FSA consults on regulatory reform regarding approved persons
04 Oct 2012
The FSA, in consultation with the Bank of England, has issued a consultation paper (CP12/26) entitled “Regulatory reform: the PRA and FCA regimes for Approved Persons”. The paper is designed to assist the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA) to create new rules in respect of approved persons which will come into force when the new regulators acquire their legal powers (a point referred to as legal cutover). The overall approach is for the existing provisions in the FSA Handbook to be adopted or “designated” by the PRA and/or FCA to form new PRA/FCA rulebooks. In addition to designation, certain changes are required to the existing FSA Handbook to align the new rulebooks with the future objectives and functions of the new regulators, as set out in the draft Financial Services Bill. The main aspects of the proposed amendments to the current FSA regime being consulted on with respect to approved persons are:
• a division of the present list of controlled functions for firms regulated by both the PRA and FCA in order to minimise duplication for dual-regulated firms; and
• an extension of the Statements of Principle in the Statements of Principle and Code of Practice for Approved Persons sourcebook (APER) to a wider set of activities, and their application to people approved by either regulator (this means that both regulators will have the ability to discipline certain categories of approved person).
Transitional arrangements. The FSA expects to set out transitional arrangements in connection with which people and which existing approvals will transfer to which regulator and how pipeline applications will be dealt with at legal cutover as part of the broader programme of transitional arrangements in the coming months. Chapter 3 of the consultation deals with how the controlled functions will operate where an application for approval is made after legal cutover.
Next steps. The deadline for comments is 7 December 2012. The FSA intends to publish a draft designation of its Handbook before legal cutover setting out how the existing provisions will transition to the PRA/FCA. The final rules and policy statements will be issued by the PRA and FCA after legal cutover.
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