EEA Firms: Key Questions To Address

  • Posted on: 15 April 2021
  • Written by: James Borley

Offering Financial Services In The UK Series

Compliancy Services' Guide 'Offering Financial Services In The UK' has been published to help European Economic Area (EEA) firms that want to access the UK market understand the process to become authorised by the Financial Conduct Authority (FCA) and for some firms, such as banks and insurance companies, additionally the Prudential Regulation Authority (PRA). 

This series of four articles are as relevant to firms in the FCA's Temporary Permissions Regime (TPR) as they are to EEA firms that want to access the UK market for the first time, or those firms which inadvertently missed the TPR deadline and are now in the Supervised Run-Off Framework.

In this article we summarise some of the key questions that firms need to address when considering an application. The article is an extract from our 'Step-By-Step Guide To Obtaining Authorisation' which has been specifically published for EEA firms and it can be downloaded now, free of charge.

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KEY QUESTIONS TO ADDRESS

Below we summarise some of the key questions we cover in our Guide and which will have to be addressed when considering an application. There are potentially many other questions and we are on hand to offer advice and guidance should you need any assistance with your application. 

Does authorisation make sense for our UK business?

  • Will it be profitable and likely to succeed? This should take into account the market in which you intend to operate and your firm's ability to meet the relevant capital requirements, on an initial and an ongoing basis.

Is our UK business a branch or a subsidiary?

  • If the business is a branch, does it need to be a subsidiary to apply?

  • How will changing to a subsidiary affect the capital requirements of the business?

  • Does it make financial sense for my business to apply for authorisation?

 How will the FCA view our firm’s ability to be regulated?

  • What is the extent to which the FCA is able to supervise the conduct of your firm’s UK business?

  • What would the FCA perceive the potential outcomes in an insolvency situation to be?

  • What is the supervisory cooperation relationship like with your firm’s Home State regulator, for both the firm and for the FCA?

What is the FCA’s view of your retail harm risk, wholesale harm risk and client asset harm risk?

  • How can your firm help to mitigate those risks?

What resources does your UK business need to have in place to meet the FCA authorisation requirements?

  • This includes human resources and expertise, capital, technology, and a location within the UK. For example, does your firm have sufficient knowledge, skills and experience to meet regulatory expectations?

  • Does your firm have the right internal controls framework in place, including governance, risk management, compliance and prudential requirements?

How does the regulator view firms with similar business models?

  • How might the regulator regard your business model?

  • What changes should you make in advance of your application?

ARTICLES IN THIS SERIES

A STEP-BY-STEP GUIDE

Applying for regulatory permission is a big step for branches and subsidiaries of EEA firms. Firms need to understand the application process and what information the regulators are asking for, as well as the impact that those demands, and how operating under a new status will affect their business goals and day-to-day operations.

Our Guide provides answers to some of the fundamental questions that firms will have as they set out on this journey. The hope is that the guide will enable EEA firms to better understand the application process, and help foster dialogue about how to proceed. Download our free guide today.

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