Vast majority of financial firms experience authorisation delays
The amount of time it takes for the UK regulators to authorise financial services firms can be slow and unpredictable, affecting competitiveness, a new report has found.
When regulatory authorisations at the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) are inefficient they also undermine confidence in the regulators’ operational efficiency and create additional operating costs, TheCityUK said.
The research found that 93 per cent of firms regulated by the FCA and 67 per cent of firms regulated by the PRA had experienced delays to the processing of their authorisation applications over the past 12-24 months.
One senior manager application took 377 from submission to approval. One business said senior manager function applications have been taking over six months to complete, even though the service standard set in legislation for this is three months.
Only five per cent of respondents were somewhat confident in the FCA’s ability to meet the statutory deadlines for their authorisations applications.
Read more: 70pc of firms say FCA authorisation process takes too long
The industry-backed research included in-depth interviews with more than 20 industry leaders and a survey of 40 firms.
“The UK is one of the world’s leading international financial centres, but our competitors are biting at our heels. Complacency is not an option,” said Miles Celic, chief executive of TheCityUK.
“The Financial Services and Markets Bill and measures set out in the Edinburgh reforms provide a strong platform from which the UK can continue to strengthen our position. However, the culture and operational efficiency of regulators are critical factors in maintaining the UK’s competitive edge. Successfully updating the rules also depends on the referee implementing them in the same spirit and with the same energy.”
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When firms see authorisations processes as too complex, opaque or slow, it can discourage further growth and investment, the report noted.
Interviewees said that high standards in the authorisation process are essential to maintaining the integrity of the UK’s financial services ecosystem.
As a result, TheCityUK recommended adopting a more commercially aware, efficiency-focused mindset; embracing transparency and accountability; and enhancing internal coordination and capabilities, including by adopting a digital-first approach to authorisations.
“We urge the regulators and government to review our recommendations in the constructive spirit with which they are intended. The industry recognises that the regulators’ task is not easy, and we are willing to engage and play their part in improving outcomes overall,” TheCityUK noted in the report.
Omar Ali, chair of TheCityUK, added: “The efficacy and transparency of regulatory authorisations will play a vital role in ensuring the international competitiveness of the UK. Getting this right will be critical to the UK maintaining its position as a leading financial centre.”
Read more: Rise in people carrying out business without FCA authorisation