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Status: You are viewing the version of the handbook as on 2005-06-30.

AUTH 1.4 The FSA's approach to applications for Part IV permission: an overview

AUTH 1.4.1G
  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. (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.

AUTH 1.4.2G
  1. (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. (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.

AUTH 1.4.3G
  1. (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. (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.

The FSA's approach to risk assessment

AUTH 1.4.4G
  1. (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. (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).