market Conduct sourcebook (MAR) and SUP;

(b) the obligations in Dispute resolution: Complaints (DISP) and Compensation (COMP); and

(c) the specialist sourcebooks included in the Handbook such as, for example, those for collective investment schemes, exempt professional firms and the market at Lloyd's.

31/10/2004
Future version of AUTH 1.5.3 after 01/03/2006

AUTH 1.6

Applying for Part IV permission: overview of the process

01/12/2004

AUTH 1.6.1

The formal procedures for applying for Part IV permission are described in AUTH 3. The application process is, however, interactive and includes discussions and, in some circumstances, an initial meeting with a potential applicant before it submits a completed application form. This section, therefore, outlines how the application process is likely to proceed in practice.

03/09/2001

AUTH 1.6.2

(1) Although the FSA does not require all applicants to appoint professional advisers to help with the application process, reports from professionals will be required in respect of some applications for Part IV permission (see AUTH 3.9.16 G and AUTH 3.9.17 G).

(2) In addition, a potential applicant should consider at an early stage whether, given the nature of the proposed business it is seeking to carry on and its own experience, it is appropriate to seek professional advice in connection with its application. For example, an applicant may need to seek professional advice from lawyers, auditors or reporting accountants, consultants, actuaries or its professional body, before making a formal application to the FSA.

(3) SUP 9 (Individual guidance) describes how a person may apply to the FSA for individual guidance which relates to its own particular circumstances or plans. Applicants should note, in particular, SUP 9.2.5 G, which states that the FSA will expect a person to have taken reasonable steps to research and analyse a topic before approaching the FSA for individual guidance. SUP 9.2.5 G also cautions that the FSA should not be viewed as a first port of call, except where only the FSA can give guidance.

03/09/2001

AUTH 1.6.3

Before beginning discussions with the FSA, an applicant for Part IV permission should have completed its business planning to determine what activities it proposes to undertake and the resources it will need to do so.

03/09/2001

AUTH 1.6.4

(1) An applicant should also have determined and established the appropriate legal entity through which the proposed activities are to be conducted - that is, whether it wishes to trade on its own account, or establish:

(a) a body corporate - for example, a limited company, which can be public or private and limited by shares or by guarantee, or a friendly society; or

(b) a partnership; or

(d) a UK branch.

(2) A limited liability partnership (regardless of the jurisdiction of incorporation) is a body corporate and does not fall within the definition of partnership, except in relation to SUP 10 (Approved persons). Most limited liability partners will be either directors or senior managers, but this will depend on the constitution of the limited liability partnership.

03/09/2001

AUTH 1.6.5

The legal status of an insurer and an applicant which seeks to carry on the regulated activity of accepting deposits is specified by threshold condition 1 (Legal status) (see COND 2.1).

03/09/2001

AUTH 1.6.6

The first stage in the application process is to establish whether the proposed business will carry on regulated activities requiring permission under Part IV of the Act (Permission to carry on regulated activities). PERG 2 gives a high-level guide to the activities that are regulated under the Act and those that are excluded (but this is not a substitute for consulting the legislation itself); further queries may be referred to the FSA's Authorisation Enquiries team (see AUTH 1.9.2 G).

01/07/2005
Past version of AUTH 1.6.6 before 01/07/2005

AUTH 1.6.7

Once an applicant has determined that it needs to apply for Part IV permission, it should begin to gather the information needed for the formal application. At this stage, applicants are encouraged to begin discussion with the FSA's Enquiries and Applications Department (Applications team) about their plans and the application (see AUTH 1.9).

01/07/2003

AUTH 1.6.8

The FSA's application pack (that is, the set of forms for an application for Part IV permission, and the notes for their completion) and approved persons forms are available from the FSA website or by contacting the Enquiries and Applications Department (Applications team) (see AUTH 1.9.2 G).

01/07/2003

AUTH 1.6.9

Among other things, the applicant will need to:

(1) determine the precise scope of the permission it wishes to apply for; this should include the regulated activities (the specified activities and the specified investments in respect of which the activities are carried on: see PERG 2 Annex 2G) and any limitations and requirements the applicant wishes to apply for to refine the scope of the regulated activities; an example includes a limitation on the types of client it wishes to carry on business with or a requirement not to hold or control client money;

(2) determine whether it needs to apply to the Society of Lloyd's for admission to the register of underwriting agents or to any other bodies; the timing of these applications should be included in the applicant's plans;

(3) determine which prudential category (and, if relevant, sub-category) will apply, and therefore its minimum regulatory financial requirements;

(4) determine the rules in the Handbook which will apply to the activities it proposes to carry on, and take all reasonable steps to ensure that it is ready, willing and organised to comply with those rules;

(5) determine the systems and controls necessary both to support its activities and to comply with the relevant rules, and have plans to implement and test these systems before the FSA determines its application;

(6) prepare a business plan setting out the planned activities (and related risks), budget and resources (human, systems and capital);

(7) determine which persons will fall under the FSA's approved persons regime and apply for the necessary approval; and

(8) obtain any auditors' or reporting accountants' reports that are required to support its application or have been requested by the FSA; the auditors or other professionals should be involved early in the process to ensure that the planned work on the application will be sufficient to enable them to provide any opinions required.

01/07/2005
Past version of AUTH 1.6.9 before 01/07/2005

AUTH 1.6.10

(1) It is in the interests of the applicant and the FSA that the application pack, when submitted, should be fully completed and address any areas of potential regulatory concern.

(2) If an applicant's plans are complex (for example, if they include insurance business, accepting deposits or certain types of designated investment business), high risk or innovative (for example, if they raise new or unusual issues), then the FSA would expect to be in discussion with the applicant while the applicant is developing the material needed for the formal application.

(3) Where appropriate - for example in an application for Part IV permission including insurance business or accepting deposits - FSA staff may, by agreement with the applicant, arrange a pre-application meeting or discuss aspects of the applicant's draft business plan or other relevant documents while the application is being prepared. This will help the FSA develop its knowledge of the applicant and the proposed business.

03/09/2001

AUTH 1.6.11

In addition, all applicants are encouraged to take the opportunity to discuss particular issues with the FSA as they arise, with a view to tackling them before submitting the completed application pack. Applicants are also advised to review the application pack before submission and check that they have provided adequate responses to all questions (that is, responses appropriate to the scope and scale of their activities and the risks they may pose to consumers).

03/09/2001

AUTH 1.6.12

After receiving the application pack, the FSA will begin its formal process of consideration. The FSA Applications and Individual Approvals teams will review the application pack and approved persons regime forms respectively. During this process, the FSA may ask for additional information and is likely to meet the applicant's management and visit its premises before determining the application.

01/07/2003

AUTH 1.7

Appointed representatives

01/12/2004

AUTH 1.7.1

An applicant for Part IV permission, an EEA firm or Treaty firm which is seeking to carry on designated investment business may wish to consider appointing an appointed representative if they become authorised.

03/09/2001

AUTH 1.7.2

(1) An appointed representative is a person who, as a result of satisfying conditions in section 39 of the Act (Exemption of appointed representatives) is an exempt person in respect of certain business which it carries on for an authorised person. The Act states that a person who is an authorised person cannot also be an appointed representative.

(2) The business for which an appointed representative may be exempt is specified in the Appointed Representatives Regulations. The business which an appointed representative carries on for a firm must fall within the scope of the firm's own permission.

(3) SUP 12 (Appointed representatives) contains guidance on the conditions in the Act, the Appointed Representatives Regulations and the FSA's rules and guidance which apply to a firm which is appointed or has appointed an appointed representative. An applicant for Part IV permission can notify the FSA of the persons it wishes to appoint as appointed representatives in the application pack.

18/10/2001

AUTH 1.8

What other general guidance is available from the FSA?

01/12/2004

AUTH 1.8.1

It will not always be clear to a person whether or not its prospective business activities will be such that it requires authorisation. The FSA has established an Authorisation Enquiries team to help in such cases.

03/09/2001

AUTH 1.8.2

The Authorisation Enquiries team gives assistance by:

(1) producing guidance for persons who wish to find out whether they need to be authorised (see PERG 2);

(2) publishing guidance about areas where persons may have difficulty deciding whether or not authorisation or exemption is needed (this is included in AUTH App X [to be added at later date]); and

(3) responding to oral and written enquiries from applicants, prospective applicants, EEA firms, Treaty firms or prospective UCITS qualifiers (or their professional advisers) about their particular position under the Act.

01/07/2005
Past version of AUTH 1.8.2 before 01/07/2005

AUTH 1.8.3

The Authorisation Enquiries team also handles enquiries about financial promotions. Under the Act, the communication of a financial promotion by an unauthorised person is prohibited, unless its contents have been approved by an authorised person, or an exemption applies.

03/09/2001

AUTH 1.8.4

As well as being included as an appendix to AUTH, copies of all current guidance issued by Authorisation Enquiries are available separately from the FSA website at www.fsa.gov.uk or through the FSA's Publications Enquiries department on 020 7066 3298. The Authorisation Enquiries team will be pleased to clarify or discuss any aspects of the guidance in more detail. Enquiries about the scope of the Act may be made to the Authorisation Enquiries helpline by telephone on 020 7066 0082 or by e-mail to authorisationenquiries@fsa.gov.uk.

01/10/2002

AUTH 1.8.5

The FSA will review its guidance from time to time and may need to amend or withdraw published or written guidance in the light of changing circumstances, developing business practices, or case law. For the status of guidance issued by the FSA, see Chapter 6 of the Reader's Guide.

01/04/2005
Past version of AUTH 1.8.5 before 01/04/2005

AUTH 1.9

Next steps?

01/12/2004

AUTH 1.9.1

To find out where next to look in the Authorisation manual, see AUTH 1 Annex 1 G. To find out who to contact at the FSA see AUTH 1.9.2 G.

03/09/2001

AUTH 1.9.2

Who to contact at the FSA

This table belongs to AUTH 1.9.1 G

FSA dept.

For advice on:

Contact details:

Authorisation and Approvals Department

The authorisation aspects of the Act and relevant secondary legislation made under the Act (for example, the Regulated Activities Order)

Authorisation Enquiries

The Financial Services Authority

25 The North Colonnade

Canary Wharf

London E14 5HS

Telephone: 020 7066 0082

Authorisation and Approvals Department

Applications for Part IV permission

Authorisation Teams

The Financial Services Authority 25 The North Colonnade

Canary Wharf

London E14 5HS

Telephone: 020 7066 3954

email: corporate.authorisation@fsa.gov.uk

Regulatory Decisions

Passporting notifications (into or out of the United Kingdom)

Passport Notification Unit

The Financial Services Authority

25 The North Colonnade

Canary Wharf

London E14 5HS

Telephone: 020 7066 1000

email: passport.notifications@fsa.gov.uk

Authorisation and Approvals Department

Applications for approval of persons under the approved persons regime

Enquiries and Applications Department (Individual Approvals team)

The Financial Services Authority

25 The North Colonnade

Canary Wharf

London E14 5HS

Telephone: 020 7066 0019

Fax: 020 7066 0017

email: iva@fsa.gov.uk

01/07/2003

AUTH 1 Annex 1

Introduction to the Authorisation Manual

01/12/2004

Where to next?

AUTH 1 Ann 1

Export chapter as

AUTH 3

Applications
for Part IV permission

AUTH 3.1

Application and purpose

01/12/2004

Application

AUTH 3.1.1

This chapter applies to:

(1) an individual, a body corporate (including a branch of a body corporate), a partnership or an unincorporated association which is not an authorised person and which wishes to apply for Part IV permission to carry on regulated activities in the United Kingdom;

(2) an EEA firm or a Treaty firm seeking to carry on regulated activities in the United Kingdom other than through the exercise of an EEA right or Treaty right;

(3) an EEA firm, Treaty firm or UCITS qualifier wishing to apply for a top-up permission to carry on any regulated activity.

03/09/2001

Purpose

AUTH 3.1.2

This chapter gives guidance to applicants on how the FSA will exercise the powers granted to it in Part IV of the Act (Permission to carry on regulated activities) to determine an application and give Part IV permission. In particular, the chapter gives guidance on:

(1) permission under Part IV of the Act;

(2) the procedures, under section 51 of the Act (Application under this Part), for making an application to the FSA for Part IV permission;

(3) when and how the FSA will determine applications under section 52 of the Act (Determination of applications); and

(4) when and how a person becomes authorised under the Act.

03/09/2001

AUTH 3.2

Introduction

01/12/2004

AUTH 3.2.1

(1) With certain exceptions (for example, EEA firms), a person wanting to carry on any one or more regulated activities must apply to the FSA for Part IV permission. If the FSA gives an applicant such permission, the applicant will become an authorised person.

(2) Authorisation gives a firm the ability to carry on regulated activities without breaching the general prohibition and incurring criminal liability (see PERG 2.2.1G). A firm may, however, be subject to regulatory action if it does not have the necessary Part IV permission for each regulated activity it carries on (see AUTH 3.3.3 G).

01/07/2005
Past version of AUTH 3.2.1 before 01/07/2005

AUTH 3.2.2

AUTH 3 Annex 1 G gives an overview of the application process from receipt of the application by the FSA.

03/09/2001

AUTH 3.3

When is Part IV permission required and what does it contain?

01/12/2004

AUTH 3.3.1

A person will, broadly speaking, be treated as carrying on a regulated activity in the United Kingdom (and so, under section 20(1), need permission), where it is carried on in the circumstances described in PERG 2.4 (Link between activities and the United Kingdom). A Part IV permission under Part IV of the Act is required before the person carries on regulated activities unless the person has permission resulting from any other provisions in the Act (see PERG 2.10 (Persons carrying on regulated activities who do not need authorisation)).

01/07/2005
Past version of AUTH 3.3.1 before 01/07/2005

AUTH 3.3.2

Under section 20(1) of the Act (Requirement for permission), a firm must not carry on a regulated activity in the United Kingdom (or purport to do so) otherwise than in accordance with its permission.

03/09/2001

AUTH 3.3.3

Following a successful application to the FSA, an applicant will be given Part IV permission. The Part IV permission will specify all or some of the following elements:

(1) a description of the activities the firm can carry on (see AUTH 3.4), including any limitations (see AUTH 3.6);

(2) the specified investments involved (see AUTH 3.5); and

(3) if appropriate, requirements (see AUTH 3.7).

03/09/2001

AUTH 3.3.4

(1) Section 42(6) of the Act (Giving permission) requires the FSA to describe the regulated activities for which a firm is given Part IV permission; this description may include limitations (see AUTH 3.6). The Part IV permission may also include requirements (see AUTH 3.7).

(2) After being given Part IV permission, a firm can apply at any time to have a limitation or a requirement varied or removed, following the procedures in SUP 6 (Application to vary or cancel Part IV permission).

03/09/2001

AUTH 3.3.5

Under section 51(3) of the Act, an application for permission must be made in such manner as the FSA directs (see AUTH 3.9.3 D).

03/09/2001

AUTH 3.4

Activities

01/12/2004

AUTH 3.4.1

(1) The activities for which an applicant may apply for Part IV permission are listed in PERG 2 Annex 2G (Regulated activities and the permission regime). The FSA has described these activities in the same way as regulated activities are specified in the Regulated Activities Order (see PERG 2.7 to PERG 2.8) but with three sub-divisions.

(2) The sub-divisions are that:

(a) advising on pension transfers and pension opt-outs is a separate category from advising on other investments; this distinction has been made because pension transfers and pension opt-outs are considered to be transactions which are high risk to consumers and it is appropriate to differentiate advice on them from other forms of advice;

(b) establishing, operating or winding up a collective investment scheme been sub-divided to distinguish regulated collective investment schemes from unregulated ones; this is because of the different regulatory requirements and risk characteristics of the two types of scheme; and

(c) safeguarding and administering investments has been divided into safeguarding and administration of assets (without arranging) and arranging safeguarding and administration of assets; this is because some firms arrange the provision of safe custody for clients instead of providing the facilities themselves.

01/07/2005
Past version of AUTH 3.4.1 before 01/07/2005

AUTH 3.4.2

It should be noted that some combinations of regulated activities are restricted by other legislation, such as the UCITS Directive and the Insurance Directives. In addition, applicants seeking to carry on specified activities in certain business areas, for example, ISA management, will be required to demonstrate that they satisfy additional regulatory obligations. Details of these restrictions and obligations are in AUTH 3.11 to AUTH 3.17.

03/09/2001

AUTH 3.4.3

If an applicant is uncertain whether the FSA will give Part IV permission for a particular combination of activities, it should seek professional advice and discuss the matter with the FSA before making a formal application for Part IV permission. These discussions with the FSA will not be part of the formal application process.

03/09/2001

AUTH 3.5

Specified investments

01/12/2004

AUTH 3.5.1

The specified investments for which an applicant may apply for Part IV permission are listed in PERG 2 Annex 2G. In general, the FSA has described these specified investments in a way that mirrors the activities specified in the Regulated Activities Order (see PERG 2.6). The FSA has, however, sub-divided certain specified investments in the Regulated Activities Order to distinguish those investments which, among other things, are considered to have significantly different risk profiles. These are:

(1) commodity futures and commodity options and options on commodity futures, which have been distinguished from other futures and options;

(2) spread bets, which have been distinguished from other contracts for differences; and

(3) rolling spot forex contracts, which have been distinguished from other contracts for differences and futures.

01/07/2005
Past version of AUTH 3.5.1 before 01/07/2005

AUTH 3.6

Limitations

01/12/2004

AUTH 3.6.1

The FSA may include appropriate limitations in a description of the regulated activities in a Part IV permission.

03/09/2001

AUTH 3.6.2

Generally speaking, a limitation limits, in some way, a particular regulated activity. Unlike requirements (see AUTH 3.7), each limitation is specific to a particular regulated activity (either to the specified activity, the specified investments or both). This is why the Act refers to a limitation being incorporated within the actual description of the regulated activity.

03/09/2001

AUTH 3.6.3

As part of its application for Part IV permission, an applicant may wish to apply for certain limitations (details of which are given in the application pack). Alternatively, the FSA may impose a limitation where it considers it appropriate after reviewing the application. Examples of limitations which may be applied for or imposed include:

(1) a limit on the types of client that a firm may deal with; this would be used either where an applicant's business plan makes it clear that it only intends to provide services for specific types of clients (for example, see AUTH 3.6.4 G) or where the FSA wishes to limit the types of clients a firm can deal with; or

(2) a limit on the number of clients with whom a firm may carry on a particular regulated activity during, for example, an initial period of operation; this might be used where, for example, a firm's systems are not yet adequate to be able to process a high volume of transactions; or

(3) a limit on the types of specified investments that a firm can deal in; this would be used either where an applicant's business plan makes it clear that it only intends to provide services in respect of certain specified investments or where the FSA wishes to limit the categories of specified investments a firm can deal with; or

(4) a limit on the type of insurance business which a firm may carry on in connection with certain categories of specified investments for which Part IV permission may be granted; for example, a limitation specifying that only reinsurance business may be carried on in relation to certain specified investments; (note that for direct insurance business, the Insurance Directives restrict the ability of the FSA to impose limitations on an individual class of specified investment).

18/10/2001

AUTH 3.6.4

(1) In relation to the carrying on of designated investment business (and related ancillary activities, including communication and approval of related financial promotions), COB 4.1.4 R (Requirement to classify) requires a firm to classify a client before conducting designated investment business with him or for him and that classification is relevant to the application of Principles 6,7,8 and 9. The classification of clients is used to apply appropriately differentiated market conduct and conduct of business provisions based on the expertise of the different clients. An applicant may, therefore, wish to apply to carry on designated investment business in respect of one or more of the following classifications:

(a) private customer;

(b) intermediate customer;

(2) In practice, a firm may be permitted to carry on regulated activities that fall within the definition of designated investment business with one, or more, of these client categories.

(3) As explained in PRIN 1.2.4 G, a firm carrying on business other than designated investment business may choose to distinguish between customers and market counterparties in complying with the Principles. An applicant may, therefore, wish to apply to carry on business only with market counterparties.

(4) In relation to accepting deposits, the limitations which may be applied for or imposed include a limitation that the firm may accepting deposits from wholesale depositors only. A firm with such a limitation may receive less intensive supervision by the FSA, because of the reduced risk it poses to the regulatory objective of protecting consumers. However, the precise arrangements that would apply would be determined case by case and would be based on an assessment of the risks the firm posed to all four of the regulatory objectives.

(5) COB 4.1.4 R does not apply to a firm which, in relation to any customer, intends only to provide advice on a stakeholder product.

06/04/2005
Past version of AUTH 3.6.4 before 06/04/2005

AUTH 3.6.5

If, after reviewing an application, the FSA proposes to impose a limitation, the applicant will be advised formally (that is, the applicant will be sent a warning notice) and given an opportunity to make representations before the FSA reaches a final decision. For an overview of how the FSA determines applications and a summary of the FSA's decision-making procedures, see AUTH 8 (Determining applications).

03/09/2001
Future version of AUTH 3.6.5 after 20/10/2005

AUTH 3.6.6

After the FSA gives a Part IV permission, a firm can apply at any time to vary that Part IV permission, including any limitation, following the procedures set out in SUP 6.

03/09/2001

AUTH 3.7

Requirements

01/12/2004

AUTH 3.7.1

(1) Section 43 of the Act (Imposition of requirements) gives the FSA power to include any requirements in a Part IV permission that it considers appropriate. A requirement may be imposed on a firm to:

(a) take a particular action; or

(b) refrain from taking a particular action.

(2) The requirement may extend to activities which are not regulated activities (for example, see AUTH 3.7.6 G (3)) and the FSA may set a time at which the requirement expires.

(3) As part of its application for Part IV permission, an applicant may wish to apply for certain requirements (details of which are given in the application pack).

03/09/2001

AUTH 3.7.2

Generally speaking, a requirement will either be unrelated to the performance of regulated activities (for example, a requirement that relates to reporting) or will relate to all, or a number of, the regulated activities which an applicant wishes to carry on. This can be contrasted with a limitation, which is specific to one particular regulated activitiy (either to the specified activity, the specified investments or both), as in AUTH 3.6.

03/09/2001

AUTH 3.7.3

(1) Requirements can, among other things, be used by the FSA to control the performance of certain business activities which are not in themselves regulated activities; although in many cases a firm will require permission for a combination of regulated activities before the business activity can be carried on. The business activities controlled in this way are those which, in the interests of consumer protection, have certain minimum standards, for example in respect of the systems and controls required to meet regulatory or other obligations (for example, see the client money rules in CASS 4).

(2) As a result, applicants will be asked to specify as part of their application whether or not they wish to carry on business activities that include:

(a) the holding or controlling of client money; or

(b) ISA, PEP, or CTF management (including, in the case of CTF management, details of any third party administrator that it engages and with details of whether it intends to offer Revenue allocated CTF's and whether it intends to provide its own stakeholder CTF); or

(d) management of a broker fund.

(3) As part of demonstrating that it can satisfy and continue to satisfy the threshold conditions in respect of the regulated activities it wishes to carry on, an applicant will be expected to demonstrate that it is ready, willing and organised to satisfy, and continue to satisfy, any relevant regulatory obligations that would apply to any business activities it wishes to carry on (for example, CASS 4 (Client money)). An applicant that does not wish to engage in these activities should apply for a requirement to exclude performance of these activities from the scope of its Part IV permission.

13/02/2004

AUTH 3.7.4

(1) A requirement can also be used by the FSA to define the scope of a number of regulated activities carried on by a firm so that a particular differentiated regulatory regime applies. Examples of such regimes include those for oil market participants, energy market participants, locals, venture capital firms, corporate finance advisory firms and service companies. Where this is relevant, an applicant may wish to apply for Part IV permission which includes a requirement defining the scope of each of its regulated activities.

(2) As an example, an applicant wishing to act as a corporate finance advisory firm may be given Part IV permission to carry on the activities of advising on investments and arranging (arranging (bringing about) deals in investments), subject to a requirement that the firm carries on these activities only within the definition of a corporate finance advisory firm.

(3) As part of the application pack, an applicant will be asked whether it wishes to apply for a requirement to define the scope of its Part IV permission. An applicant that applies for Part IV permission with a requirement to reduce the scope of that permission will only be required to demonstrate to the FSA that it is able to satisfy, and continue to satisfy, the threshold conditions in respect of the reduced scope.

21/02/2002

AUTH 3.7.5

As part of the application process, an applicant will need to determine which prudential category it falls into and, in some cases, which sub-category (see AUTH 3.8.5 G). In some cases, a requirement may form part of the description of such a category or sub-category, in which case the applicant may wish to apply for Part IV permission subject to appropriate requirements. The FSA may also impose a requirement on a firm to require it to comply with certain financial requirements (see SUP 7.4 (Individual requirements)).

03/09/2001

AUTH 3.7.6

Examples of requirements which may be applied by the FSA in particular circumstances, include:

(1) a requirement, imposed under section 48 of the Act (Prohibitions and restrictions), that a firm given Part IV permission obtain the approval of the FSA before payment of a dividend; or

(2) a requirement to submit financial returns more often than normal, for example during the firm's first months or years of business; or

(3) a requirement to submit audited financial accounts of a parent company; or

(4) a requirement, on the permission of an insurer, to carry on only reinsurance business; or

(5) a requirement to submit periodic independent compliance reviews, performed by an appropriate person, during the first months or years of business.

03/09/2001

AUTH 3.7.7

If, after reviewing an application, the FSA proposes to impose a requirement, the applicant will be advised formally (that is, the applicant will be sent a warning notice) and given an opportunity to make representations before the FSA reaches a final decision. For an overview of how the FSA determines applications and a summary of the FSA's decision making procedures, see AUTH 8.

03/09/2001
Future version of AUTH 3.7.7 after 20/10/2005

AUTH 3.7.8

Following the giving of a Part IV permission, a firm can apply, at any time, to vary that Part IV permission, including any requirement or limitation, following the procedures in SUP 6.

03/09/2001

AUTH 3.8

The threshold conditions and financial resources

01/12/2004

The threshold conditions

AUTH 3.8.1

(1) Under section 41(2) of the Act (The threshold conditions), the FSA is required, in giving Part IV permission or imposing any requirement, to ensure that the applicant satisfies, and will continue to satisfy, the threshold conditions in relation to all the regulated activities for which it has or will have permission. The threshold conditions are in Schedule 6 to the Act.

(2) The FSA has provided guidance on the threshold conditions in COND. This guidance is not exhaustive and is written at a high level of generality as satisfaction of the threshold conditions is considered on a case-by-case basis, in relation to each regulated activity an applicant is seeking to carry on.

03/09/2001

AUTH 3.8.2

(1) There are six threshold conditions and certain additional conditions applying to a firm with Part IV permission:

(a) threshold condition 1 (Legal status) sets out the legal status that the applicant must have if it wishes to carry on certain regulated activities;

(b) threshold condition 2 (Location of offices) provides that:

(i) a body corporate constituted under the law of any part of the United Kingdom must have its head office and, if it has one, its registered office, in the United Kingdom; and

(ii) a non body corporate with its head office in the United Kingdom must carry on business in the United Kingdom;

(ca) threshold condition 2A (Appointment of claims representatives) provides that if it appears to the FSA that any person is seeking to carry on, or carrying on, motor vehicle liability insurance business, that person must have a claims representative in each EEA State other than the United Kingdom;

(d) threshold condition 4 (Adequate resources) relates to the adequacy of an applicant's resources;

(e) threshold condition 5 (Suitability) relates to the suitability of the applicant;

(f) additional conditions apply to non-EEA insurers (see COND 2.6 (Additional Conditions)).

(2) Threshold conditions 2A, 3, 4, and 5 enable the FSA to assess the applicant in the light of the activities it wishes to carry on and, in particular, make it clear that suitability to carry on one regulated activity does not mean that the applicant is suitable to carry on all regulated activities. Threshold conditions 3, 4 and 5 do not apply to Swiss general insurance companies.

(3) An incoming firm applying for a top-up permission must also satisfy the threshold conditions with the exception of threshold condition 2 (Location of offices): see COND 1.1 Application) and paragraphs 6 and 7 of Schedule 6 to the Act.

(4) The application of the threshold conditions to Swiss general insurance companies was varied by the Financial Services and Markets Act 2000 (Variation of Threshold Conditions) Order 2001.

19/01/2003

AUTH 3.8.3

The FSA, in making a determination whether an applicant satisfies and will continue to satisfy the threshold conditions under section 41(2) of the Act, will consider whether an applicant can demonstrate that it is ready, willing and organised so as to enable it to comply with the specific regulatory obligations that will apply to the applicant if it is given Part IV permission to carry on the regulated activities referred to in its application.

03/09/2001

Financial resources

AUTH 3.8.4

(1) As part of its application, an applicant will be required to demonstrate that it has adequate financial resources to meet the financial resources requirement for its prudential category.

(2) The Single Market Directives, the Capital Adequacy Directive and the E-Money Directive set out minimum financial requirements for all firms which carry on banking, issuing e-money, insurance or investment services within the scope of the Single Market Directives and the E-Money Directive, that is, most firms that are credit institutions, financial institutions, insurance undertakings or investment firms as defined in these Directives. These requirements are reflected in PRU or in the relevant IPRU for each type of firm.

31/12/2004

AUTH 3.8.5

(1) An applicant will need to determine its prudential category and, in some cases, its sub-category. The application pack and AUTH 3 Annex 2 G give further details.

(2) In determining its prudential sub-category, an applicant may need to consider whether it falls under the scope of a Single Market Directive or the E-Money Directive, for example whether it will be an investment firm as defined in the ISD.

(3) However, an applicant which falls outside the Single Market Directive or the E-Money Directive will not have a right to passport into the EEA and will be subject to separate prudential requirements.

27/04/2002

AUTH 3.8.6

An applicant in the prudential category of bank or insurer should note that the FSA will give it individual guidance on its likely capital requirements: for example, the individual capital ratios for a bank (see IPRU(BANK) CO 4.1.1 (Individual capital ratios)) or the capital resources requirements of an insurer (see PRU 2.1)) during pre-application discussions (see AUTH 3.9.2 G).

31/12/2004

AUTH 3.8.7

Applicants should note that the prudential category and, where relevant, sub-category, not only determines which provisions in the relevant IPRU or PRU will apply, but which provisions on auditors, financial reporting and transaction reporting in SUP will apply.

31/01/2005
Past version of AUTH 3.8.7 before 31/01/2005

AUTH 3.8.8

An applicant that is a member of a group should note that the FSA may take into consideration the impact of other members of the group on the adequacy of its resources (see the relevant sections of PRU or IPRU).

31/12/2004

AUTH 3.9

Procedures in relation to applications for Part IV permission

01/12/2004

Pre-application meetings

AUTH 3.9.1

All applicants for Part IV permission are encouraged to contact the Authorisation and Approvals Department of the FSA to discuss their application before they send in an application form.

01/07/2003

AUTH 3.9.2

(1) If an applicant's plans are complex (for example, including insurance business or accepting deposits and some designated investment business), high risk or innovative (for example, raising new or unusual issues), the FSA will expect the applicant to discuss its plans with them before submitting an application for Part IV permission.

(2) FSA staff will be available to attend a pre-application meeting with such applicants to discuss the application and any issues or problem areas. If appropriate, for example in the case of an application to carry on insurance business or accepting deposits, FSA staff may, by agreement with the applicant discuss aspects of the application during its preparation, for example, the applicant's draft business plan or other relevant documentation. If relevant, FSA staff will discuss likely capital and, where relevant, liquidity ratios with the applicant to enable the applicant to prepare capital adequacy projections.

(3) Applicants should note that:

(a) a pre-application meeting is not a substitute for an applicant obtaining any professional assistance;

(b) a pre-application meeting is to give informal assistance to applicants (as set out in AUTH 3.9.2 G). A meeting might, for example, be used to help an applicant prepare its formal application for Part IV permission and to identify and address issues or problem areas at an early stage before time and costs are incurred in preparing a complete application. This assistance is not part of the application process outlined in the rest of AUTH 3.9.

(c) the submission of an incomplete application will start the formal application process, including the time limits for determination of incomplete applications (see AUTH 3.9.31 G) and the requirements for a fee (see AUTH 3.9.4 G (1)).

03/09/2001

The application for permission

AUTH 3.9.3

(1) An applicant for Part IV permission, except in so far as the FSA may direct in an individual case, must apply in writing in the manner directed, and with the information required, in the application pack provided by the FSA.

(2) The application for Part IV permission must be:

(a) given to a member of, or addressed for the attention of, the Authorisation and Approvals Department; and

(b) delivered to the FSA by one of the methods in (3).

(3) The application may be delivered by:

(a) post to the address in (4);

(b) leaving the application at the address in (4) and obtaining a time-stamped receipt; or

(4) The address for applications is: The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.

(5) Until the application has been determined, an applicant which submits an application for Part IV permission must inform the FSA of any significant change to the information given in the application immediately it becomes aware of the change.

01/07/2003

AUTH 3.9.4

(1) An application should be accompanied by the application fee set by the FSA (see AUTH 4 (Authorisation Fees)).

(2) The application pack and accompanying guidance notes are available on www.fsa.gov.uk or from the Authorisation and Approvals Department of the FSA. To contact the Authorisation and Approvals Department:

(a) telephone on 020 7066 3954; or

(b) write to the Authorisation and Approvals Department at the address in AUTH 3.9.3 D (4); or

01/07/2003

AUTH 3.9.5

The application pack is made up of several sections and the ones which need to be completed will depend on the category of applicant. For example, the insurance sections will contain different application questions according to the type of applicant (for example, matters needing to be addressed vary for overseas applicants and Swiss general insurance companies). In addition, applicants will need to submit forms for approved persons (see AUTH 6 (Approved persons)) and controllers as part of the pack (see AUTH 3.9.24 G).

03/09/2001

Information to be supplied to the FSA

AUTH 3.9.6

Under section 51(1)(b) of the Act, an application for Part IV permission must give an address in the United Kingdom for service of any document required by the Act.

03/09/2001

AUTH 3.9.7

The application forms ask for general information about the applicant, its intended activities and any proposed or current unregulated activities. They also ask for details of how the applicant plans to comply with the FSA's regulatory obligations relating to the activities it seeks Part IV permission to carry on. The forms contain notes on completion and details of how the FSA can help.

03/09/2001

AUTH 3.9.8

In addition to the information in the application pack, the FSA may require the applicant to provide such further information as it reasonably considers necessary to enable it to determine the application, and to verify it as the FSA directs. This may include the provision of documents. The FSA may request such additional information during a pre-application meeting or after reviewing a submitted application pack. Should the FSA require further information on reviewing an application pack, the applicant will be advised in writing as early as possible.

03/09/2001

AUTH 3.9.9

The FSA will assess the applicant having regard to the regulatory objectives and will, therefore, be proportional in its procedures, including in the information which it seeks from applicants (see AUTH 1.4.4 G). Thus the nature of the information and documents requested by the FSA, either in the application pack or subsequently, will be proportional to the nature of the business the applicant intends to carry on. For example, a small company seeking to carry on low risk business will be required to submit a business plan and other information relevant to its size and the scope of the proposed business. Information which is requested from applicants as part of the application pack includes but is not limited to the following.

(1) A business plan which describes the regulated activities and any unregulated activities (except where not permitted, for example see AUTH 3.12.2 G) which the applicant proposes to carry on, the management and organisational structure of the applicant and details of any proposed outsourcing arrangements. The level of detail required in the business plan will be appropriate to the risks to consumers arising from the proposed regulated and unregulated activities. For an applicant seeking to carry on insurance business, the business plan should include a scheme of operations in accordance with SUP App 2 (Insurer and friendly societies: schemes of operation).

(2) Appropriately analysed financial budget and projections which demonstrate that the applicant expects to comply with the relevant financial resources requirements appropriate to the applicant's prudential category (and in some cases sub-category).

(3) Details of systems to be used (which do not have to be in place at the time of initial application), compliance procedures and documentation.

(4) Details of the individuals to be involved in running the proposed business (such as directors, partners and members of the governing body, all of whom will be performing controlled functions) and any connected persons (see AUTH 3.9.23 G). AUTH 6 gives guidance on the approved person regime and the procedures for approval.

03/09/2001

AUTH 3.9.10

(1) The application pack should be accompanied by such other information as the applicant reasonably considers the FSA should be aware of for the purposes of determining the application. Any relevant supporting documentation should also be enclosed. The guidance notes to the application pack give further details about information to be provided by applicants, to enable them to answer the questions.

(2) In certain circumstances, the interests of the customers of an applicant would be significantly affected by the death or incapacity of an individual within the applicant. If this is the case, the applicant will be required to provide information on its arrangements to protect the interests of customers in that event. Examples include arrangements to enable urgent transactions to be carried out and unfinished transactions to be completed. The information should include the name and address, and such other details as the FSA may reasonably require, of an authorised person with whom arrangements have been made for the protection of customers. The guidance notes to the application pack give further details.

03/09/2001

AUTH 3.9.11

The application forms also require a statement from one or more members of the applicant's governing body confirming, to the best of their knowledge, the completeness and accuracy of information supplied.

03/09/2001

AUTH 3.9.12

Applicants should be aware that there may be a delay in processing applications if the information given to the FSA is inaccurate or incomplete; for example, if the business plan for an applicant does not describe in adequate detail the regulated activities for which the applicant seeks Part IV permission. Applicants should discuss any problems with the Enquiries and Applications Department (Applications team) before submitting the application or, if necessary, consider seeking appropriate professional advice.

01/07/2003

AUTH 3.9.13

At any time after receiving an application and before determining it, the FSA may give notice to the applicant to require it to provide additional information or documents. The circumstances of each application will determine what additional information or procedures are appropriate.

03/09/2001

AUTH 3.9.14

While applicants will often wish to discuss applications with the Enquiries and Applications Department (Applications team) during the application process; similarly, the FSA will often need to discuss and clarify information that has been submitted within the application pack. The exchange of information during the application process is viewed as important by the FSA, since the final decision about an application needs to be based on as complete a picture of the application as possible.

01/07/2003

AUTH 3.9.15

In addition, in considering the application, the FSA may:

(1) carry out any enquiries which it considers appropriate, for example, discussions with other regulators or exchanges;

(2) ask the applicant, or any specified representative of the applicant, to attend meetings at the FSA to give further information and explain any matter the FSA considers relevant to the application;

(3) require any information given by the applicant to be verified in such a way as the FSA may specify (for example, see AUTH 3.9.16 G);

(4) take into account any information which it considers appropriate in relation to the application, for example any unregulated activities which the applicant carries on or proposes to carry on;

(5) visit the premises which the applicant intends to use as its place of business.

03/09/2001

Reports from third parties

AUTH 3.9.16

Under section 51(6) of the Act, the FSA may require the applicant to verify information provided in such a way as the FSA directs. Thus, as part of the application, the FSA may require the applicant to provide, at its own expense, a report by an auditor, reporting accountant, actuary or other qualified person approved by the FSA. The report may be on such aspects of the information provided, or to be provided, by the applicant as the FSA may specify.

03/09/2001

AUTH 3.9.17

Applicants seeking to carry on long-term insurance business are also required to provide a certificate from an actuary confirming the appropriateness of the projections for the long-term insurance business and, in particular, the adequacy of premium rates and technical provisions and margin of solvency and how quickly capital strains from effecting new business will be overcome.

03/09/2001

AUTH 3.9.18

If an applicant appoints a reporting accountant other than its own auditor to report on an application for Part IV permission, the applicant is directed to take reasonable steps to ensure that the reporting accountant satisfies the qualification and independence tests, as relevant, in SUP 3.4 (Auditor's qualifications) and SUP 3.5 (Auditor's independence).

03/09/2001

AUTH 3.9.19

If an applicant appoints an actuary, to report on an application for Part IV permission, the applicant is directed to take reasonable steps to ensure that the actuary satisfies the qualification tests in SUP 4.3.8 G (actuaries' qualifications).

31/12/2004

AUTH 3.9.20

Occasionally, the FSA may identify a need for an independent report on specific areas of an application; for example, a report from the auditors of an applicant seeking to carry on regulated activities which include accepting deposits where the applicant's business plan is innovative, complex or raises concerns as a result of matrix management. Such reports will usually be discussed and agreed with the applicant as part of the pre-application meeting (see AUTH 3.9.2 G).

03/09/2001

Applications to other bodies

AUTH 3.9.21

In addition to applying to the FSA for Part IV permission:

(1) an applicant which will need permission from the Council of the Society of Lloyd's to conduct business as underwriting agents should apply for that permission at the same time as its application to the FSA; and

(2) an applicant should also determine whether it needs to apply to any other bodies, for example, to any exchanges or to other bodies for membership, the Office of Fair Trading for a consumer credit licence or to court for licences such as a gaming licence; the applicant should check when any such applications should be made.

03/09/2001

Connected persons

AUTH 3.9.22

(1) Under section 49 of the Act (Persons connected with an application), in considering an application for Part IV permission, the FSA may have regard to any person appearing to it to be, or likely to be, in a relationship with the applicant which is relevant.

(1A) The Financial Groups Directive Regulations make special provision where the FSA is exercising its functions under Part IV of the Act (Permission to carry on regulated activities) for the purposes of carrying on supplementary provision. Broadly, where the FSA, in the course of carrying on supplementary supervision, is considering varying the Part IV permission of a person who is a member of a group which is a financial conglomerate, the consultation provision in section 49(2) of the Act are disapplied. In their place, the regulations impose special obligations, linked to the Financial Groups Directive, to obtain the consent of the relevant competent authorities, to consult those authorities and to consult with the group itself.

(2) A person in, or likely to be in, a relationship with an applicant which is relevant is known as a connected person. The FSA will assess whether a particular relationship is relevant in the light of the particular circumstances of each application. Examples of persons who might be considered connected with an applicant include, but are not limited to:

(a) a controller of the applicant; or

(b) an applicant's directors, partners or members of its governing body; or

(d) a person with whom the applicant intends to enter into a material outsourcing agreement; or

(e) any other person who may exert influence on the applicant which might pose a risk to the applicant satisfying or continuing to satisfy the threshold conditions.

03/09/2001

AUTH 3.9.23

As a result, as part of the application process, the FSA may request information about any other person who the FSA determines is in a relationship with an applicant which is relevant. The FSA may request information from the applicant on persons who are connected persons or are likely to become connected persons under any proposed transactions or relationships.

03/09/2001

AUTH 3.9.24

(1) As part of the application process, the FSA may request information on an applicant's controllers, directors, partners or members of its governing body. The FSA will assess whether:

(a) the applicant's controller is a fit and proper person to have control over the firm;

(b) the applicant's directors, partners and members of the governing body who will be performing controlled functions are fit and proper persons to be granted approval under the approved persons regime (see AUTH 6).

(2) An applicant (other than a Swiss general insurance company seeking to establish an agency or branch in the United Kingdom or an EEA firm, or a Treaty firmin the circumstances set out in AUTH 3.1.1 G (2) and in AUTH 3.1.1 G (3)) will be required to provide the following information about its controllers:

(a) in the case of a controller who is not an authorised person, the information required in Controllers Form A SUP 11 Annex 4) and one or more of Controllers Form B SUP 11 Annex 5) in accordance with SUP 11.3.8 D and SUP 11.3.9 D; or

(b) in all other cases, the information required in Controllers Form A, sections 1, 5 and 6 SUP 11 Annex 4).

03/09/2001

Commencing regulated activities

AUTH 3.9.25

(1) If Part IV permission is given, the FSA will expect a firm to commence its regulated activity in line with its current business plan. Applicants should take this into consideration when determining when to make an application to the FSA.

(2) Applicants should be aware that the FSA may exercise its own-initiative powers to vary or cancel a Part IV permission once granted if they do not:

(a) commence a regulated activity for which they have Part IV permission within a period of at least twelve months from the date the permission was given; or

(b) carry on a regulated activity for which they have Part IV permission for a period of at least twelve months (irrespective of the date of the grant of permission).

(3) If FSA considers that it may be appropriate to exercise its own-initiative powers to vary or cancel a firm's Part IV permission, FSA staff will discuss the proposed action with the firm and ascertain the firm's reasons for not commencing or carrying on the regulated activities concerned. Applicants are advised to discuss any problems about commencing a regulated activity with the Enquiries and Applications Department (Applications team).

01/07/2003

When will the FSA grant an application for Part IV permission?

AUTH 3.9.26

(1) The FSA will assess the information provided in the application process. As noted in AUTH 3.8.1 G, the FSA is required, by section 41(2) of the Act, to ensure that an applicant will satisfy, and continue to satisfy, the threshold conditions in relation to all the regulated activities for which the applicant is seeking Part IV permission. However, section 41(3) of the Act states that the FSA's duty under section 41(2) of the Act does not prevent it, having regard to that duty, from taking such steps as it considers necessary in relation to a particular applicant, to secure the consumer protection objective.

(2) As part of the assessment of whether an applicant satisfies and will continue to satisfy the threshold conditions, the FSA will consider whether the applicant is ready, willing and organised to comply with the regulatory requirements to which it will be subject if it is granted Part IV permission to carry on the regulated activities referred to in its application.

(3) The FSA will give Part IV permission in respect of some categories of regulated activity only if the applicant can meet specific requirements. For example, Part IV permission including advising on pension transfers and pension opt-outs and will only be granted to applicants that will have persons (or individuals) qualified to advise in this area.

03/09/2001

AUTH 3.9.27

As noted in AUTH 3.6 and AUTH 3.7, the FSA may decide to grant an application for Part IV permission including appropriate limitations or requirements. Where the FSA imposes limitationsor requirements on a Part IV permission that were not applied for by the applicant, their precise nature will depend on the circumstances of each application. During the application process, the FSA will discuss with applicants any limitations or requirements it is considering imposing but which they have not applied for. The applicant may ask the FSA to reconsider its preliminary views on any such limitations or requirements in the course of the application process.

03/09/2001

AUTH 3.9.28

In some cases, the FSA would be minded to grant an application for Part IV permission as long as certain conditions are fulfilled. As an example, the FSA may advise an applicant that it is minded to grant its application subject to the applicant providing proof that its share capital or its required financial resources are in place or that it has satisfied an outstanding element of its business plan. Part IV permission will not, however, be given until the FSA is content that its conditions have been satisfied by the applicant and, as a result, the applicant satisfies the threshold conditions. Applicants are welcome to discuss with the Enquiries and Applications Department (Applications team) the circumstances in which the FSA may be prepared to determine an application subject to such conditions being met.

01/07/2003

Other powers relating to the scope of Part IV permission

AUTH 3.9.29

(1) In determining an application for Part IV permission, the FSA may:

(a) specify a narrower or wider description of regulated activity than that for which Part IV permission was originally sought; or

(b) give Part IV permission for a regulated activity which was not originally applied for.

(2) Occasionally, the FSA expects to use its power to give Part IV permission for an applicant to carry on a regulated activity for which it did not originally apply. This might happen when, as a result of correspondence and discussion with an applicant, it becomes clear that it needs Part IV permission to carry on different categories of activities or activities relating to different categories of specified investments than those it had originally applied for.

(3) The Insurance Directives set out minimum information requirements for an application for authorisation which include information on the specified investments the applicant proposes to deal in. If these requirements are not met, the FSA may not be able to use the power described in AUTH 3.9.29 G (1)(b).

03/09/2001

How long will an application take?

AUTH 3.9.30

(1) Under Part IV of the Act, the FSA has six months from the date of receipt of a completed application to make its determination.

(2) When the FSA receives an application which is incomplete, that is, when information or documents required to be submitted as part of the application are not provided, Part IV of the Act requires the FSA to determine that incomplete application, in any event, within twelve months of the initial receipt of the application.

(3) Within these time limits, however, the length of the process will relate directly to the complexity of the application. The FSA publishes standard response times on its web site at www.fsa.gov.uk, setting out how long the application process is expected to take in practice, and, from time to time, the FSA publishes its performance against these times.

(4) Unless it considers it is appropriate to do so, the FSA will not grant an application for Part IV permission until it has had the opportunity to review all the information and documents which it has requested in connection with the application (whether as part of the application or at a later date).

03/09/2001

How will FSA make the decision?

AUTH 3.9.31

AUTH 8 (Determining applications) gives an overview of how the FSA will determine an application. The FSA's decision making procedures are in DEC and include the procedures the FSA will follow if it proposes to refuse an application for Part IV permission or grant an application subject to limitations or requirements not applied for.

03/09/2001
Future version of AUTH 3.9.31 after 20/10/2005

Withdrawal of applications

AUTH 3.9.32

An applicant may withdraw its application at any time before the application is granted or refused by giving written notice to the FSA. This written notice should be signed by a person with appropriate authority to bind the applicant.

03/09/2001

Authorised status

AUTH 3.9.33

(1) The Act states that an applicant which does not qualify for automatic authorisation by, or under, the Act, becomes authorised automatically if the FSA grants it Part IV permission.

(2) When the FSA grants an application for Part IV permission, it will inform the applicant by written notice, stating the date on which the permission takes effect.

03/09/2001

AUTH 3.10

The FSA register

01/12/2004

AUTH 3.10.1

(1) Section 347 of the Act (The record of authorised persons etc) requires the FSA to maintain a public record containing certain details about all firms, including information as to the services they hold themselves out as able to provide.

(2) When the FSA grants an application for Part IV permission, it will update the FSA Register with a general description of the regulated activities the firm has permission to carry on.

(3) The FSA register can be accessed at www.fsa.gov.uk.

03/09/2001

AUTH 3.11

Specific obligations: partnerships or unincorporated associations

01/12/2004

AUTH 3.11.1

Section 32 of the Act (Partnerships and unincorporated associations) treats all partnerships and unincorporated associations as if they were legal persons for the purposes of the grant of Part IV permission (Scottish partnerships already have the status of a legal person as have limited liability partnerships). So, where a partnership or unincorporated association proposes to carry on a regulated activity, the application for Part IV permission should be made in the name of the partnership or unincorporated association. However, a partnership should consider by whom the regulated activity will be carried on. If a partner carries on the regulated activity independently from the partnership, and not in his capacity as a partner, that person would need authorisation in his own right. The person may, for example, manage the assets of the partnership in his own name rather than in the name of the partnership. In such cases, the authorisation of the partnership itself would not, or may not, be necessary.

01/07/2003

AUTH 3.11.2

(1) Once a partnership or an unincorporated association is authorised by the FSA, then under section 32 of the Act:

(a) it is authorised to carry on the regulated activities concerned in the name of the partnership or unincorporated association; and

(b) its authorisation is not affected by any change in its membership as long as the substantive continuity test described in (2) is met.

(2) If a partnership or unincorporated association is dissolved, its authorisation continues to have effect in relation to any partnership or unincorporated association which succeeds to the business of the dissolved partnership or unincorporated association, as long as:

(a) the members of the resulting partnership or unincorporated association are substantially the same as those of the dissolved partnership or unincorporated association; and

(b) the succession is to the whole or substantially the whole of the business of the dissolved partnership or unincorporated association.

03/09/2001

AUTH 3.11.3

The treatment of partnerships described in AUTH 3.11.1 G and AUTH 3.11.2 G does not apply to a partnership which is a body corporate, that is, a limited liability partnership or any other partnership which is a body corporate and is constituted under the law of any place outside the United Kingdom.

03/09/2001

AUTH 3.11.4

Further guidance on the specific issues that arise for applicants that are limited partnerships under the Limited Partnerships Act 1907 or limited liability partnerships is in AUTH 3.22 (Specific issues: applicants that are limited partnerships under the Limited Partnerships Act 1907) and AUTH 3.23 (Specific issues: applicants that are limited liability partnerships).

01/07/2003

AUTH 3.12

Specific obligations: applicants seeking to carry on insurance business

01/12/2004

AUTH 3.12.1

Under threshold condition 1 (Legal status) (see COND) and additional restrictions imposed under the Insurance Directives, an applicant seeking Part IV permission to carry on the regulated activities of effecting or carrying out contracts of insurance must be an incorporated company other than a limited liability partnership, a registered friendly society or a registered industrial and provident society.

15/11/2001

AUTH 3.12.2

An applicant seeking to carry on insurance business should note the restrictions in PRU 7.6.13 R which relate to the carrying on of other commercial business.

31/12/2004

AUTH 3.12.3

(1) As a result of these restrictions, the FSA will grant an applicant seeking to carry on insurance business Part IV permission for insurance business, and any other regulated activities, only to the extent they are not restricted under PRU.

(2) For example, it may be appropriate for an applicant to apply for the regulated activity of accepting deposits. Also, an applicant seeking to carry on long-term insurance business may need to apply for certain designated investment business activities arising directly from the long-term insurance business it proposes to carry on. If the FSA gives an applicant Part IV permission for insurance business and other regulated activities, these other regulated activities will be subject to limitations, as appropriate, so as to comply with PRU 7.6.13 R.

31/12/2004

AUTH 3.12.4

Applicants should also be aware that the FSA will not grant Part IV permission to carry on both long-term and general insurance business, unless:

(1) the applicant's business will be restricted to reinsurance; or

(2) the applicant's general insurance business will be restricted to accident or sickness contracts (or both).

03/09/2001

Friendly societies and reinsurance

AUTH 3.12.5

Friendly societies are subject to the conditions and restrictions on reinsurance business under the Friendly Societies Act 1974 (registered friendly societies) and the Friendly Societies Act 1992 (incorporated friendly societies). A registered friendly society or an incorporated friendly society may only effect and carry out contracts of reinsurance if the conditions and restrictions set out in the relevant Friendly Societies Act are met. These include that:

(1) the approval of the actuary of the friendly society (A) is required;

(2) the friendly society is carrying on (and continues to carry on) direct insurance business of the same class; and

(3) the reinsurance is provided only to another friendly society (B).

The FSA will, therefore, not grant a friendly society a Part IV permission to carry on pure reinsurance business.

03/09/2001

Contracts written on an ancillary and supplementary basis

AUTH 3.12.6

Part IV permission to effect or carry out certain classes of contracts of insurance includes permission to effect or carry out certain classes of general insurance contracts on an ancillary or supplementary basis. In applying for Part IV permission to carry on insurance business, applicants will need to determine the specified investments for which Part IV permission will be necessary, having regard to whether certain classes of contract may qualify to be effected or carried out on an ancillary or supplementary basis. If they do, there is no need to apply for Part IV permission to effect or carry out those contracts (that is, the contracts which are eligible to be effected or carried out on an ancillary or supplementary basis) and an applicant should not do so.

03/09/2001

AUTH 3.12.7

Part IV permission to effect or carry out life and annuity contracts includes permission to effect or carry out accident or sickness contracts (or both) on a supplementary basis (see article 1(1)(c) of the First Life Directive).

03/09/2001

AUTH 3.12.8

Part IV permission to effect or carry out any class of general insurance contract includes permission to effect or carry out any other class of general insurance contract on an ancillary basis other than credit, suretyship or, except as provided in AUTH 3.12.9 G, legal expenses insurance (see part C of the Annex to the First Non-Life Directive). However, a friendly society may not effect or carry out any general insurance contracts, whether or not on an ancillary basis, other than those permitted under the Friendly Societies Act 1992.

03/09/2001

AUTH 3.12.9

Part IV permission to effect or carry out any class of general insurance contract includes permission to effect or carry out legal expenses contracts when AUTH 3.12.10 G is met and:

(1) if the main risk relates solely to the provision of assistance provided for persons who fall into difficulties while travelling, while away from home or while away from their permanent residence; or

(2) where it concerns disputes or risks arising out of, or in connection with, the use of sea-going vessels.

03/09/2001

AUTH 3.12.10

A contract of insurance will qualify to be effected or carried out on an ancillary basis if:

(1) the business in question is to be the subject of the same contract as the principal business and concerns the same object; and

(2) the risks covered are connected to the principal risk.

03/09/2001

AUTH 3.12.11

In determining the classes of specified investments for which Part IV permission is required, and those which may qualify to be written on an ancillary or supplementary basis, an applicant may need to take professional advice and may also wish to discuss this with a member of the Enquiries and Applications Department (Applications team).

01/07/2003

AUTH 3.12.12

The application for Part IV permission will need to provide information about the insurance business to be carried on by the applicant in the classes of specified investments for which Part IV permission is requested and also that qualifying to be carried on on an ancillary or supplementary basis.

03/09/2001

Reporting requirements

AUTH 3.12.13

An applicant for Part IV permission which includes insurance business should be aware that specific reporting requirements apply during its first three years of operation (see SUP App 2)

03/09/2001

Applicants seeking to carry on insurance business with a head office outside the United Kingdom (other than EEA firms or Treaty firms)

AUTH 3.12.14

In addition to AUTH 3.18, where an applicant for Part IV permission which has its head office outside the United Kingdom seeks to carry on insurance business in the United Kingdom, the following guidance is of relevance.

03/09/2001

AUTH 3.12.15

An applicant which has its head office outside the United Kingdom (other than an EEA firm, Treaty firm or a Swiss general insurance company) should note the requirement in IPRU(INS) 8.3R to appoint a chief executive (that is, the person who alone or jointly with one or more others, is responsible for the conduct of its business in the United Kingdom) and an authorised UK representative (see COND 2.6 (Additional Conditions) for the additional conditions which apply to non-EEA insurers and SUP 15.4 (Notified persons) for rules on notifications by overseas firms).

31/12/2004

AUTH 3.12.16

A Swiss general insurance company seeking to establish a branch in the United Kingdom should note the requirement referred to in COND 2.6.1 D to appoint an authorised UK representative for the United Kingdom.

31/12/2004

AUTH 3.12.17

An applicant with its head office outside the United Kingdom (other than an EEA firm or a Treaty firm) seeking permission to carry on direct or both direct and reinsurance business in the United Kingdom should note that specific prudential requirements apply PRU).

31/12/2004

AUTH 3.13

Specific obligations: applicants seeking to carry on the regulated activities of accepting deposits or issuing electronic money

01/12/2004

AUTH 3.13.1

Under threshold condition 1 (Legal status), an applicant who seeks to carry on the regulated activities of accepting deposits or issuing electronic money must be either a body corporate or a partnership (see COND).

27/04/2002

AUTH 3.14

Specific obligations: applicants seeking to hold or control client money

01/12/2004

AUTH 3.14.1

Unlike safeguarding and administering assets, holding or controlling client money is not a regulated activity in the Regulated Activities Order. As in AUTH 3.7.3 G, the FSA controls this activity by using requirements on a firm's Part IV permission.

03/09/2001

AUTH 3.14.2

(1) An applicant seeking to hold or control client money must complete the relevant sections of the application forms for Part IV permission. The applicant must be able to demonstrate to the FSA that it can satisfy, and continue to satisfy, the threshold conditions (see AUTH 3.8.1 G to AUTH 3.8.3 G) should the application for Part IV permission be granted. This will include demonstrating that it is ready, willing and organised to comply with the relevant requirements in CASS 4 (Client money).

(2) If an applicant is not able to demonstrate to the FSA that it can satisfy, and continue to satisfy, the threshold conditions to hold or control client money, but its application for Part IV permission is granted, the FSA will impose a requirement on the permission to the effect that the firm will not be able to hold, or control, client money.

03/09/2001

AUTH 3.15

Specific obligations: applicants seeking to manage PEPS or ISAS

01/12/2004

AUTH 3.15.1

Management of PEPs and ISAs, in themselves, are not regulated activities in the Regulated Activities Order although the activities carried on by a firm in relation to PEP and ISA management constitute regulated activities. As a result, where the firm has Part IV permission which includes the regulated activities which would otherwise permit the firm to manage a PEP or an ISA, the FSA controls participation in these activities by using requirements on the firm's permission (see AUTH 3.7.3 G).

03/09/2001

AUTH 3.15.2

(1) An applicant seeking to manage PEPs or ISAs must complete the relevant sections of the application forms for Part IV permission, specifying the types of ISA and their constituent components which it intends to manage. An applicant should check that the regulated activities for which it is seeking permission will permit it to carry on the proposed activities in respect of the component concerned (for example, one of the sub categories of safeguarding and administering assets of the component includes equities) and:

(a) consider whether it needs to hold or control client money (see AUTH 3.14) if it has not applied for permission including accepting deposits; or

(b) have plans to put in place contractual provisions under which it will receive client money as agent for an approved bank so that any loss in relation to the ISA cash component will be compensated for by that approved bank or the compensation scheme.

(2) Cash ISAs raise particular issues. Applicants may find it helpful to seek an independent legal opinion on their proposals before they proceed and may wish to discuss their proposals with the FSA.

03/09/2001

AUTH 3.15.3

Applicants should also be aware that a firm wishing to act as an ISA or PEP manager will have to obtain approval from HM Revenue and Customs as an account manager under the HM Revenue and Customs regulations.

21/04/2005
Past version of AUTH 3.15.3 before 21/04/2005

AUTH 3.15.4

To manage ISAs or PEPs, an applicant must be able to demonstrate to the FSA that it can satisfy and continue to satisfy the threshold conditions should the application for Part IV permission be granted. This will include demonstrating that it is ready, willing and organised to comply with the relevant regulatory and HM Revenue and Customs requirements.

21/04/2005
Past version of AUTH 3.15.4 before 21/04/2005

AUTH 3.15.5

If an applicant is not able to demonstrate to the FSA that it is able to comply with those obligation, the FSA will impose a requirement on the firm's permission to the effect that the firm will not be able to manage PEPs or ISAs.

03/09/2001

AUTH 3.16

Specific obligations: applicants seeking to establish, operate or wind up a stakeholder pension scheme

01/12/2004

AUTH 3.16.1

Applicants should be aware that, in addition to requiring permission from the FSA to establish, operate or wind up a stakeholder pension scheme, a firm will need to obtain exempt approval of the stakeholder pension scheme from HM Revenue and Customs and to register the scheme with the Pensions Regulator.

AUTH 3.16.2

Establishment and operation of a stakeholder pension scheme may involve heavy investment in new systems or changes to existing systems which, in view of the limit on charges, might not be recovered for some time. So, the FSA will normally require an applicant wishing to establish, operate or wind up a stakeholder pension scheme to provide financial projections for the whole period up to the point at which the new business is expected to break even. The applicant must also be able to demonstrate to the FSA that it is ready, willing and organised to comply with the requirements (including those in COB 5, COB 6 and TC 2) applicable to operation of a stakeholder pension scheme.

03/09/2001

AUTH 3.17

Specific obligations: applicants seeking to establish a collective investment scheme or to act as manager of a regulated collective investment scheme

01/12/2004

AUTH 3.17.1

An applicant seeking to establish a collective investment scheme should consult COLL and CIS for detailed requirements and guidance. Applicants should note that until 12 February 2007 they may elect to comply with COLL or CIS, although qualified investor schemes have to comply with COLL.

01/04/2004

AUTH 3.17.2

Applicants seeking to establish a collective investment scheme or to act as manager of a regulated collective investment scheme should note the rules in COLL 6.3.9 (Plan registers) and CIS 6.5 (Plan registers), which implements article 6 of the UCITS Directive and restrict the activities of a manager of an authorised unit trust which is a UCITS scheme.

01/04/2004

AUTH 3.17.3

An applicant which wishes to act as a UCITS management company should note the restriction on the activities it may engage in (see COLL 6.9.9 Restrictions of business of UCITS management companies) and CIS 16.5 (Restrictions of business of UCITS management companies).

01/04/2004

AUTH 3.17.4

A firm which is subject to the rule in COLL 6.9.9 or CIS 16.5 may, in addition, carry on 'connected activities' referred to in COLL 6.6.11 and CIS 16.5, which include management of PEPs, ISAs and stakeholder pension schemes, as long as they are dedicated to investments in unit trusts and OEICs for which the firm acts as manager or ACD. The Enquiries and Applications Department (Applications team) would be pleased to discuss any other activities which potential applicants consider may be connected.

01/04/2004

AUTH 3.18

Specific obligations: additional considerations for applicants (other than EEA firms or Treaty firms) with a head office in a country of territory outside the United Kingdom seeking to establish a branch in the United Kingdom

01/12/2004

AUTH 3.18.1

This section applies to applicants identified in AUTH 3.1.1 G (1) (excluding a Swiss general insurance company). The exercise of EEA rights or Treaty rights by EEA firms or Treaty firms is dealt with separately in AUTH 5.

03/09/2001

AUTH 3.18.2

The FSA must always assess whether an applicant for Part IV permission as a whole will satisfy, and continue to satisfy, the threshold conditions. This applies even though an applicant for Part IV permission may have its head office outside the United Kingdom. In other words, the FSA will not just assess the circumstances of any proposed branch in the United Kingdom. In making this assessment of the applicant for Part IV permission as a whole, the FSA will take into account all relevant matters, including the extent to which the applicant is regulated in its home state. The FSA would seek to liaise with any home state regulator and would take into account information from it with respect to, for example, the adequacy of the applicant's resources and the applicant's suitability, having regard to the need to ensure that the applicant's affairs are conducted soundly and prudently. Information with respect to the conduct of the applicant's affairs would extend in particular to the adequacy of the internal control systems under SYSC.

03/09/2001

AUTH 3.18.3

The FSA's regulatory requirements, including PRU and IPRU, will apply to a firm in full and worldwide, unless otherwise stated. Where necessary, waivers, limitations and requirements will be used to ensure that appropriate prudential requirements apply to the branch, taking into account the home state supervisory arrangements and the particular circumstances of an applicant.

31/12/2004

AUTH 3.18.4

If the FSA considers that the applicant may be unable to satisfy the threshold conditions and that this cannot be addressed by the use of limitations and requirements, the FSA would have to conclude that a branch presence in the United Kingdom would be inappropriate. In such circumstances, the applicant may wish to consider forming a UK incorporated subsidiary as an alternative method of obtaining a presence in the United Kingdom.

03/09/2001

AUTH 3.19

Specific obligations: applications in connection with group-restructuring

01/12/2004

AUTH 3.19.1

Where an application for Part IV permission is to be made as part of the restructuring of a group which includes, or will include, one or more firms, the group's plans should be discussed with the supervisor or lead supervisor for the group at the FSA. This is particularly important where a group intends to transfer business into a new entity from a firm in its group and then wishes to apply for cancellation of that firm's Part IV permission.

03/09/2001

AUTH 3.19.2

The application for Part IV permission for the new entity should be submitted to the Enquiries and Applications Department (Applications team) with details of the group and any business the group proposes to transfer. Applicants should note that particular requirements apply to transfers of insurance business, or if the business includes accepting deposits.

01/07/2003

AUTH 3.19.3

If applications for Part IV permission and for cancellation of Part IV permission (see SUP 6) have been submitted, then the Enquiries and Applications Department (Applications team) will liaise with the lead supervisor, who will liaise with the group in respect of its applications. Although the group will need to obtain Part IV permission for the new entity first, the FSA will endeavour to process, if possible, the other applications at the same time.

01/07/2003

AUTH 3.19.4

Statutory procedures apply to the transfer of insurance business or banking business (see SUP 18).

03/09/2001

AUTH 3.20

Specific obligations: applicants seeking to establish a branch in, or provide services into, another EEA State

01/12/2004

AUTH 3.20.1

Certain firms (known as UK firms) may establish branches in, or provide cross border services into, other EEA States exercising rights under one of the Single Market Directives (this is often referred to as passporting). A firm may also have rights under the Treaty.

03/09/2001

AUTH 3.20.2

An applicant for Part IV permission that wishes, if the FSA grants the permission, to passport into another EEA State on, or shortly after, being given permission, is advised to contact the Corporate Authorisation department to discuss its plans (see AUTH 3.9.4 G (2) for contact details).

01/07/2003

AUTH 3.20.3

(1) SUP 13 (Exercise of passport rights by UK firms) gives guidance on the procedures to be followed by a UK firm to establish a branch in, or provide cross border services into, another EEA State. SUP 13 Annex 3 contains guidance on the Single Market Directives, including guidance on which firms are entitled to passport.

(2) COLLG 2 and CIS 2.3.4 G gives guidance when an operator of a UCITS wishes to market its scheme in another EEA State.

(3) Firms wishing to exercise rights under the Treaty in another EEA State should seek guidance from the FSA in the first instance.

01/04/2004

AUTH 3.20.4

An applicant may submit a separate notice of intention to passport (see SUP 13.6.4 G and SUP 13.7.3 G) with its application for Part IV permission. The notice of intention will be reviewed with the application for Part IV permission. The FSA is not, however, able to issue a consent notice (see SUP 13.6.10 G), or send a notice of intention (see SUP 13.7.9 G), to the relevant Host State regulators unless or until an applicant is authorised. As a result, an applicant seeking to establish a branch in another EEA State will not be able to satisfy the conditions in the Act for establishing a branch (see SUP 13.6.2 G) until after authorisation.

01/07/2003

AUTH 3.20.5

An applicant should note, however, that the business plans and financial projections and, where relevant, scheme of operations submitted with its application for Part IV permission should reflect any passported activity (and any branches outside the EEA) that the firm plans to commence in the immediate future.

03/09/2001

AUTH 3.21

Treaty firms applying for Part IV Permission

01/12/2004

AUTH 3.21.1

The Treaty establishing the European Community provides firms with rights of establishment, under article 43, and the right to provide services under article 49. These rights can be exercised anywhere in any other State in the EEA.

21/02/2002

AUTH 3.21.2

Treaty firms which do not have, or do not wish to exercise, a treaty right to carry on a regulated activity in the United Kingdom, and which do not have an EEA right to passport in relation to that activity, must seek Part IV permission to do so (see AUTH 5.4.3 G to AUTH 5.3.13 G).

21/02/2002

AUTH 3.21.3

Where such a treaty firm has received Home State authorisationto carry on the regulated activities that it seeks to carry on under the Part IV permission, the FSA will take this into account when considering the application.

21/02/2002

AUTH 3.21.4

These applications will be considered on a case by case basis. Applicants should contact the Enquiries and Applications Department (Applications team) (see AUTH 3.9.4 G (2) for contact details) at an early stage to discuss their plans.

01/07/2003

AUTH 3.22

Specific issues: applicants that are limited partnerships under the Limited Partnerships Act 1907

01/12/2004

AUTH 3.22.1

Limited partnerships are formed under the Limited Partnerships Act 1907, which also governs aspects of their operation. A limited partnership differs from a normal partnership in that not all the partners will be liable for all the debts and obligations of the partnership, though there must be at least one partner (the general partner) who is. The other partners (limited partners) are not permitted to be active in managing the day-to-day business of the limited partnership but may be involved only in its constitutional affairs (see section 6(1) of the Limited Partnerships Act 1907 (Modifications of general law in case of limited partnerships)).

01/07/2003

AUTH 3.22.2

Applications for Part IV permission should be in the name of the partnership (see AUTH 3.11.1 G and sections 32 (Partnerships and unincorporated associations) and 40(1)(c) (Application for permission) of the Act). This permission, if granted, will then cover the business to be carried on. Authorisation of the limited partnership will, in effect, authorise the partners when conducting the business of the partnership. However, if a partner conducts regulated activities separately from the limited partnership, this may trigger a need for the partner to seek authorisation independently. Thus, if the general partner seeks to manage the assets of the limited partnership by conducting business in his name (rather than as a partner in the name of the limited partnership), the general partner will need to be authorised . This is if the activities he carries on amount to managing investments or another regulated activity. In the case of a limited partnership therefore, the authorisation of the partnership itself may not always be appropriate or sufficient. The key question is how and by whom the regulated activities will be carried on. So, the scope of the application will differ depending on which regulated activities the applicant wishes to undertake (see AUTH 3.22.3 G to AUTH 3.22.4 G).

01/07/2003

AUTH 3.22.3

The limited partnership may be set up to invest the funds of the partners, for example, in the way of a venture capital fund. If so, it will usually be a collective investment scheme. The partnership will not require authorisation simply for being a collective investment scheme as this is not a regulated activity. It will also often be the case that the partnership, in investing its assets, will be excluded from the regulated activity of dealing in investments as principal (see AUTH 2.8.4 G (Dealing in investments as principal)). However, it is likely that the general partner will require permission from the FSA to establish, operate or wind up a collective investment scheme (see AUTH 3.17 (Specific obligations: applicants seeking to establish a collective investment scheme or to act as manager of a regulated collective investment scheme) and COLL and CIS). If the general partner delegates responsibility for operating a limited partnership that is a collective investment scheme to another person on behalf of the partnership, that other person will require authorisation from the FSA (whether or not the general partner also requires authorisation).

01/04/2004

AUTH 3.22.4

Where the limited partnership intends to manage the investments of third parties rather than the capital contributions of the partners, the limited partnership itself may require permission from the FSA. This is because it is likely to be carrying on the regulated activity of managing investments and may be carrying on other regulated activities as well. A typical example of this kind of limited partnership would be a hedge fund scheme.

01/07/2003

AUTH 3.22.5

If the limited partnership is a collective investment scheme, neither the limited partnership itself (if authorised) nor the general partner (if authorised) will be within the scope of the ISD in respect of its management of the scheme assets. So, neither of them will be an ISD investment firm. This is because the ISD specifically excludes from its scope collective investment undertakings and their managers and depositaries. This includes operators who manage both the scheme and its assets. However, where the management of the scheme and the assets are split, the activities of the asset manager will fall under the ISD.

01/07/2003

AUTH 3.23

Specific issues: applicants that are limited liability partnerships

01/12/2004

AUTH 3.23.1

A limited liability partnership is a body corporate incorporated under either the Limited Liability Partnerships Act 2000 or other legislation having the same effect as the Limited Liability Partnerships Act 2000. So, a limited liability partnership is a body corporate and exists as a legal person separate from its members. Any limited liability partnership that wishes to carry on a regulated activity must make its application for Part IV permission in its own name. Consequently, unlike partners in a partnership , the members of the limited liability partnership do not personally become authorised . So, the members do not have permission to conduct regulated activities in their own names. The regulated activities must be carried on by the limited liability partnership itself.

01/07/2003

AUTH 3.23.2

A limited liability partnership has some features of a limited company and some of a partnership. For example, it can have the organisational flexibility of, and is subject to a taxation regime similar to that of, a partnership. However, although the partners of a general partnership are liable personally for the obligations of the partnership, a limited liability partnership (like a limited company) is a separate legal entity that is owned by its members. It is this structure that allows members to protect their personal assets from the liabilities of the body corporate .

01/07/2003

AUTH 3.23.3

The organisational flexibility available to a limited liability partnership means that all of the members can be involved in the day-to-day management and operations of the business. This is so, even though they have limited their liability for the limited liability partnership's obligations. This may be contrasted with the position of limited partners in a limited partnership.

01/07/2003

AUTH 3.23.4

A consequence of the organisational flexibility available to a limited liability partnership is the potential for widely differing organisational structures. This means that the proposed organisational structure for an applicant for Part IV permission will need to be explained fully in the application. This will allow the FSA to give proper consideration, with the applicant, to the way in which the approved persons and financial resource requirements will apply to it. All limited liability partnerships that are making an application for Part IV permission, whether or not they have been formed under the Limited Liability Partnerships Act 2000, will need to supply this information.

01/07/2003

AUTH 3.23.5

Authorised persons wishing to exchange their existing status to that of a limited liability partnership will need to make an application for Part IV permission in the name of the new entity, and will be expected to complete an application pack for Part IV permission. A firm considering changing its existing status should contact the Enquiries and Applications Department (Applications team) (see AUTH 1.9.2 G) at an early stage for advice on what will be required.

01/07/2003

AUTH 3.24

Specific obligations: applicants wishing to operate an ATS

01/12/2004

AUTH 3.24.1

If an applicant who wishes to operate an ATS intends to assume responsibility for the clearing or settlement of transactions effected using the ATS, the applicant should provide sufficient information with its application to demonstrate that it has adequate arrangements in place to ensure efficient clearing or settlement (as the case may be) of the transactions.

01/04/2004

AUTH 3 Annex 1

Application for Part IV Permission

01/12/2004

AUTH 3 Annex 1.1

03/09/2001
Future version of AUTH 3 Annex 1.1 after 20/10/2005

AUTH 3 Annex 2

01/12/2004

AUTH 3 Annex 2.1

CHAPTER OF IPRU(INV) THAT REQUIREMENT ON PERMISSION REQUIRES THE FIRM TO COMPLY WITH

FIRM'S PRUDENTIAL CATEGORY

Chapter 3

Securities and futures firm

Chapter 5

Investment management firm

Chapter 10

Securities and futures firm

Chapter 13

Personal investment firm

The table below shows how a firm's main regulated activities determine its prudential category. A firm's 'main regulated activities' in this context are the regulated activities included in the firm's Part IV permission from which the firm derives or is expected to derive the most substantial part of its gross income, including commissions. The aggregate gross income from all of the activities listed against each prudential category should be considered to determine which source is the most substantial.
The gross income is based on the business plan submitted as part of the firm's application for a Part IV permission.

ACTIVITIES FROM WHICH THE MOST SUBSTANTIAL PART OF THE FIRM'S GROSS INCOME, INCLUDING COMMISSIONS, FROM REGULATED ACTIVITIES IS DERIVED

FIRM'S PRUDENTIAL CATEGORY

(i) Managing investments other than for private customers or where the assets managed are primarily derivatives;
(ii) OPS activity;
(iii) acting as the manager or trustee of an AUT;
(iv) acting as the ACD or depositary of an ICVC;
(v) establishing, operating or winding up a collective investment scheme other than an AUT or ICVC; and
(vi) safeguarding and administering investments.

Investment management firm

(i) Advising on investments, or arranging (bringing about) deals in investments in relation to, packaged products; and
(ii) managing investments for private customers.

Personal investment firm

ACTIVITIES FROM WHICH THE MOST SUBSTANTIAL PART OF THE FIRM'S GROSS INCOME, INCLUDING COMMISSIONS, FROM REGULATED ACTIVITIES IS DERIVED

FIRM'S PRUDENTIAL CATEGORY

(i) An activity carried on as a member of an exchange;
(ii) making a market in securities or derivatives;
(iii) corporate finance business;
(iv) dealing, or arranging (bringing about) deals in investments, in securities or derivatives;
(v) the provision of clearing services as a clearing firm;
(vi) managing investments where the assets managed are primarily derivatives; and
(vii) activities relating to spread bets;

Securities and futures firm

27/04/2002

AUTH 3 Annex 3

Determination of an applicant's prudential category

01/12/2004

AUTH 3 Annex 3.1

03/09/2001

Export chapter as

AUTH 4

Authorisation
Fees

AUTH 4.1

Introduction

01/12/2004

Application

AUTH 4.1.1

This chapter applies to:

(1) every applicant for Part IV permission (including an incoming firm applying for top-up permission);

(2) every Treaty firm that wishes to exercise a Treaty right to qualify for authorisation under Schedule 4 to the Act (Treaty rights) in respect of regulated activities for which it does not have an EEA right; and

(3) an applicant for a certificate under article 54 of the Regulated Activities Order.

01/01/2002

AUTH 4.1.2

This chapter does not apply to:

(1) an EEA firm that wishes to exercise an EEA right; or

(2) an ICVC; or

(3) a UCITS qualifier.

01/01/2002

Purpose

AUTH 4.1.3

The purpose of this chapter is to set out the requirements on applicants for Part IV permission, and Treaty firms qualifying for authorisation under Schedule 4 to the Act (Treaty rights), to pay fees.

01/01/2002

Background

AUTH 4.1.4

GEN 3 (FSA Fees - General Provisions) applies to fees required by this chapter.

01/01/2002

AUTH 4.1.5

Most of the detail of what fees are payable by applicants and Treaty firms is set out in AUTH 4 Annex 1.

01/04/2004

AUTH 4.1.5A

AUTH 4 Annex 2 R contains details of the application fees payable by applicants seeking to obtain permission to carry out any of the activities included in the A.2 (mortgage lenders and administrators), A.18 (mortgage lenders, advisers and arrangers) and A.19 (general insurance mediation) activity groups, for the period before these activities begin to be subject to regulation.

01/01/2004

AUTH 4.1.6

The rates set for authorisation fees represent an appropriate proportion of the costs of the FSA in processing the application or exercise of Treaty rights.

01/01/2002

AUTH 4.1.7

Except as set out in AUTH 4.1.7A G, applications (and exercises of Treaty rights) are categorised by the FSA for the purpose of fee raising as complex, moderately complex and straightforward as identified in AUTH 4 Annex 1. This differentiation is based on the permitted activities sought and does not reflect the FSA's risk assessment of the applicant (or Treaty firm).

01/11/2003

AUTH 4.1.7A

For the period before the activities referred to in AUTH 4.1.5A G are subject to regulation, applications for the A.2 (mortgage lenders and administrators), A.18 (mortgage lenders, advisers and arrangers) and A.19 (general insurance mediation) activity groups are categorised by the FSA for the purpose of fee raising using a measure of the amount of business being undertaken by the person, as detailed in AUTH 4 Annex 2 R.

01/01/2004

AUTH 4.1.8

A potential applicant (or Treaty firm) has the opportunity to discuss its proposed application (or exercise of Treaty rights) with the FSA before submitting it formally (see AUTH 3.9.1 G). If an applicant (or Treaty firm) does so, the FSA will be able to use that dialogue to make an initial assessment of the fee categorisation and therefore indicate the authorisation fee that should be paid.

01/01/2002

AUTH 4.1.9

See AUTH 3.9 in relation to the procedures for making applications for Part IV permission and AUTH 5 for procedures for the exercise of Treaty rights by Treaty firms.

01/01/2002

AUTH 4.1.10

Authorisation fees are not refundable.

01/01/2002

AUTH 4.2

Obligation to Pay Authorisation Fees

01/12/2004
Future version of AUTH 4.2 after 31/12/2005

General

AUTH 4.2.1

A person to whom this chapter applies must pay to the FSA an authorisation fee for each application made (or exercise of a Treaty right), as set out in AUTH 4 Annex 1 and AUTH 4 Annex 2 R.

01/11/2003

Amount

AUTH 4.2.2

In respect of a particular application (or exercise) the authorisation fee referred to in AUTH 4.2.1 R is the highest of the tariffs set out in part 1 of AUTH 4 Annex 1 and part 2 of AUTH 4 Annex 2 R which apply to that application (or exercise).

01/11/2003

AUTH 4.2.3

If an application (or exercise of a Treaty right) falls within more than one category, only one fee is payable. That fee is the one for the category to which the highest fee tariff applies.

01/01/2002

Due date and method of payment

AUTH 4.2.4

The sum payable under AUTH 4.2.2 R must be paid:

(1) by bankers draft, cheque or other payable order;

(2) in full without deduction; and

(3) on or before the date on which the application is made (or notice of exercise is given).

01/01/2002

AUTH 4.2.5

The appropriate authorisation fee is an integral part of an application for Part IV permission. Any application pack received by the FSA without the accompanying appropriate authorisation fee, in full and without deduction (see AUTH 4.2.4 R), will not be treated as an application made, incomplete or otherwise, in accordance with section 51(3)(a) of the Act. Where this is the case, the FSA will contact the applicant to point out that the application cannot be progressed until the appropriate fee has been received. In the event that the appropriate authorisation fee, in full and without deduction, is not forthcoming, the application pack will be returned to the applicant and no application will have been made.

01/03/2003

Modification for certain Treaty firms

AUTH 4.2.6

If a certificate has been issued under paragraph 3(4) of schedule 4 to the Act in respect of an exercise of a Treaty right, no sum payable under AUTH 4.2.2 R.

01/01/2002

AUTH 4.2.7

If no certificate has been issued under paragraph 3(4) of schedule 4 to the Act in respect of an exercise of a Treaty right, the sum payable is as specified in Part 4 of AUTH 4 Annex 1.

01/01/2002

AUTH 4.3

Obligation to pay certification fees

01/12/2004

General

AUTH 4.3.1

An applicant for a certificate under article 54 of the Regulated Activities Order must pay to the FSA the application fee specified in Part 6 of AUTH 4 Annex 1.

15/11/2001

Due date and method of payment

AUTH 4.3.2

The application fee must be paid:

(1) by bankers draft, cheque or other payable order;

(2) in full without deduction; and

(3) on or before the date on which the application is made.

15/11/2001

AUTH 4.3.3

An application for an article 54 certificate will be treated as incomplete until the application fee has been paid.

15/11/2001

AUTH 4 Annex 1

Authorisation fees payable

01/12/2004

Application type (see Part 2)

Amount payable

(a) Credit unions - registration of common bond

£200

(b) Version 1 credit unions - authorisation

£300

£1,800

(d) Straightforward

£1,500

(e) Moderately complex

£5,000

(f) Complex

£25,000

Straightforward cases

Activity grouping

Description

A.3

Friendly societies only

A.4

Friendly societies only

A.12

Advisory arrangers, dealers or brokers (holding or controlling client money and/or assets)

A.13

Advisory only firms and advisory arrangers, dealers or brokers (not holding or controlling client money and/or assets)

A.14

Corporate finance advisers

A.18

Mortgage lenders, advisers and arrangers (excluding mortgage lenders)

A.19

General insurance mediation

Moderately complex cases

Activity grouping

Description

A.1

E-money issuers only

A.2

Mortgage lenders and administrators

A.5

Managing agents at Lloyd's

A.7

Fund managers

A.9

Operators, trustees and depositaries of collective investment schemes

A.10

Firms dealing as principal

Service companies

Complex cases

Activity grouping

Description

A.1

Deposit acceptors (excluding e-money issuers and credit unions)

A.3

Insurers - general (excluding friendly societies)

A.4

Insurers - life (excluding friendly societies)

The fee payable under SUP 6.3.22 R is 50% of that payable under AUTH 4.2.2 R.There are no circumstances specified for the purposes of SUP 6.3.22 R (2).

If the Treaty firm wishes to undertake the permitted activities in question through its branch in the United Kingdom, the fee is 50% of the fee that would be payable under AUTH 4.2.2 R.

If the Treaty firm wishes to undertake the permitted activities in question by providing services in the United Kingdom, the fee is 25% of the fee which would be payable under AUTH 4.2.2 R.

The activity group definitions are set out in SUP 20 Annex 1.

The amount payable in relation to each application is £2,000.

03/09/2001

AUTH 4 Annex 2

Authorisation fees payable in relation to the A.2 and A.18 activity groups up to and including 30 October 2004 and the A.19 activity group up to and including 13 January 2005

01/12/2004

Note: This annex specifies the application fees for applicants seeking to apply for Part IV permission, or to vary their existing Part IV permission, in order to undertake any of the activities specified in the A.2, A.18 and A.19 activity groups (see Part 1 of SUP 20 Annex 1 for details of the activities).

For the permitted activities included in the A.2 and A.18 activity groups, regulation commences on 31 October 2004. Regulation commences on 14 January 2005 for the permitted activities included in the A.19 activity group.

The fee rules set out in this annex will apply from the beginning of the application period until regulation of these permitted activities commences. At that time, these rules will cease to have effect and application fees for these types of permitted activities will be dealt with alongside the other authorisation fees as part of AUTH 4 Annex 1.

1. For the A.2 and A.18 activity groups, these rates apply up to and including 30 October 2004.

2. For the A.19 activity group, these rates apply up to and including 13 January 2005.

Activity group

Amount payable

Fee bands

Fee - early applications

Fee - other applications

Discount - electronic applications

Discount - non-electronic applications paying by direct debit

Band no.

Band

A.2 Mortgage lenders and administrators

1

2

3

4

Gross advances (£m)

0-10

>10-100

>100-1,000

>1,000

Fee (?)

600

8,000

13,000

23,000

Fee (?)

1,200

10,000

15,000

25,000

Discount (£)

100

250

250

500

Discount (£)

50

50

50

50

A.18 Mortgage lenders, advisers and arrangers; and

A.19 General insurance mediation

5

6

7

8

Annual income (£m)

0 - 1

>1-3

>3-25

>25

Fee (?)

600

4,250

9,000

23,000

Fee (?)

1,200

5,750

11,000

25,000

Discount (£)

100

250

250

500

Discount (£)

50

50

50

50

(1)

An early application is an application lodged:

(a)

for A.2 or A.18 applications, before 1 April 2004; and

(b)

for A.19 applications, before 1 June 2004.

(2)

For the purposes of this table:

(a)

An electronic application is one submitted via the electronic facility provided by the FSA for these purposes.

(b)

Gross advances means the value of all new mortgage advances made (not the total mortgage balances outstanding) including loans for house purchase, remortgages, further advances and top-up loans, in the 12 months to 31 December 2003; PLUS

the value of all new mortgages administered (not the total mortgage balances outstanding) including loans for house purchase, remortgages, further advances and top-up loans, in the 12 months to 31 December 2003, multiplied by 0.5.

Note: For this purpose, a mortgage is a contract for a loan secured by a first charge over residential property in the United Kingdom.

(3)

For the purposes of this table, annual income means:

(a)

the net amount retained by the firm of all brokerages, fees, commissions and other related income (e.g. administration charges, overriders, profit shares) due to the firm in respect of or in relation to:

(i)

activities which would be mortgage mediation activity if they had been carried out after 30 October 2004; PLUS

(ii)

activities which would be insurance mediation activity (in relation to general insurance contracts or pure protection contracts) if they had been carried out after 13 January 2005;

earned in its latest financial year ending on or before 31 December 2003;

PLUS

(b)

(i)

in relation to the activities set out in (a)(i), for any mortgage mediation activity carried out by the firm for which it receives payment from the lender on a basis other than that in (a), the value of all new mortgage advances resulting from that activity multiplied by 0.004;

PLUS

(ii)

If the firm is a mortgage lender, the value of all new mortgage advances which would be regulated mortgage contracts if they had been made after 30 October 2004 (other than those made as a result of mortgage mediation activity by another firm), multiplied by 0.004;

for its latest financial year ending on or before 31 December 2003;

PLUS

(c)

in relation to the activities set out in (a)(ii):

(i)

for any insurance mediation activity carried out by the firm for which it receives payment from the insurer on a basis other than that in (a), the amount of premiums receivable on the contracts of insurance resulting from that activity multiplied by 0.07; PLUS

(ii)

if the firm is an insurer, the amount of premiums receivable on its contracts of insurance multiplied by 0.07, excluding those contracts of insurance which:

(aa)

result from insurance mediation activity by another firm, where a payment has been made by the insurer to the firm under (a); or

(ab)

the insurer reports, and pays a fee on, in the A.4 activity group; or

(ac)

are not general insurance contracts or pure protection contracts;

for its latest financial year ending on or before 31 December 2003.

The firm must include in its income calculation, on the same basis as above, earnings from those who will become its appointed representatives immediately after authorisation.

In note (3), a reference to a "firm" also includes reference to any person who carried out activities which would be;

(1)

mortgage mediation activity if they had been carried out after 30 October 2004; or

(2)

insurance mediation activity (in respect of general insurance contracts or pure protection contracts) if they had been carried out after 13 January 2005.

The activity group definitions are set out in SUP 20 Annex 1.

03/09/2001

Export chapter as

AUTH 5

Qualifying for authorisation under the Act

AUTH 5.1

Application and purpose

01/12/2004

Application

AUTH 5.1.1

(1) This chapter applies to an EEA firm that wishes to exercise an entitlement to establish a branch in, or provide cross border services into, the United Kingdom under a Single Market Directive. (The Act refers to such an entitlement as an EEA right and its exercise is referred to in the Handbook as "passporting"). (See SUP App 3 (Guidance on passporting issues) for further guidance on passporting).

(2) The chapter also applies to:

(a) a Treaty firm that wishes to exercise rights under the Treaty in respect of regulated activities not covered by the Single Market Directives and qualify for authorisation under Schedule 4 to the Act (Treaty Rights); and

(b) a UCITS qualifier, that is, an operator, trustee or depositary of a recognised collective investment scheme, constituted in another EEA State, and which qualifies for authorisation under Schedule 5 to the Act (Persons concerned in collective investment schemes).

(3) The provisions implementing the Single Market Directives are within the coordinated field (see PERG 2.9.18G(1)). So, where an incoming ECA provider intends to provide electronic commerce activity that consist of activities that fall within one of the Single Market Directives, the passporting requirements on exercising an EEA right in this chapter will apply.

01/07/2005
Past version of AUTH 5.1.1 before 01/07/2005

AUTH 5.1.2

This chapter does not apply to:

(1) an EEA firm that wishes to carry on in the United Kingdom activities which are outside the scope of its EEA right and the scope of a permission granted under Schedule 4 to the Act; in this case the EEA firm requires a "top-up permission" under Part IV of the Act and `should refer to AUTH 3 (Applications for Part IV permission); or

(2) a person participating in a community co-insurance operation by the provision of services and otherwise than as leading insurer, carrying on any insurance activity; by virtue of Article 11 of the Regulated Activities Order Community co-insurance operation is treated as authorised on completion by the leading insurer of the requirements of Schedule 3 to the Act.

(3) a Treaty firm that wishes to provide electronic commerce activities into the United Kingdom.

21/08/2002

AUTH 5.1.3

(1) Under The Gibraltar Order made under section 409 of the Act (Gibraltar), a Gibraltar firm is treated as an EEA firm under Schedule 3 to the Act if it is:

(a) authorised in Gibraltar under the Insurance Directives; or

(b) authorised in Gibraltar under the Banking Consolidation Directives.

(2) A Gibraltar insurance company is allowed to passport its services into the United Kingdom if it complies with the relevant notification procedures. Similarly, a Gibraltar credit institution is allowed to passport into the United Kingdom to provide banking services provided those services fall within items 1 to 6 in Annex 1 to the Banking Consolidation Directive. So, any references in this chapter to EEA State or EEA right include references to Gibraltar and the entitlement under the Gibraltar Order where appropriate.

(3) The entitlement in the Gibraltar Order does not, however, extend to investment services as Gibraltar investment firms have not been granted the right to passport into the United Kingdom.

01/12/2001

Purpose

AUTH 5.1.4

(1) This chapter explains how an EEA firm and a Treaty firm can qualify for authorisation under Schedules 3 and 4 to the Act and how a UCITS qualifier is authorised under Schedule 5 to the Act.

(2) This chapter also provides guidance on Schedule 3 to the Act for an incoming EEA firm that wishes to establish a branch in the United Kingdom instead of, or in addition to, providing cross border services into the United Kingdom or vice versa.

01/12/2001

AUTH 5.1.5

(1) EEA firms should note that the chapter only addresses the procedures which the FSA will follow under the Act after it has received a consent notice or been notified of an EEA firm's intentions by its Home State regulator. So, an EEA firm should consider this guidance in conjunction with the requirements with which it will have to comply in its Home State.

(2) The guidance in this chapter represents the FSA's interpretation of the Single Market Directives the Act and the secondary legislation made under the Act. The guidance is not exhaustive and should not be seen as a substitute for a person consulting the legislation or taking legal advice.

21/02/2002

AUTH 5.2

EEA firms and Treaty firms

01/12/2004

AUTH 5.2.1

A person will only be an EEA firm or a Treaty firm if it has its head office in an EEA State other than the United Kingdom. EEA firms and Treaty firms are entitled to exercise both the right of establishment and the freedom to provide services under the Treaty. The difference, however, is that an EEA firm has a right to passport under a Single Market Directive, whereas a Treaty firm carries on activities which do not fall within the scope of a Single Market Directive. An EEA firm may also be a Treaty firm if it carries on such activities. A person may be a Treaty firm, where, for example, it carries on business that:

(1) comprises regulated activities, such as reinsurance, which are not covered by any Single Market Directives; or

(2) includes regulated activities which do not fall within the scope of the Single Market Directive under which it is entitled to exercise an EEA right.

01/12/2001

AUTH 5.2.2

An EEA firm may passport those activities which fall within the scope of the relevant Single Market Directive as long as they are included in its Home State authorisation.

01/12/2001

AUTH 5.3

Qualification for authorisation under the Act

01/12/2004

EEA firms

AUTH 5.3.1

Section 31 of the Act (Authorised persons) states that an EEA firm is authorised for the purposes of the Act if it qualifies for authorisation under Schedule 3 to the Act (EEA Passport Rights). Under paragraph 12 of Part II of that Schedule, an EEA firm qualifies for authorisation if:

(1) it is seeking to establish a branch in the United Kingdom in exercise of an EEA right and satisfies the establishment conditions (see AUTH 5.4.2 G); or

(2) it is seeking to provide cross border services into the United Kingdom in exercise of an EEA right and satisfies the service conditions (see AUTH 5.5.3 G).

01/12/2001

AUTH 5.3.2

(1) On qualifying for authorisation, subject to AUTH 5.3.2 G (1A), an EEA firm will have permission to carry on each permitted activity (see (2) below) which is a regulated activity:

(a) through its UK branch (if it satisfies the establishment conditions); or
(b) by providing cross border services into the United Kingdom (if it satisfies the service conditions).

(1A)

(a) Paragraph (1) does not apply to the activity of dealing in units in a collective investment scheme in the United Kingdom where:

(i) the firm is an EEA UCITS management company;
(ii) the firm satisfies the establishment conditions in AUTH 5.4.2 G; and
(iii) the FSA notifies the EEA firm and the EEA firm's Home State regulator that the way in which it intends to market a relevant scheme in the United Kingdom does not comply with the law in force in the United Kingdom.

(b) The FSA's notice under (1A)(a)(iii) has to be given to the EEA firm within two months of receiving the consent notice (AUTH 5.4.2 G(1)) and will be similar to a warning notice.
(c) For details of the FSA's procedures for the giving of warning notices and references to the Tribunal, see DEC 2.2 (Statutory notice procedure: Warning notice and decision notice procedure) and DEC 5 (References to the Tribunal, publication and services of notices).

(2) The permitted activities of EEA firm are those activities identified in the consent notice, regulator's notice or notice of intention. Permitted activities may include activities that are within the scope of a Single Market Directive but which are unregulated activity in the United Kingdom.
(3) Paragraph 15(2) of Part II of Schedule 3 to the Act states that this permission is treated as being on terms equivalent to those appearing in the consent notice, regulator's notice or notice of intention. For example, it will reflect any limitations or requirements which are included in the firm's Home State authorisation.

13/02/2004

AUTH 5.3.3

An EEA firm which has qualified for authorisation is referred to in the Handbook as an incoming EEA firm.

01/12/2001

Treaty firms

AUTH 5.3.4

Under section 31 of the Act, a Treaty firm is authorised for the purposes of the Act if it qualifies for authorisation under Schedule 4 (Treaty Rights), that is:

(1) the Treaty firmis seeking to carry on a regulated activity; and

(2) the conditions set out in paragraph 3(1) of Schedule 4 to the Act are satisfied.

01/12/2001

AUTH 5.3.5

The conditions in paragraph 3(1) of Schedule 4 to the Act are that:

(1) the Treaty firm has received authorisation under the law of its Home State to carry on the regulated activities it seeks to carry on (under paragraph 3(2)). A Treaty firm is not to be regarded as so authorised unless its Home State regulator has so informed the FSA in writing); and

(2) the relevant provisions of the law of the firm's Home State:

(a) afford equivalent protection (see AUTH 5.3.6 G); or

(b) satisfy the conditions laid down by a Community instrument for the co-ordination or approximation of laws, regulations, or administrative provisions of EEA States relating to the carrying on of that activity; and

(3) the Treaty firm has no EEA right to passport in relation to that activity under one of the Single Market Directives in respect of that activity.

01/12/2001

AUTH 5.3.6

Paragraph 3(3) of Schedule 4 to the Act states that Home State provisions afford equivalent protection if, in relation to the Treaty firm carrying on of the regulated activity, they afford consumers protection which is at least equivalent to that afforded by or under the Act in relation to that activity. A certificate issued by the Treasury that the provisions of the law of a particular EEA State afford equivalent protection in relation to the activities specified in the certificate is conclusive evidence of that fact.

01/12/2001

AUTH 5.3.7

On qualifying for authorisation a Treaty firm will have permission to carry on each permitted activity which is a regulated activity. This permission will be treated on the same terms as those which apply to the Treaty firm's Home State authorisation. For example, it will reflect any limitations or requirements which are included in the firm's Home State authorisation.

01/12/2001

AUTH 5.3.8

The effect of paragraph 5(1) and 5(2) of Schedule 4 to the Act is that a Treaty firm which qualifies for authorisation under that Schedule must, at least seven days before it carries on any of the regulated activities covered by its permission, give the FSA written notice of its intention to do so. Failure to do so is a criminal offence under paragraph 6(1) of that Schedule.

01/12/2001

AUTH 5.3.9

(1) A notice from a Treaty firm under paragraph 5 (2) of the Schedule 4 to the Act must be given in writing in the manner directed, and with the information required, in the information pack provided by the FSA.

(2) The notice must be:

(a) given to a member of, or addressed for the attention of, the Enquiries and Application Department (Applications team); and

(b) delivered to the FSA by one of the methods in (3).

(3) The notice may be delivered by:

(a) post to the address in AUTH 5.3.11 G below; or

(b) leaving the application at the address in AUTH 5.3.11 G below and obtaining a time-stamped receipt; or

01/07/2003

AUTH 5.3.10

(1) The information pack required by AUTH 5.3.9 D should be accompanied by confirmation of the Treaty firm's authorisation from the Home State regulator, as referred to in AUTH 5.3.5 G (1).

(2) An information pack may be obtained from the Authorisation and Approvals Department (Authorisation teams).

01/07/2003

AUTH 5.3.11

(1) To contact the Authorisation and Approvals Department (Authorisation teams):

(a) telephone on +4420 7066 3954 or fax on +4420 7066 xxxx; or

(b) write to: Authorisation and Approvals Department (Authorisation teams), The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London, E14 5HS; or

01/07/2003

AUTH 5.3.12

(1) The guidance in PERG 2 (Authorisation and regulated activities) is relevant to Treaty firms to help them determine if they require authorisation under the Act.

(2) A Treaty firm which qualifies for authorisation is referred to in the Handbook as an incoming Treaty firm. It has, for each regulated activity for which the conditions in AUTH 5.3.5 G are satisfied, permission, under paragraph 4 of Schedule 4 to theAct, to carry it on through its UK branch or by providing cross border services into the United Kingdom.

01/07/2005
Past version of AUTH 5.3.12 before 01/07/2005

AUTH 5.3.13

(1) An EEA firm that is carrying on both direct insurance and reinsurance business will be entitled to passport under Schedule 3 to the Act in relation to the direct insurance business. It will also have a Treaty right under Schedule 4 to the Act. Such EEA firms are advised to discuss their particular circumstances with the Enquiries and Applications Department (Applications team) before sending in their notification under AUTH 5.5.3 G.

(2) An insurance company with its head office in an EEA State other than the United Kingdom that is carrying on pure reinsurance business in that State, and which wishes to carry on such business in the United Kingdom, is advised to discuss its particular requirements with the Enquiries and Applications Department (Applications team). It may be entitled to exercise a Treaty right provided it satisfies the conditions in paragraph 3(1) of Schedule 4 to the Act (see AUTH 5.3.5 G). Otherwise, it will have to seek a Part IV permission (see AUTH 3 (Applications for Part IV Permission)).

01/07/2003

UCITS qualifiers

AUTH 5.3.14

Under Schedule 5 to the Act (Persons concerned in collective investment schemes), a person who for the time being is an operator, trustee or depository of a scheme which is a recognised scheme under section 264 of the Act is an authorised person. Such a person is referred to in the Handbook as a UCITS qualifier.

01/12/2001

AUTH 5.3.15

A UCITS qualifier has permission under paragraph 2 of Schedule 5 to the Act, to carry on, as far as is appropriate to the capacity in which it acts in relation to the scheme:

(1) the establishing, operating or winding up of a collective investment scheme, and

(2) any activity in connection with, or for the purposes of, the scheme.

01/07/2003

AUTH 5.3.16

A UCITS qualifier should refer to COLLG or to the following sections of COLL and CIS for requirements for recognised schemes:

(1) COLLG 9.2.1G and CIS 16.1.8 G for guidance on notifications;

(2) COLLG 9.2.1G and CIS 17.2 for guidance on information and documentation requirements; and

(3) COLL 9.4 and CIS 17.4 which includes guidance on what facilities need to be maintained.

01/04/2004

AUTH 5.4

EEA firms establishing a branch in the United Kingdom

01/12/2004

What constitutes a branch?

AUTH 5.4.1

There is guidance for UK firms in SUP 13 Annex X [to be added later] on what constitutes a branch. EEA firms may find this of interest although they should follow the guidance of their Home State regulators.

01/12/2001

The conditions for establishing a branch

AUTH 5.4.2

Before an EEA firm exercises an EEA right to establish a branch in the United Kingdom other than under the Insurance Mediation Directive, the Act requires it to satisfy the establishment conditions, as set out in paragraph 13(1), Part II of Schedule 3 to the Act (EEA Rights). These conditions are that:

(1) the FSA has received notice (a consent notice) from the EEA firm's Home State regulator that it has given the EEA firm consent to establish a branch in the United Kingdom;

(2) the consent notice:

(a) is given in accordance with the relevant Single Market Directive;

(b) identifies the activities to which the consent relates; and

(c) includes the information prescribed under regulation 2 of the EEA Passport Rights Regulations (see AUTH 5 Annex 1 G);

(3) the EEA firm has been informed of the applicable provisions or two months have elapsed beginning with the date on which the FSA received the consent notice.

01/12/2001

AUTH 5.4.2A

Where an EEA firm exercises its EEA right to establish a branch in the United Kingdom under the Insurance Mediation Directive, the Act requires it to satisfy the establishment conditions, as set out in paragraph 13(1A) Part II of Schedule 3 to the Act (EEA Rights). These conditions are that:

(1) the EEA firm has given its Home State regulator notice of its intention to establish a branch in the United Kingdom;

(2) the FSA has received notice ("a regulator's notice") from the EEA firm's Home State regulator that the EEA firm intends to establish a branch in the United Kingdom;

(3) the EEA firm's Home State regulator has informed the EEA firm that the regulator's notice has been sent to the FSA; and

(4) one month has elapsed beginning with the date when the EEA firm's Home State regulator informed the EEA firm that it had sent the regulator's notice to the FSA.

14/01/2005

AUTH 5.4.3

For the purposes of paragraph 13 of Part II of Schedule 3 to the Act, the applicable provisions may include FSA rules. The EEA firm is required to comply with relevant rules when carrying on a passported activity through a branch in the United Kingdom as well as with relevant UK legislation.

01/12/2001

The notification procedure

AUTH 5.4.4

(1) When the FSA receives a consent notice from the EEA firm's Home State regulator, it will, under paragraphs 13(2)(b), (c) and 13(3) of Part II of Schedule 3 to the Act, notify the applicable provisions (if any) to:

(a) the EEA firm; and

(b) in the case of an EEA firm passporting under Insurance Directives, the Home State regulator;

within two months of the date on which the FSA received the consent notice.

(2) Although the FSA is not required to notify the applicable provisions to an EEA firm passporting under the Insurance Mediation Directive, these provisions are set out in AUTH 5 Annex 3 G (Application of the Handbook to Incoming EEA Firms).

01/12/2001

AUTH 5.5

EEA firms providing cross border services into the United Kingdom

01/12/2004

Is the service provided within the United Kingdom?

AUTH 5.5.1

There is guidance for UK firms in SUP 13 Annex X on when a service is provided cross border [to be added later]. EEA firms may find this of interest although they should follow the guidance of their Home State regulators.

01/12/2001

AUTH 5.5.2

An EEA firm should note that the requirement under the Single Market Directives to give a notice of intention to provide cross border services applies whether or not:

(1) it has established a branch in the United Kingdom; or

(2) those cross border services are regulated activities.

01/12/2001

The conditions for providing cross border services into the United Kingdom

AUTH 5.5.3

Before an EEA firm exercises an EEA right to provide cross border services into the United Kingdom, the Act requires it to satisfy the service conditions, as set out in paragraph 14 of Part II of Schedule 3 to the Act. These conditions are that:

(1) the EEA firm has given its Home State regulator notice of its intention to provide cross border services into the United Kingdom (a notice of intention);

(2) if the EEA firm is passporting under the Investment Services Directive, the Insurance Directives, or the Insurance Mediation Directive, the FSA has received notice ("a regulator's notice") from the EEA firm's Home State regulator containing the information prescribed under regulation 3 of the EEA Passport Rights Regulations (see AUTH 5 Annex 2 G);

(3) if the EEA firm is passporting under the Insurance Directives or the Insurance Mediation Directive, its Home State regulator has informed the EEA firm that it has sent the regulator's notice to the FSA; and

(4) if the EEA firm is passporting under the Insurance Mediation Directive, one month has elapsed beginning with the date when the EEA firm's Home State regulator informed the EEA firm that it had sent the regulator's notice to the FSA.

01/12/2001

The notification procedure

AUTH 5.5.4

(1) Unless the EEA firm is passporting under the Insurance Mediation Directive, if the FSA receives a regulator's notice or, where no notice is required (in the case of an EEA firm passporting under the Banking Consolidation Directive), is informed of the EEA firm's intention to provide cross border services into the United Kingdom, the FSA will, under paragraphs 14(2)(b) and 14(3) of Part II of Schedule 3 to the Act, notify the EEA firm of the applicable provisions (if any) within two months of the day on which the FSA received the regulator's notice or was informed of the EEA firm's intention.

01/12/2001

AUTH 5.5.5

An EEA firm that has satisfied the service conditions in AUTH 5.5.3 G is entitled to start providing cross border services into the United Kingdom. However, a EEA firm that wishes to start providing cross border services but has not yet received notification of the applicable provisions may wish to contact the FSA's Passport Notification Unit (see AUTH 5.8.1 G (2)).

01/12/2001

AUTH 5.6

Which rules will an incoming EEA firm be subject to?

01/12/2004

AUTH 5.6.1

AUTH 5 Annex 3 G summarises how the Handbook applies to incoming EEA firms.

01/12/2001

AUTH 5.6.2

An incoming EEA firm or incoming Treaty firm carrying on business in the United Kingdom must comply with the applicable provisions (see AUTH 5.5.4 G) and other relevant UK legislation. For example where the business includes:

(1) business covered by the Consumer Credit Act 1974, then an incoming EEA firm or incoming Treaty firm must comply with the provisions of that Act, as modified by paragraph 15(3) of Schedule 3 to the Act; or

(2) effecting or carrying out contracts covering motor vehicle third party liability risks as part of direct insurance business, then an incoming EEA firm or incoming Treaty firm is required to become a member of the Motor Insurers' Bureau.

01/12/2001

AUTH 5.6.3

In particular, an EEA firm or Treaty firm must comply with the applicable provisions in SUP 10 (Approved persons). An EEA firm or Treaty firm should read AUTH 6 (Approved persons) but also refer to SUP 10.1 (Application) which sets out the territorial provisions of the approved persons regime.

01/12/2001

AUTH 5.6.4

Under the EEA Passport Rights Regulations, references in section 60 of the Act (applications for approval for persons to perform controlled functions) to "the authorised person concerned" include an EEA firm with respect to which the FSA has received a consent notice or regulator's notice under paragraph 13 of Schedule 3 to the Act (see AUTH 5.4.2 G (1) and AUTH 5.4.2A G (2)) or a regulator's notice under paragraph 14 of that Schedule (see AUTH 5.5.3 G (2)), and which will be the authorised person concerned if the EEA firm qualifies for authorisation under that Schedule.

01/12/2001

AUTH 5.6.5

AUTH 5 Annex 3 G does not apply to incoming ECA providers. Such persons should refer to ECO for information on how the Handbook applies to them.

01/12/2001

AUTH 5.7

Top-up permission

01/12/2004

AUTH 5.7.1

If a person established in the EEA:

(1) does not have an EEA right;

(2) does not have permission as a UCITS qualifier; and

(3) does not have, or does not wish to exercise, a Treaty right (see AUTH 5.3.4 G to AUTH 5.3.9 D);

to carry on a particular regulated activity in the United Kingdom, it must seek Part IV permission from the FSA to do so (see AUTH 3). This might arise if the activity itself is outside the scope of the Single Market Directives, or where the activity is included in the scope of a Single Market Directive but is not covered by the EEA firm's Home State authorisation. If a person also qualifies for authorisation under Schedules 3, 4 or 5 of the Act as a result of its other activities, the Part IV permission is referred to in the Handbook as a top-up permission.

01/12/2001

AUTH 5.7.2

Where the FSA grants a top-up permission to an incoming EEA firm to carry on regulated activities for which it has neither an EEA right nor a Treaty right, the FSA is responsible for the prudential supervision of the incoming EEA firm, to the extent that the responsibility is not reserved to the incoming EEA firm's Home State regulator.

01/12/2001

AUTH 5.7.3

Top-up permission will normally be required, for example, for:

(1) the marketing of life insurance contracts by intermediaries; and

(2) designated investment business activities carried on in relation to commodity derivatives.

01/12/2001

AUTH 5.7.4

For guidance on how to apply for Part IV permission under the Act, see AUTH 3 (Applications for Part IV permission). If an EEA firm or Treaty firm wishes to make any subsequent changes to its top-up permission, it can make an application for variation of that permission (see SUP 6 (Applications to vary and cancel Part IV permission)).

01/12/2001

AUTH 5.8

Sources of further information

01/12/2004

AUTH 5.8.1

For further information on UK regulation, an EEA firm, aTreaty firm or a UCITS qualifier should contact the Authorisation and Approvals Department (Authorisation Enquiries) at the FSA. Questions about the passporting notification procedures can be addressed to the Passport Notification Unit.

(1) To contact the Authorisation Enquiries team:

(a) telephone on +44 20 7066 0082 or fax on +44 20 7066 9719;
(b) write to: Authorisation and Approvals Department (Authorisation Enquiries), The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.

(2) To contact the Passport Notification Unit:

(a) telephone on +44 20 7066 1000 or fax on +44 20 7066 xxxx;
(b) write to: Passport Notification Unit, The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS;
(c) email: passport.notifications@ fsa.gov.uk.

01/12/2001

AUTH 5 Annex 1

Establishment of a branch: Contents of Consent Notice G

01/12/2004

Type of firm

Para No.

Contents of consent notice (Regulation 2)

Investment firm

(2)(a)

a statement that the firm is an investment firm;

(b)

the requisite details of the branch (see SUP 13 Annex 1 );

(c)

details of any compensation scheme which is intended to protect the branch's investors.

EEA UCITS management company

(2A)(a)

a statement that the firm is an EEA UCITS management company;

(b)

the requisite details of the branch; and

(c)

details of any compensation scheme which is intended to protect the branch's investors.

Credit institution

or

(3)(a)

a statement that the firm is a credit institution;

(b)

the requisite details of the branch (see SUP 13 Annex 1 );

(c)

the amount of the firm's own funds (as defined in Section 1 of Chapter 2 of Title V to the Banking Consolidation Directive); and

(d)

the solvency ratio of the firm (calculated in accordance with the Banking Consolidation Directive).

Financial institution

(4)(a)

a statement that:

(i)

the firm is a financial institution;

(ii)

the firm is a subsidiary undertaking of a credit institution which is authorised in the EEA State in question and which holds at least 90 per cent of the voting rights in the firm (and for the purpose of this paragraph any two or more credit institutions which are authorised in that EEA State and hold voting rights in the firm are to be treated as a single credit institution, and as being "parent undertakings" of the firm);

(iii)

the firm carries on in that EEA State the EEA activities in question;

(iv)

the memorandum and articles of association, or other constituent instrument, of the firm permit it to carry on those activities;

(v)

the consolidated supervision of the firm's parent undertaking or, if more than one of them, any one of them effectively includes supervision of the firm;

(vi)

the firm's parent undertaking has guaranteed or, if more than one, they have jointly and severally guaranteed, the firm's obligations, with the consent of the Home State regulator;

(vii)

the firm's business is being conducted in a prudent manner.

(b)

the requisite details of the branch (see SUP 13 Annex 1 );

(c)

the amount of the firm's own funds (as defined in Section 1 of Chapter 2 of Title V to the Banking Consolidation Directive);

(d)

the solvency ratio of the firm's parent undertaking (calculated in accordance with the Banking Consolidation Directive).

Insurance undertaking

(5)(a)

a scheme of operations prepared in accordance with such requirements as may be imposed by the firm's Home State regulator, setting out (among other things) the types of business to be carried on and the structural organisation of the branch;

(b)

the name of the firm's authorised agent;

(c)

the address in the United Kingdom from which information about the business may be obtained, and a statement that this is the address for service on the firm's authorised agent;

(d)

in the case of a firm which intends to cover relevant motor vehicle risks, a declaration by the firm that it has become a member of the Motor Insurers' Bureau (being a company limited by guarantee and incorporated under the Companies Act 1929(1) on 14 ^th June 1946); and

(e)

a statement by the firm's Home State regulator attesting that the firm has the minimum margin of solvency calculated in accordance with such of the following as are appropriate:

(i)

articles 16 and 17 of the First Non-Life Insurance Directive; and;

(ii)

articles 18, 19 and 20 of the First Life Insurance Directive.

13/02/2004

AUTH 5 Annex 2

Provision of services: Contents of regulator's notice G

01/12/2004

Type of firm

Para No.

Contents of regulator's notice (Regulation 3)

Investment firm

(2)(a)

a statement that the firm is an investment firm; and

(b)

particulars of the programme of operations to be carried on in the United Kingdom including a description of the particular activities which the firm is seeking to carry on in the United Kingdom in the exercise of an EEA right.

EEA UCITS management company

(2A)(a)

a statement that the firm is an EEA UCITS management company;

(b)

(c)

details of any compensation scheme which is intended to protect the branch's investors.

Insurance undertaking

(3)(a)

a statement of the classes of business which the firm is authorised to carry on in accordance with Article 6 of the First Non-Life Directive or Article 6 of the First Life Directive;

(b)

the name and address of the firm;

(c)

the nature of the risks or commitments which the firm proposes to cover in the United Kingdom;

(d)

in the case of a firm which intends to cover relevant motor vehicle risks:

(i)

the name and address of the claims representative (Note); and

(ii)

a declaration by the firm that it has become a member of the Motor Insurers' Bureau (being a company limited by guarantee and incorporated under the Companies Act 1929 (1) on 14 ^th June 1946); and

(e)

a statement by the firm's Home State regulator attesting that the firm has a minimum margin of solvency calculated in accordance with such of the following as are appropriate:

(i)

articles 16 and 17 of the First Non-Life Insurance Directive ; and

(ii)

article 18, 19 and 20 of the First Life Insurance Directive

Insurance intermediary

(4)

that the firm intends to carry on insurance mediation or reinsurance mediation by providing services in the United Kingdom.

13/02/2004

AUTH 5 Annex 3

Application of the Handbook to Incoming EEA Firms G

01/12/2004

The table below summarises the application of the Handbook to an incoming EEA firm. Where the table indicates that a particular module of the Handbook may apply, its application in relation to any particular activity is dependent on the detailed application provisions in that module. The table does not apply to incoming ECA providers. These should refer to ECO 1 for guidance on how the Handbook applies to them.

In some cases, the application of the Handbook depends on whether responsibility for a matter is reserved under a European Community instrument to the incoming EEA firm's Home State regulator. Guidance on the reservation of responsibility is contained in SYSC App 1 (Matters reserved to a Home State regulator).

For an incoming EEA firm which has permission for cross-border services only, many parts of the Handbook apply only if the firm carries on regulated activities in the United Kingdom. Those parts of the Handbook will therefore not apply if the firm confines its activities to those within the overseas persons exclusions in article 72 of the Regulated Activities Order, or which would not be regarded as carried on in the United Kingdom. Further guidance may be found in PERG 2.4 (Link between activities and the United Kingdom) and PERG 2.9.15G to PERG 2.9.17G (Overseas persons).

(1) Module of Handbook

(2) Potential application to an incoming EEA firm with respect to activities carried on from an establishment of the firm (or its appointed representative) in the United Kingdom

(3) Potential application to an incoming EEA firm with respect to activities carried on other than from an establishment of the firm (or its appointed representative) in the United Kingdom

PRIN

The Principles apply only in so far as responsibility for the matter in question is not reserved by a European Community instrument to the firm's Home State regulator (PRIN 3.1.1 R).
For an incoming EEA firm which is a BCD credit institution without a top-up permission, Principle 4 applies only in relation to the liquidity of a branch established in the United Kingdom (PRIN 3.1.1 R (2)).

The Principles do not apply if the firm has permission only for cross-border services and does not carry on regulated activities in the United Kingdom (PRIN 3.1.1 R (2)).
The Principles have limited application for activities which are not carried on from a UK establishment (see PRIN 3.3.1 R).
Otherwise, see column (2).

SYSC

SYSC 1 contains application provisions only. SYSC 2 and SYSC 3 apply as set out in SYSC 1.1.1 R (1):
(1) SYSC 2.1.1 R and SYSC 2.1.2 G do not apply;
(2) SYSC 2.1.3 R to SYSC 2.2.3 G apply, but only in relation to allocation of the function in SYSC 2.1.3 R (2) and only in so far as responsibility for the matter in question is not reserved by a European Community instrument to the firm's Home State regulator; and
(3) SYSC 3 applies, but only in so far as responsibility for the matter in question is not reserved by a European Community instrument to the firm's Home State regulator.
SYSC 1.1.7 R (Where?) further restricts the territorial application of SYSC 1 to SYSC 3 for an incoming EEA firm. Further guidance is contained in SYSC 2.1.6 G, Question 12.
SYSC 4 applies to the extent that the Public Interest Disclosure Act 1998 applies to the firm.

SYSC 1 to SYSC 3 do not apply if the firm has permission only for cross-border services and does not carry on regulated activities in the United Kingdom (SYSC 1.1.1 R (2)).
SYSC 1 to SYSC 3 have limited application for activities which are not carried on from a UK establishment (see SYSC 1.1.7 R).
Otherwise, see column (2).

COND

COND does not apply if the firm does not have, or apply for, a top-up permission.
Otherwise, only threshold conditions 1, 3, 4 and 5 apply and only in so far as relevant to:
(1) an application for a top-up permission under Part IV of the Act (that is, a permission to carry on regulated activities in addition to those permitted through its authorisation under Schedule 3 to the Act (EEA Passport Rights)); and
(2) the exercise of the FSA's own-initiative power in relation to the top-up permission.
(COND 1.1.1 G.)

As column (2).

APER

APER applies to approved persons (APER 1.1.1 G). See below under SUP 10 as to whether controlled functions are performed, and approval therefore required.

Not relevant because SUP 10 does not apply.

FIT

FIT applies to a firm wishing to establish a branch in the United Kingdom or to apply for a top-up permission in respect of any application that it makes for the approval of a person to perform a controlled function (FIT 1.1). See under SUP 10 below as to whether such approval is required.

Does not apply.

GEN

GEN applies (GEN 1.1, GEN 2.1, GEN 3.1, GEN 4.1, GEN 5.1 and GEN 6.1). However, (a) GEN 4 does not apply to the extent that the firm is subject to equivalent rules imposed by its Home State (4.1.1 R (3)) and (b) GEN 6 only applies to business that can be regulated under section 138 of the Act (General rule-making power). It does not therefore apply if, or to the extent that, responsibility has been reserved to an incoming firm's Home State regulator by a European Community instrument.

GEN 4 does not apply if the firm has permission only for cross-border services and does not carry on regulated activities in the United Kingdom.
Otherwise, as column (2).

IPRU(BANK)

Only the following apply, and only if the firm is a credit institution other than an electronic money institution within the meaning of article 1(3)(a) of the E-Money Directive that has the right to benefit from the mutual recognition arrangements under the Banking Consolidation Directive (IPRU(BANK) 3.2.1R):
(1) IPRU(BANK) 3.3.15R, IPRU(BANK) 3.3.16G and IPRU(BANK) 3.5.1R; and
(2) chapter CO (which provides an overview of the underlying policy) and the more detailed guidance in chapters CB, CA, BC, BO, FX, CM, DU, TI, TE, TC, TL, TU, TS and TV.

Does not apply. But if the firm is a credit institution whose notification to the FSA of its intention to provide services in the United Kingdom covers services provided through a branch, see column (2).

IPRU(BSOC)

Does not apply because an incoming EEA firm cannot be a building society (IPRU(BSOC) X.2.1R).

IPRU(FSOC)

Does not apply because an incoming EEA firm cannot be a friendly society (IPRU(FSOC) 1.1).

IPRU(INS)

Only IPRU(INS) 3.6 and 3.7 (Linked long-term contracts) apply, and only if the firm is an insurer (IPRU(INS) 1.1(b)).

As column (2).

IPRU(INV)

IPRU(INV) does not apply unless the firm:
(1) has a top-up permission;
(2) is an authorised professional firm, investment management firm, members' adviser, personal investment firm, securities and futures firm, service company or underwriting agent; and
(3) is not a lead regulated firm or a media firm.
(IPRU(INV) 1.1.1R and 1.2R)

As column (2).

PRU

PRU 9.1 (Responsibility for insurance mediation activity) does not apply unless the firm has a top-up permission.
PRU 9.2 (Professional indemnity insurance requirements for insurance and mortgage mediation activity and mortgage lending and administration) does not apply unless the firm has a top-up permission.

As column (2).
As column (2).

PRU

PRU 9.3 (Capital resources for insurance and mortgage mediation activity and mortgage lending and administration) does not apply unless the firm has a top-up permission. See PRU 9.3.2 G for more detailed guidance.
PRU 9.4 (Insurance undertakings and mortgage lenders using insurance or mortgage mediation services) does not apply unless the firm has a top-up permission.
Otherwise, PRU does not apply unless the firm is an insurer to which PRU 7.6.33 R applies

As column (2).
As column (2).

COB

COB applies.

Where the activity:
(1) (a) would fall within the overseas persons exclusions in article 72 of the Regulated Activities Order; or
(b) would not be regarded as carried on in the United Kingdom; or
(c) is not carried on with or for a client in the United Kingdom;
then only the following apply:
(d) COB 3 (Financial promotion), but see the territorial scope in COB 3.3 (Where?);
(e) COB 5.5.7 R (Overseas business);
(f) certain parts of COB 6 (Product disclosure and the customer's right to cancel or withdraw) but only in relation to long-term insurance business carried on with a customer habitually resident in the United Kingdom or if the State of the risk is the FSA (see COB 1.4.7 R and COB 1.4.8 R); and
(g) (i) COB 4.3.19 R to COB 4.3.25 R save that the firm must also comply with those rules as if they also applied to a firm carrying out the activities in COB 4.3.19R (1) with or on behalf of all private customers;
(ii) COB 5.2.12 R to COB 5.2.14 R; and
(iii) COB 5.3.18 R (1) and COB 5.3.18A R to COB 5.3.18C R;
but only in relation to activities passported under the IMD (see COB 1.4.12R (3));
(2) concerns a distance contract and is carried on with retail customers in the United Kingdom from an establishment maintained by the firm in an EEA State which:
(a) has implemented the DMD; or
(b) has obligations in its domestic law corresponding to those provided for by the DMD;
COB 4.2, COB 5, and COB 6 do not apply.
Otherwise, as column (2), (COB 1.4.3 R).

ICOB

ICOB applies.

Only the following provisions of ICOB apply:
(a) ICOB 3 (Financial promotion), but see the territorial scope in ICOB 3.4 (Application: where?)
(b) ICOB 5.5.20 R, but only in relation to general insurance contracts if the state of the risk is the United Kingdom;
(c) ICOB 5.5.20 Rand ICOB 5.5.20 R, but only in respect of non-investment insurance contracts which are pure protection contracts where the habitual residence of the customer, other than an EEA ECA recipient, is in the United Kingdom;
(d) ICOB 6 (Cancellation), but only in respect of non-investment insurance contracts which are pure protection contracts where the habitual residence of the customer, other than an EEA ECA recipient, is in the United Kingdom.

CASS

CASS does not apply with respect to the firm's passported activities unless the firm is an insurer (CASS 1.2.3 R (2)).

As column (2).

MAR

MAR 1 (Code of market conduct)
Applies if the firm is seeking guidance as to whether or not behaviour amounts to market abuse (MAR 1.1.1 G).

MAR 1 (Code of market conduct) As column (2).

MAR 2 (Price stabilising rules)
Applies if the firm undertakes stabilising action and wishes to show that it has acted in conformity with price stabilising rules, or that its behaviour conforms with rules in accordance with section 118A(5)(a)of the Act (Market abuse) (MAR 2.1 Application))

MAR 2 (Price stabilising rules)
Only applies in so far as the firm undertakes stabilising action and wishes to rely on a defence that it has acted in conformity with price stabilising rules, or that its behaviour conforms with rules in accordance with section 118A(5)(a)of the Act (Market abuse) (MAR 2.1 and in particular MAR 2.1.3R).

MAR 3 (Inter-professional conduct)
Applies (MAR 3.1.4 R).

MAR 3 (Inter-professional conduct)
Does not apply (MAR 3.1.4 R).

MAR 4 (Endorsement of the Take-over Code)
Applies to firms whose permission includes, or ought to include, any designated investment business, except as set out in MAR 4.4.1 R.

MAR 4 (Endorsement of the Take-over Code)
Does not apply (MAR 4.4.1 R (4)(b)).

MAR 5 (Alternative Trading Systems)
Does not apply (MAR 5.1.1 R).

TC applies, but only in so far as responsibility for any matter it covers is not reserved by a European Community instrument to the firm's Home State regulator.

TC 1 (Commitments):
(1) contains guidance relevant to compliance with Principle 3, satisfaction of threshold condition 5 and the fit and proper test for approved persons; it is therefore relevant only if they apply to the firm (see the guidance on application of PRIN, COND and FIT above);
(2) in particular, does not therefore apply if the firm has permission only for cross-border services and does not carry on regulated activities in the United Kingdom.
TC 2 (Rules and guidance) does not apply (TC 2.1.2 R (2)).

Applies (ML 1.1.2 R).

Does not apply (ML 1.1.2 R).

AUTH

AUTH applies to the firm if it:
(1) is considering carrying on activities in the United Kingdom which may fall within the scope of the Act and is seeking guidance on whether it needs a top-up permission; or
(2) is, or is considering, applying to the FSA to carry on regulated activities in the United Kingdom under a top-up permission; or
(3) is, or is considering, establishing a branch or providing cross-border services into the United Kingdom using EEA rights.

As column (2).

SUP

SUP 1 (The FSA's approach to supervision)
Applies, but contains only guidance.

SUP 1 (The FSA's approach to supervision)
As column (2).

SUP 2 (Information gathering by the FSA on its own initiative)
The application of this chapter is the same as for Principle 11 (see under PRIN above).

SUP 2 (Information gathering by the FSA on its own initiative)
As column (2).

SUP 3 (Auditors)
Applies to the firm (and its auditor) only if the firm has a top-up permission.

SUP 3 (Auditors)
As column (2).

SUP 4 (Actuaries)
Does not apply.

SUP 4 (Actuaries)
Does not apply

SUP 5 (Skilled persons)
Applies only if the firm is required by the FSA to provide a report under section 166 of the Act (Reports by skilled persons).

SUP 5 (Skilled persons)
As column (2).

SUP 6 (Applications to vary and cancel Part IV permission)
Applies only if the firm has a top-up permission.

SUP 6 (Applications to vary and cancel Part IV permission)
As column (2).

SUP 7 (Individual requirements)
Applies only if the firm has a top-up permission. It contains only guidance on the exercise of the FSA's own-initiative power to vary that permission. The FSA has similar, but more limited, powers of intervention under Part XIII of the Act in relation to the permission of the firm under Schedule 3 to the Act (see ENF 4).

SUP 7 (Individual requirements)
As column (2).

SUP 8 (Waiver and modification of rules)
Applies only if the firm wishes to apply for, or consent to, or has been given, a waiver of the FSA's rules (SUP 8.1.1 R).

SUP 8 (Waiver and modification of rules)
As column (2).

SUP 9 (Individual guidance)
Applies only if the firm wishes to obtain individual guidance from the FSA or if the FSA gives the firm individual guidance on its own initiative (SUP 9.1.1 G).

SUP 9 (Individual guidance)
As column (2).

SUP 10 (Approved persons)
Applies, but the applicable controlled functions are limited. See SUP 10.1 (Application) for more detailed guidance.

SUP 10 (Approved persons)
Does not apply (SUP 10.1.6 R).

SUP 11 (Controllers and close links)
Does not apply (SUP 11.1.1 R (2)).

SUP 12 (Appointed representatives)
Applies only if the firm has permission to carry on designated investment business, insurance mediation activity or mortgage mediation activity and wishes to appoint, or has appointed, an appointed representative (SUP 12.1.1 R (1)).

SUP 12 (Appointed representatives)
As column (2).

SUP 13 (Exercise of passport rights by UK firms)
Does not apply.

SUP 14 (Incoming EEA Firms: Changing detail and cancelling qualifications for authorisation)
Applies.

SUP 14 (Incoming EEA Firms: Changing detail and cancelling qualifications for authorisation)
Applies

SUP 15 (Notifications to the FSA)
Applies in full if the firm has a top-up permission. Otherwise, the application is modified as set out in SUP 15 Annex 1.

SUP 15 (Notifications to the FSA)
Does not apply if the firm has permission only for cross-border services and does not carry on regulated activities in the United Kingdom (SUP 15 Annex 1).Otherwise, as column (2).

SUP 16 (Reporting requirements)
Parts of this chapter may apply if the firm has a top-up permission or if the firm is:
(a) a bank; or
(b) a depositary of an ICVC; or
(c) an OPS firm; or
(d) a trustee of an AUT; or
(e) an insurer with permission to effect or carry out life policies; or
(f) a firm with permission to establish, operate or wind up a stakeholder pension scheme; or
(g) a firm with permission to advise on investments, arrange (bring about) deals in investments, make arrangements with a view to transactions in investments, or arrange safeguarding and administration of assets.
(SUP 16.1.)

SUP 16 (Reporting requirements)
Parts of this chapter may apply if the firm has a top-up permission or if the firm is:
(a) a depositary of an ICVC; or
(b) an OPS firm; or
(c) a trustee of an AUT; or
(d) an insurer with permission to effect or carry out life policies; or
(e) a firm with permission to establish, operate or wind up a stakeholder pension scheme; or
(f) a firm with permission to advise on investments, arrange (bring about) deals in investments, make arrangements with a view to transactions in investments, or arrange safeguarding and administration of assets
(SUP 16.1.)

SUP 17 (Transaction reporting)
Does not apply in relation to the firm's passported activities. Otherwise, this chapter applies only if the firm is a securities and futures firm, a personal investment firm or an ISD investment firm (SUP 17.1.1).

SUP 17 (Transaction reporting)
Does not apply (SUP 17.1.1 (2)(a)).

SUP 18 (Transfers of business) SUP 18.4
Does not apply. SUP 18.1, SUP 18.2 and SUP 18.3 may be relevant if the firm proposes to transfer the whole or part of its business by an insurance business transfer scheme or to accept such a transfer or proposes to accept certain transfers of insurance business taking place outside the United Kingdom.

SUP 18 (Transfers of business)
As column (2).

SUP 19 (Commodity Futures Trading Commission Part 30 Exemption)
This chapter may be relevant if the firm intends to trade on behalf of US customers on non-US futures and options exchanges.

SUP 19 (Commodity Futures Trading Commission Part 30 Exemption)
Does not apply (SUP 19.1.1 G (2)).

SUP 20 (Fees)
Applies (SUP 20.1.1 R) but modified (SUP 20.4.7 G - SUP 20.4.10 R).

SUP 20 (Fees)
As column (2).

SUP App 1 (Prudential categories)
Applies and provides guidance on the prudential categories used in the Handbook.

SUP App 1 (Prudential categories)
As column (2).

SUP App 2 (Insurers: Scheme of operations)
Does not apply (SUP App 2.1.1 R).

ENF

ENF applies and contains guidance on the use of the FSA's enforcement powers (ENF 1).

DEC

DEC applies and contains guidance on the FSA's decision making procedures (DEC 1).

DISP

Applies (DISP 1.1.1 R).

Does not apply (DISP 1.1.1 R).

COMP

Applies, except in relation to the passported activities of an ISD investment firm or a BCD credit institution (see the definition of "participant firm") other than an electronic money institution within the meaning of article 1(3)(a) of the E-Money Directive that has the right to benefit from the mutual recognition arrangements under the Banking Consolidation Directive. However, an ISD investment firm or BCD credit institution may be able to apply for top-up cover in relation to its passported activities (see COMP 14 (Participation by EEA Firms)).

Does not apply in relation to the passported activities of an ISD investment firm or a BCD credit institution (see the definition of "participant firm"). Otherwise, COMP may apply, but the coverage of the compensation scheme is limited for non-UK activities (see COMP 5).

COAF

Applies if the firm wishes to bring a complaint under the complaints scheme, provided the complaint meets the requirements of the complaints scheme (COAF 1.2).

As column (2).

COLL and CIS

COLL and CIS apply if the firm:
(a) is the operator or depositary of an AUT or ICVC; or
(b) wishes to apply for an authorisation order to establish an AUT or ICVC; or
(c) is the operator of a recognised scheme; or
(d) wishes to apply for recognition of a recognised scheme.

As column (2).

CRED

Does not apply.

ECO

ECO 2 applies if the firm is an outgoing ECA provider. ECO 3 applies if the firm is a domestic ECA provider. ECO 1 does not apply.

ECO 1 applies if the firm is an incoming ECA provider except for ECO 1.2.1 R which does not apply if:.
(a) the electronic commerce activity is not insurance business which:
(i) satisfies the conditions in ECO 1.2.3 R; and
(ii) is carried on by an insurer; and
(b) the EEA State from which the activity is provided has implemented the DMD with the result that the obligations provided for by the DMD are applied when the incoming ECA provider is carrying on the activity from an establishment in that State with a UK ECA recipient in the United Kingdom.
ECO 2 and ECO 3 do not apply.

ELM

Only ELM 6 and (in so far as it applies to the rules in ELM 6) ELM 5.6.1R apply.

Does not apply.

LLD

Does not apply.

MCOB

Applies where the activity is carried on with or for a customer resident in the United Kingdom or another EEA State at the time that the activity is carried on, but see the territorial scope in MCOB 3.3 (Application: where?).

Applies where the activity is carried on with or for a customer resident in the United Kingdom at the time, that the activity is carried on but see MCOB 1.3.4 R (Distance contracts entered into from an establishment in another EEA State) and MCOB 3.3 (Application: where?).

PROF

PROF applies only if the firm is an authorised professional firm.

As column (2).

REC

Does not apply.

LR (Listing Rules)
May apply if the firm is applying for listing in the United Kingdom, is a listed issuer in the United Kingdom , is a sponsor or is applying for approval as a sponsor.

LR (Listing Rules). As column (2).

PR (Prospectus Rules)
May apply if the firm makes an offer of transferable securities to the public in the United Kingdom or is seeking the admission to trading of transferable securities on a regulated market situated or operating in the United Kingdom.

PR (Prospectus Rules). As column (2).

DR (Disclosure Rules)
May apply if the firm is an issuer, any class of whose financial instruments have been admitted to trading on a regulated market, or are the subject of an application for admission to trading on a regulated market, other than issuers who have not requested or approved admission of their financial instruments to trading on a regulated market.

DR (Disclosure Rules). As column (2).

Export chapter as

AUTH 6

Approved
persons

AUTH 6.1

Application and purpose

01/12/2004

Application

AUTH 6.1.1

This chapter applies to:

(1) a person who wishes to become an authorised person under the Act and who is, or is considering, applying to the FSA for Part IV permission to carry on regulated activities in the United Kingdom;

(2) an EEA firm, a Treaty firm or a UCITS qualifier that wishes to establish a branch or provide cross-border services into the United Kingdom using EEA rights, Treaty rights or UCITS Directive rights, or apply for a top-up permission;

(3) a candidate, but only as a matter of general relevance.

21/02/2002

AUTH 6.1.2

An EEA firm, a Treaty firm and UCITS qualifier should refer to SUP 10.1 (Application) for the special application of the approved persons regime to firms which are exercising their passport rights, Treaty rights or rights as a UCITS qualifier.

03/09/2001

AUTH 6.1.3

In this chapter, references to a 'firm' should be read as including an applicant for Part IV permission, or an EEA firm a Treaty firm or a UCITS qualifier, unless the context otherwise requires.

03/09/2001

Purpose

AUTH 6.1.4

This chapter gives guidance on the provisions of the Act and the Handbook under which a firm must obtain the prior approval of certain persons to perform controlled functions on its behalf.

03/09/2001

AUTH 6.2

Introduction

01/12/2004

AUTH 6.2.1

A controlled function is a function specified by the FSA which cannot be performed by a person under an arrangement entered into by a firm, or one of its contractors, until approval for this has been given by the FSA. Approval from the FSA is required for each controlled function to be performed by a person.

03/09/2001

AUTH 6.2.2

An approved person is a person whose performance of one or more controlled functions has been approved by the FSA.

03/09/2001

AUTH 6.2.3

A person who performs a controlled function is likely to be an individual, but in some cases the function may be performed by others, such as a body corporate. References to a person in this chapter, and the rest of the Handbook, should always be read as including these other entities.

03/09/2001

AUTH 6.2.4

This regime covers persons who perform controlled functions in the capacity of an appointed representative or an employee of such an appointed representative. For further details on appointed representatives, see SUP 10.1.16 R and SUP 12 (Appointed Representatives).

03/09/2001

AUTH 6.2.5

An introducer, that is, in outline, a person, other than an appointed representative, who is appointed by a firm to effect introductions between customers and the firm but not to give advice on investments, will not, for this reason alone, need to be an approved person although certain obligations will apply (for example, see COB 5 (Advising and selling).

03/09/2001

AUTH 6.2.6

The controlled functions which have been specified by the FSA are those functions which the FSA sees as key to the operation of the provisions of Part V of the Act (Performance of Regulated Activities) and the provisions made under Part V. Those provisions include:

(1) the Statements of Principle and Code of Practice for Approved Persons issued under section 64 of the Act (Conduct: statements and codes) (see APER); and

(2) the fit and proper test referred to in section 61 of the Act (Determination of applications) (see FIT).

03/09/2001

AUTH 6.2.7

The purpose of the direct approval of persons who perform controlled functions is to complement the regulation of the firm for which the approved person performs the function.

18/10/2001

AUTH 6.2.8

The FSA may grant an application by a firm for a candidate to perform one or more controlled functions only if it is satisfied that he is fit and proper to perform the function to which the application relates (see AUTH 6.3.11 G and AUTH 6.3.13 G).

21/02/2002

Controlled functions

AUTH 6.2.9

The list of controlled functions which the FSA has specified in accordance with section 59 of the Act (Approval for particular arrangements) is set out in SUP 10 (Approved persons) and in Form A, a copy of which is included in the application pack for Part IV permission, and which also may be found in SUP 10 Annex 4.

18/10/2001

AUTH 6.3

Procedures relating to approved persons

01/12/2004

AUTH 6.3.1

An application for the FSA's approval under section 59 of the Act (Approval for particular arrangements) must be made by completing Form A (included as part of the application pack for Part IV permission) in the manner directed by AUTH 3.9.3 D (2) to AUTH 3.9.3 D (5).

21/02/2002

AUTH 6.3.2

In accordance with section 60 of the Act (Application for approval), applications for approved persons must be submitted by, or on behalf of, the firm, not by the candidate.

03/09/2001

AUTH 6.3.3

A summary of FSA procedures is in AUTH 6 Annex 2 G.

03/09/2001

AUTH 6.3.4

Until the application has been determined by the FSA, the firm which submits a Form A must inform the FSA of any significant changes to the information given in the form immediately it becomes aware of the change.

03/09/2001

Outsourcing to another firm

AUTH 6.3.5

Where a firm has outsourced the performance of a controlled function, the details of the outsourcing will determine who may apply for the candidate's approval. Further details are in SUP 10.12.4 G.

03/09/2001

EEA firms and Treaty firms

AUTH 6.3.6

The FSA encourages EEA firms and Treaty firms that wish to carry on regulated activities in the United Kingdom to submit any necessary applications for approved person status as early as possible. This will help to ensure that there are no delays in the EEA firm or Treaty firm complying with applicable provisions and commencing its regulated activities. For further details on the application of the approved persons regime to EEA firms and Treaty firms see SUP 10.1 (Application).

03/09/2001

Processing an application

AUTH 6.3.7

The Act allows the FSA three months from the time it receives a properly completed application for approval under section 59 of the Act (Approval for particular arrangements) to consider it and come to a decision. However, if the applicant for Part IV permission is not yet an authorised person, approved person status will only be effective from the date the applicant for Part IV permission receives permission.

03/09/2001

AUTH 6.3.8

Because approved person status is only effective from the date Part IV Permission is given, it is possible that this may take up to twelve months from the date of application if the application for Part IV permission is incomplete. See AUTH 3.9.30 G (How long will an application take?) for guidance on how long this process may take.

03/09/2001

AUTH 6.3.9

Before making a decision either to approve or to give a warning notice(see AUTH 8.3 (Statutory notices and other matters)), the FSA may request further information about the candidate from the applicant for Part IV permission. If it does this, the three month approval period:

(1) will stop on the day the FSA requests the information; and

(2) will start running again from the point at which it stopped, on the final day on which the FSA receives all the requested information.

18/10/2001
Future version of AUTH 6.3.9 after 20/10/2005

AUTH 6.3.10

The FSA may grant an application only if it is satisfied that the candidate is a fit and proper person to perform the controlled function stated in the application form.

03/09/2001

AUTH 6.3.11

For further guidance on criteria for assessing fitness and propriety, see FIT.

21/02/2002

Decisions on applications

AUTH 6.3.12

See AUTH 8 (Determining applications) for an overview of how applications for Part IV permission and for approval of a candidate under section 59 of the Act (Approval for particular arrangements) will be determined. AUTH 8 also includes a summary of the decision making procedures which apply.

03/09/2001

AUTH 6.3.13

Whenever it approves an application, the FSA will confirm this in writing to all interested parties.

03/09/2001

AUTH 6.4

Further questions

01/12/2004

AUTH 6.4.1

A list of frequently asked questions and answers relating to new firms is at AUTH 6 Annex 1 G.

03/09/2001

AUTH 6.4.2

If the firm has questions unanswered by AUTH 6 Annex 1 G, it should contact the FSA's Authorisation and Approvals Department (Individual approvals team):

(1) telephone 020 7066 0019; or

(2) write to: Authorisation and Approvals Department (Individual approvals team), The Financial Services Authority 25 The North Colonnade Canary Wharf London E14 5HS; or

(3) e-mail iva@fsa.gov.uk

01/07/2003

AUTH 6.5

Notified persons

01/12/2004

AUTH 6.5.1

There are four positions which require notification to the FSA but not approval by the FSA. These relate to overseas firms (but excluding EEA firms) with branches in the United Kingdom. These are:

(1) the firm's worldwide chief executive where the person holding the position is situated outside the United Kingdom;

(2) the person, if not the worldwide chief executive, within the overseas firm with a purely strategic responsibility for UK operations;

(3) for a bank: the two or more persons who effectively direct its business in accordance with IPRU(BANK) GN 3.3.1 R;

(4) for an insurer: the authorised UK representative.

18/10/2001

AUTH 6.5.2

For further details relating to those positions which require notification only, see SUP 15.4 (Notified persons).

18/10/2001

AUTH 6 Annex 1

Approved Persons

01/12/2004

AUTH 6 Annex 1.1

Question:

Answer:

Requirements of the regime

When is approval required?

The Act requires that approval be obtained before a person performs a controlled function. See section 59 of the Act (Approval for particular arrangements).

Can an individual be approved in advance of a firm becoming authorised?

No. The application will be coordinated to ensure that the approval of the individual coincides with the giving of permission to the firm.

Can a person be approved for more than one controlled function?

Yes. A firm will need to seek approval in respect of each controlled function a person is to perform.

Do the controlled functions apply to an incoming EEA firm that is providing cross border services into the United Kingdom?

No. The approved persons regime does not apply to cross border services. See SUP 10.1.6 R (Application).

May any activity be outsourced by a firm?

Yes. But if that activity constitutes a regulated activity the person to whom it is outsourced will itself need permission.

Can a significant influence function be outsourced?

It is a question of fact in each case who is performing a significant influence function. These functions are mostly described at a high level of responsibility, that is, for example, the director of a company or a partner of a partnership. The persons performing these functions cannot avoid their ultimate responsibility and therefore the need for approval approval. However, some of the significant influence functions may be performed by a person who is specifically brought in to do the job, for example the chief executive function (where it is to be performed by a body corporate) and the appointed actuary function actuarial and with-profits actuary functions.

Do Lloyd's underwriting agents still require registration with Lloyd's?

Yes. Approval for a controlled function is not sufficient.

Submitting an application

Who applies for approval?

It is the firm which applies for approval. See section 60 of the Act (Applications for approval).

What is the role of the candidate in the application process?

Before the firm submits Form A it must verify the information contained in it. As part of this verification, the form provides for the candidate to confirm the accuracy of the information given by the firm so far as it relates to him.

What is the "fit and proper" test for approval?

Section 61(1) of the Act (Determination of applications) provides that the FSA may grant an application only if it is satisfied that the candidate is a fit and proper person to perform the relevant function. In determining this question, the Act sets out the matters to which the FSA may have regard (section 61(2) of the Act) and the FSA has given guidance on this in FIT.

If a firm is unsure whether or not something may have an impact on an individual's fitness and propriety, should it be disclosed?

Yes, always. The non-disclosure of material facts is taken very seriously by the FSA, as it is seen as evidence of current dishonesty. Therefore, if in doubt, disclose.

Must all gaps in previous employment be explained?

Yes.

FSA procedures

Does the FSA verify the information provided to it?

Yes, as far as possible, information is verified.

Will the FSA handle information confidentially?

Yes. The FSA handles all information confidentially and is subject to the provisions of the Data Protection Act 1988.

01/07/2003
Future version of AUTH 6 Annex 1.1 after 01/10/2005

AUTH 6 Annex 2

Approved Persons

01/12/2004

AUTH 6 Annex 2.1

03/09/2001
Future version of AUTH 6 Annex 2.1 after 20/10/2005

Export chapter as

AUTH 8

Determining applications

AUTH 8.1

Application and purpose

01/12/2004

Application

AUTH 8.1.1

This chapter applies to:

(1) an applicant for Part IV permission (including an applicant for top-up permission) which has made an application to carry on regulated activities in the United Kingdom; and

(2) a person for whom an application for approval under section 59 of the Act (Approval for particular arrangements) has been made with an application for Part IV permission (including an application for top-up permission).

03/09/2001

Purpose

AUTH 8.1.2

AUTH 8 gives applicants an overview of how their applications for Part IV permission and for approval of a candidate under section 59 of the Act will be determined. This overview includes a summary of the decision making procedures which apply to those decisions, within the scope of AUTH, that are subject to a statutory requirement to issue formal notices.

03/09/2001

AUTH 8.1.3

Statutory notices include warning notices and decision notices. If the FSA proposes or decides to take certain action in respect of an application within the scope of AUTH, it is required by the Act to give a warning notice or a decision notice. These statutory notices have specified procedures and specific actions and protections.

03/09/2001

AUTH 8.1.4

This chapter is only a summary and is not part of the FSA's formal statement of procedure under section 395 of the Act (The FSA's procedures). An applicant needing further details of the FSA's procedure should refer to the Decision making manual (DEC).

03/09/2001

AUTH 8.1.5

For guidance on the FSA's procedures before it determines an application, see:

(1) AUTH 3 (Applications for Part IV permission) for applications for Part IV permission; and

(2) AUTH 6 (Approved persons) for applications for approval of a candidate under section 59 of the Act, made with an application for Part IV permission.

03/09/2001

AUTH 8.2

Determination of an application

01/12/2004

Who makes the determination?

AUTH 8.2.1

A decision to determine an application for Part IV permission, or an application for approval under section 59 of the Act, is taken in one of two ways:

(1) by internal staff procedures involving FSA staff at an appropriate level of seniority, if the decision is to grant the application on the terms applied for (this decision does not involve giving a statutory notice); or

(2) by the FSA's Regulatory Decisions Committee (RDC), in any other case (this decision does involve the giving of a statutory notice).

03/09/2001

AUTH 8.2.2

The decision on an application will be taken by the RDC where FSA staff have recommended:

(1) the refusal, or proposed refusal, of:

(a) an application for Part IV permission (sections 52(7) and 52(9)(c)) of the Act (Determination of applications)); or

(b) an application for approval under section 59 of the Act made with an application for Part IV permission (sections 62(2) and 62(3) of the Act (Applications for approval: procedure and right to refer to the Tribunal)); and

(2) the grant, or proposed grant, of an application for Part IV permission subject to a limitation or requirement which was not applied for by the applicant or with a narrower description of regulated activity than that to which the application relates (sections 52(6)(a) and 52(9)(a) of the Act).

03/09/2001

What are internal staff procedures?

AUTH 8.2.3

The FSA Board has given FSA staff the authority to grant applications on the terms applied for. The majority of applications are determined by internal staff procedures.

03/09/2001

AUTH 8.2.4

As part of its application for Part IV permission, an applicant may apply for permission which includes a limitation (for example, a limitation on client categories), or a requirement (for example, a requirement not to hold or control client money). Limitations and requirements may be applied for in the application pack, or in a revision to the application pack submitted by the applicant if, for example, its business plans have changed. In those situations, FSA staff have authority to grant the application, on the terms applied for, using internal staff procedures.

03/09/2001

An overview of internal staff procedures

AUTH 8.2.5

(1) Internal staff procedures for decisions within the scope of AUTH are intended to ensure that decisions will, so far as possible, be taken by FSA staff with a good knowledge and understanding of:

(a) the application concerned; and

(b) other relevant factors in the general context of the application.

(2) They are also designed to ensure that applicants with routine applications obtain a decision as quickly as the nature of their application allows.

03/09/2001

AUTH 8.2.6

(1) Internal staff procedures provide for relevant aspects of the application to be taken fully into account and require that decisions are taken by FSA staff with appropriate experience. Decisions to grant the majority of applications for approval of a candidate, which are more routine in nature, may be made by a single individual, subject to appropriate oversight.

(2) The FSA has established staff committees which may grant an application for Part IV permission, or approval under Part V of the Act, as appropriate. The Authorisation and Approvals Committee will consider an application where, for example, it is complex or sensitive and the recommendation is to refer the application to the RDC to give a warning notice. The chairman of the Authorisation and Approvals Committee is the director responsible for authorisation decisions and its members are senior staff at the FSA.

21/02/2002

AUTH 8.2.7

The FSA keeps a record of each decision taken by internal staff procedures. This includes the names of the FSA staff taking the decision, the nature of the decision, the date it was taken and the information taken into account in arriving at the decision.

03/09/2001

AUTH 8.2.8

FSA staff are required by their contract of employment to comply with a code of conduct which imposes strict rules to cover the handling of conflicts of interest which may arise from personal interests or associations. FSA staff who are subject to a conflict of interest must declare that interest to the person to whom they are directly responsible for the decision. This individual to whom the conflict of interest is declared will decide whether that conflict precludes the involvement of the FSA staff member in making a decision.

03/09/2001

The Regulatory Decisions Committee

AUTH 8.2.9

The RDC is appointed by the FSA Board to exercise certain regulatory powers on behalf of the FSA Board. It is fully and directly accountable to the FSA Board for the decisions it makes. The RDC is a body outside the FSA's management structure.

03/09/2001

AUTH 8.2.10

The RDC has a Chairman, one or more Deputy Chairmen, and other members. Other than the Chairman, none of the members of the RDC is an employee of the FSA. Members are:

(1) current and recently retired practitioners with financial services industry skills and knowledge; and

(2) other suitable individuals representing the public interest.

03/09/2001

AUTH 8.2.11

For full details of the RDC and its procedures see DEC 4 (The decision maker). All decisions involving giving of statutory notices within the scope of AUTH will be determined by the RDC (see AUTH 8.2.2 G).

03/09/2001

AUTH 8.2.12

FSA staff are responsible for assembling and assessing the information required by the RDC and making recommendations to the RDC. Section 395 of the Act, however, requires the FSA to have procedures under which a decision which gives rise to a statutory notice is "taken by a person not directly involved in establishing the evidence on which that decision is based." So, the RDC is not directly involved in establishing the evidence on which decisions are based.

03/09/2001

AUTH 8.3

Statutory notices and other matters

01/12/2004

AUTH 8.3.1

A statutory notice includes a warning notice (see AUTH 8.3.2 G to AUTH 8.3.5 G) and a decision notice (see AUTH 8.3.8 G to AUTH 8.3.10 G). A final notice will also be given to a person which has received a decision notice (see AUTH 8.3.14 G to AUTH 8.3.16 G). See AUTH 8 Annex 1 G.

03/09/2001

Warning notices

AUTH 8.3.2

A warning notice warns the recipient that the FSA proposes to take certain action and gives an opportunity for representations to be made to the FSA before a decision is made.

03/09/2001

AUTH 8.3.3

FSA staff will review each application that falls within the scope of AUTH. Where they consider that the application should be refused, or should be granted subject to a limitation or a requirement which was not applied for, or with a narrower description of regulated activity than that to which the application relates (see AUTH 8.2.2 G), they will recommend to the RDC that a warning notice be given.

03/09/2001

AUTH 8.3.4

After considering the FSA staff recommendation, the RDC may decide to grant the application on the terms applied for. However, the RDC will decide to give a warning notice to the applicant, or, in the case of applications for approval under section 59 of the Act, to all interested parties, if it proposes that any of the following actions be taken:

(1) grant an application for Part IV permission either with a limitation or requirement which was not applied for, or with a narrower description of regulated activity than that to which the application relates (see AUTH 3), under section 52(6)(a) of the Act; or

(2) refuse to grant an application for Part IV permission (see AUTH 3) under section 52(7) of the Act; or

(3) refuse to grant an application for approval under section 59 of the Act (see AUTH 6) under section 62(2) of the Act.

03/09/2001

AUTH 8.3.5

For full details of warning notices and the warning notice procedure, see DEC 2.2 (Warning notice procedure).

03/09/2001

Representations

AUTH 8.3.6

The warning notice will contain a statement that the person concerned is entitled to make representations to the RDC. It will specify a reasonable time period, of not less than 28 business days from receiving the warning notice, within which the person to whom it is given may make representations to the RDC.

03/09/2001

AUTH 8.3.7

The procedures for making representations to the RDC are set out in DEC 4.4 (Representations).

03/09/2001

Decision notices

AUTH 8.3.8

A decision notice states the action the FSA has decided to take. For the purpose of an application within the scope of AUTH, the decision notice represents the FSA's determination of the application.

03/09/2001

AUTH 8.3.9

After considering any written and oral representations, the RDC may decide to grant the application on the terms applied for. However, the RDC will decide to give a decision notice to the persons to whom the warning notice was given if it decides that any of the following actions be taken:

(1) grant an application for Part IV permission with a limitation or requirement which was not applied for, or with a narrower description of regulated activity than those to which the application relates (see AUTH 3), under section 52(9)(a) of the Act; or

(2) refuse to grant an application for Part IV permission (see AUTH 3) under section 52(9)(c) of the Act; or

(3) refuse to grant an application for approval under section 59 of the Act (see AUTH 6) under section 62(3) of the Act.

03/09/2001

AUTH 8.3.10

For full details of final notices and the final notice procedure, see DEC 2.3.10 G to DEC 2.3.11 G

03/09/2001

Reference to the Financial Services and Markets Tribunal

AUTH 8.3.11

(1) Any person who receives a decision notice is entitled to refer the FSA's decision to the Tribunal.

(2) Under section 133(1) of the Act (Proceedings: general provision), any reference must be made within 28 days of the date when the decision notice is given, or within any other period that may be prescribed in the Tribunal rules.

(3) The Tribunal is appointed by the Lord Chancellor's Department.

03/09/2001

AUTH 8.3.12

A reference to the Tribunal will be a full rehearing and not an appeal. See DEC 5.1 (The Tribunal) for the procedure on referring cases to the Tribunal.

03/09/2001

AUTH 8.3.13

Any party to a reference to the Tribunal may appeal against the Tribunal's decision on a point of law to the Court of Appeal or, in Scotland, to the Court of Session.

03/09/2001

Final notices

AUTH 8.3.14

The FSA will give a final notice to the person that received a decision notice if the FSA:

(1) takes the action set out in the decision notice (if a reference to the Tribunal has not been made and the time limit for making references has passed); or

(2) takes action in accordance with any directions given by the Tribunal or the court under section 137 of the Act (Appeal on a point of law) where the matter was referred to the Tribunal.

03/09/2001

AUTH 8.3.15

The final notice will state the action being taken and the date on which it is to be taken.

03/09/2001

AUTH 8.3.16

For full details of final notices and the final notice procedure, see DEC 2.3.10 G to DEC 2.3.11 G

03/09/2001

Publication

AUTH 8.3.17

Details on the publication of decisions are set out in DEC 5.2 (Publication).

03/09/2001

AUTH 8.3.18

In the case of a decision within the scope of AUTH, the FSA's policy is to publish relevant details about the decision. The details may include the identity of the applicant or the name of any person who is the subject of an application such as an application for approval under section 60 of the Act. Other details may include the nature of the application and grounds for the decision. The FSA will seek to publish these details in a way which is fair to the person who is named and which is not prejudicial to the interests of consumers.

01/11/2004

AUTH 8 Annex 1

Determining applications

01/12/2004

AUTH 8 Annex 1

The FSA's decision making procedures for applications involving warning notices and decision notices

03/09/2001

Export chapter as

Transitional Provisions and Schedules

AUTH TP 1

Transitional Provisions

AUTH TP 1.1

There are no transitional provisions in AUTH.

GEN contains transitional provisions that apply throughout the Handbook.

01/12/2004

AUTH Sch 1

Record Keeping Requirements

01/12/2004

AUTH Sch 1.1

There are no record keeping requirements in AUTH.

03/09/2001

AUTH Sch 2

Notification Requirements

01/12/2004

AUTH Sch 2.1

Handbook reference

Matter to be notified

Contents of notification

Trigger event

Time allowed

AUTH 3.9.3 D

Application for Part IV permission

Matters relevant to the application as indicated in the application pack

Application or significant changes to information given in the application

immediately applicant becomes aware

AUTH 5.3.9 D

Intention of incoming Treaty firm to carry on a regulated activity in the United Kingdom.

Matters relevant to the notice as indicated in the application pack.

Intention to carry on a regulated activity.

At least seven days in advance.

AUTH 6.3.1 D AUTH 6.3.4 D

Application for approval of person under section 59 of the Act

Matters relevant to the application as indicated in Form A and significant changes to information given in that Form

01/12/2001
Future version of AUTH Sch 2.1 after 01/02/2006

AUTH Sch 3

Fees and other required payments

01/12/2004

AUTH Sch 3.1

Type of Fee

Trigger Event

Date/Time of Payment

Amount/Rate

Handbook reference

Certification Fee

Application for a certificate under article 54 of the Regulated Activities Order.

On or before the date on which application is made.

See AUTH 4 Annex 1, Part 6

AUTH 4.3

21/02/2002
Future version of AUTH Sch 3.1 after 01/01/2006

AUTH Sch 4

Powers exercised

01/12/2004

AUTH Sch 4.1

The following powers and related provisions in the Act have been exercised by the FSA to make the rules in AUTH:

Section 156 (General supplementary powers)

Paragraph 17(1) of Schedule 1 (Fees).

The following power in the Act has been exercised by the FSA to give the guidance in AUTH:

Section 157(1) (Guidance).

The following powers in the Act have been exercised by the FSA in AUTH to direct and require:

Section 51 (Application under this Part).

Section 60 (Application for approval).

Paragraph 5(4) of Schedule 4 (Treaty Rights: Notice to Authority).

01/12/2001
Future version of AUTH Sch 4.1 after 01/02/2006

AUTH Sch 5

Rights of action for damages

01/12/2004

AUTH Sch 5.1

The table below sets out the rules in AUTH contravention of which by an authorised person may be actionable under section 150 of the Act (Actions for damages) by a person who suffers loss as a result of the contravention.

If a "Yes" appears in the column headed "For private person?", the rule may be actionable by a "private person" under section 150 (or, in certain circumstances, his fiduciary or representative; see article 6(2) and (3)(c) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 (SI 2001/2256)). A "Yes" in the column headed "Removed" indicates that the FSA has removed the right of action under section 150(2) of the Act. If so, a reference to the rule in which it is removed is also given.

The column headed "For other person?" indicates whether the rule may be actionable by a person other than a private person (or his fiduciary or representative) under article 6(2) and (3) of those Regulations. If so, an indication of the type of person by whom the rule may be actionable is given.

03/09/2001

AUTH Sch 5.2

Right of Action under section 150

Chapter/Appendix

Section/Annex

Paragraph

For private person?

Removed?

For other person?

All rules in AUTH 4

Yes

03/09/2001

AUTH Sch 6

Rules that can be waived

01/12/2004

AUTH Sch 6.1

The rules in AUTH 4 cannot be waived by the FSA.

03/09/2001
Future version of AUTH Sch 6.1 after 01/01/2006

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AUTH Authorisation (to see AUTH derivations and destinations tables, go to Useful links)

Used in

Export part as

Introduction to the Authorisation manual

Application and purpose

Application

Purpose

Introduction

The Authorisation manual

Summary of AUTH and parts of PERG

This table belongs to AUTH 1.3.7 G

The FSA's approach to applications for Part IV permission: an overview

The FSA's approach to risk assessment

Understanding the requirements and standards of the regulatory system

Applying for Part IV permission: overview of the process

Appointed representatives

What other general guidance is available from the FSA?

Next steps?

Who to contact at the FSA

This table belongs to AUTH 1.9.1 G

Introduction to the Authorisation Manual

Where to next?

Applicationsfor Part IV permission

Application and purpose

Application

Purpose

Introduction

When is Part IV permission required and what does it contain?

Activities

Specified investments

Limitations

Requirements

The threshold conditions and financial resources

The threshold conditions

Financial resources

Procedures in relation to applications for Part IV permission

Pre-application meetings

The application for permission

Information to be supplied to the FSA

Reports from third parties

Applications to other bodies

Connected persons

Commencing regulated activities

When will the FSA grant an application for Part IV permission?

Other powers relating to the scope of Part IV permission

How long will an application take?

How will FSA make the decision?

Withdrawal of applications

Authorised status

The FSA register

Specific obligations: partnerships or unincorporated associations

Specific obligations: applicants seeking to carry on insurance business

Friendly societies and reinsurance

Contracts written on an ancillary and supplementary basis

Reporting requirements

Applicants seeking to carry on insurance business with a head office outside the United Kingdom (other than EEA firms or Treaty firms)

Specific obligations: applicants seeking to carry on the regulated activities of accepting deposits or issuing electronic money

Specific obligations: applicants seeking to hold or control client money

Specific obligations: applicants seeking to manage PEPS or ISAS

Specific obligations: applicants seeking to establish, operate or wind up a stakeholder pension scheme

Specific obligations: applicants seeking to establish a collective investment scheme or to act as manager of a regulated collective investment scheme

Specific obligations: additional considerations for applicants (other than EEA firms or Treaty firms) with a head office in a country of territory outside the United Kingdom seeking to establish a branch in the United Kingdom

Specific obligations: applications in connection with group-restructuring

Specific obligations: applicants seeking to establish a branch in, or provide services into, another EEA State

Treaty firms applying for Part IV Permission

Specific issues: applicants that are limited partnerships under the Limited Partnerships Act 1907

Specific issues: applicants that are limited liability partnerships

Specific obligations: applicants wishing to operate an ATS

Application for Part IV Permission

Determination of an applicant's prudential category

AuthorisationFees

Introduction

Application

Purpose

Background

Obligation to Pay Authorisation Fees

General

Amount

Due date and method of payment

Applications
for Part IV permission

Authorisation
Fees

Approved
persons