Permission profile 2 – Corporate Finance Advisory Firms

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Application for Authorisation
Supplement for securities and futures firms (non-complex) – notes
Please take time to read these notes carefully. They will help you to fill in the supplement
form correctly.
When completing the application forms you will need to refer to the Handbook:
www.fshandbook.info/FS/index.jsp.
If after




reading these notes you need more help please:
check our website;
consult the Handbook: www.fshandbook.info/FS/index.jsp.
call our Customer Contact Centre: 0300 500 0597; or
email our Customer Contact Centre: [email protected]
These notes, while aiming to help you, do not replace the rules and guidance in the Handbook.
Terms in this form
These notes use the following terms:

'you' refers to the person(s) signing the form on behalf of the applicant firm;

'the applicant firm' refers to the firm applying for authorisation;

‘the FCA' ,'we', ‘us’ or 'our' refers to the Financial Conduct Authority

‘the PRA’, ‘we’, ‘us’ or ‘our’ refers to the Prudential Regulation Authority;

‘Appropriate Regulator’ refers to either or both of the FCA and PRA and

FSMA refers to the Financial Services and Markets Act 2000.
Important information
At the point of authorisation we expect the applicant firm to be ready, willing and
organised to start business.
Contents of these notes
1 Regulatory business plan
2
2 Scope of Permission required
6
3 Financial resources
12
4 Personnel
24
5 Compliance arrangements
27
6 Fees and levies
30
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 1
(NOTES) 1 Regulatory business plan
1
Regulatory business plan
We need to know about the business the applicant firm intends to carry on so
we can ensure that it is authorised for the correct regulated activities,
investment types and client types, and assess the adequacy of its resources.
We see the applicant firm's description of its proposed business as an
important regulatory tool for both the applicant firm and us. It helps us
measure the applicant firm's business risk and control over any regulatory
concerns. Firms that are not common platform firms) can find further
information about this in: www.fshandbook.info/FS/html/FCA/SYSC/3/2;
common platform firms can find out more in SYSC 4 to10.
Bearing in mind the threshold conditions, we need to be satisfied that the
applicant firm can:
• identify all the regulated activities and any unregulated activities it intends
to carry on;
• identify all the likely business and regulatory risk factors;
• explain how it will monitor and control these risks; and
• take into account any intended future developments.
Please remember that the applicant firm's regulatory business plan is an
important part of the overall application and integral to our decision-making
process. The amount of detail you submit should be proportionate to the
nature of the business the applicant firm intends to carry on. For example, if
it is a small firm seeking to carry on a business with a risk that you perceive
as low, the business plan should be less complex and detailed than that of a
high-risk firm. The level of detail should also be appropriate to the risks to
the applicant firm's clients.
You can find further information about our requirements and expectations for
business plans at www.fshandbook.info/FS/html/FCA/COND/2/4
Background
1.1 You must provide a concise explanation why the applicant firm
wishes to carry on regulated activities at this time.
No additional notes.
MiFID business
1.2 Will the applicant firm be carrying on MiFID business?
You can find guidance on whether the applicant firm's proposed business will
be MiFID business in PERG 13: www.fshandbook.info/FS/html/FCA/PERG/13
If you will be relying on one of the article 2 exemptions or the article 3
exemption from MiFID you will need to adopt the relevant standard limitation
or requirement set out in Section 2.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 2
(NOTES) 1 Regulatory business plan
Advice
1.3 Will the applicant firm be advising on investments?
No additional notes.
1.3.1 What type of clients will the applicant firm give advice to?
You need to tell us this information so we can continue to build up a picture
of the type of business the applicant firm will be carrying on. We will use this
information, among other things, to assess the applicant firm's risk.
If the applicant firm wishes to limit one or more of its activities to a certain type or
types of client, it can do so by selecting the relevant client type, and in doing so
apply for an appropriate limitation.
The table below gives a list of the available client types for designated
investment business:
Regulated
business
category
Designated
Investment
business
Client type
Link to full Glossary definition
Retail
The scope of the term retail client is different for
MiFID and non-MiFID business. You can access
the definition in the Handbook Glossary, see link
below:
www.fshandbook.info/FS/html/FCA/Glossary/R
Professional
The scope of the term professional client is
different for MiFID and non-MiFID business. You
can access the definition in the Handbook
Glossary, see link below:
www.fshandbook.info/FS/html/FCA/Glossary/P
Eligible
counterparty
A client can only be an eligible counterparty in
relation to eligible counterparty business. You
can access the respective definitions in the
Handbook Glossary, see link below:
www.fshandbook.info/FS/html/FCA/Glossary/E
Questions 1.3.2 – 1.3.4
No additional notes.
Arranging deals
Questions 1.4 and 1.4.1 – 1.4.3
No additional notes.
All business activities
Questions 1.5 – 1.9
No additional notes.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 3
(NOTES) 1 Regulatory business plan
1.10 What are the main business risks for the applicant firm and how does
it intend to manage those risks?
Here are some examples that should be considered, depending on the nature
of the applicant firm’s business:
External risks:
The applicant firm should:

identify competitors and assess their reaction to the applicant firm's
presence in the market, if applicable; and

consider critical economic factors which should then be analysed and
assessed. For example, it may be useful to explore the effect on the
applicant firm's business if there were large-scale local redundancies,
a recession in the economy, low interest rates or limited demand for
its products/services.
Internal risks:
The applicant firm should:

undertake a sensitivity analysis of various scenarios and the possible
outcomes (this could be a reduction in business or an equally large
increase in business – for example, towards the end of a tax year);

consider how the applicant firm would manage if it lost key staff;

prepare and maintain a contingency plan that deals with the applicant
firm's identified key risks.
1.11 Will the applicant firm have any branches in the UK that intend
conducting regulated activities?
No additional notes.
1.12 Does the applicant firm intend to carry on any regulated activities in
another EEA state by:

providing cross-border services; and/or

establishing a branch; and/or

appointing a tied agent.
If the applicant firm has any plans to carry on business activities in other EEA
countries, please note that once authorised it will need to complete:
• a 'notification of intention to provide cross-border services into another EEA
state' form; and/or
• a 'notification of intention to establish a branch in another EEA state' form
for a branch.
This must be submitted using our Online Notifications and Applications
(ONA).
You may wish to consult our website for further guidance at
www.fca.org.uk/firms/being-regulated/passporting
Questions 1.13 – 1.14
No additional notes.
Outsourcing with third parties
1.15 What functions (if any) will the applicant firm outsource?
The applicant firm must submit all the information about any arrangements
made with third parties in connection with its regulated activities, and explain
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 4
(NOTES) 1 Regulatory business plan
fully how the activity will be operated. In addition, the applicant firm must
demonstrate that sufficient consideration has been given to emergency
situations, such as contingency plans.
The applicant firm cannot contract out its regulatory obligations (see COBS).
Points to consider:
(a) why the applicant firm chose this person;
(b) any contingency plan;
(c) reviews of the third parties' performance.
The applicant firm should ensure that arrangements are made with third
parties (for example, emergency contact) to safeguard the interests of clients
in the event of the absence, illness, disability or death of any key members of
staff.
If the applicant firm will be a MiFID investment firm and it is intending to
outsource portfolio management services to retail customers to non-EEA
(third country) service providers you must explain how it will comply with
SYSC 8.2.1 (1).
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 5
(NOTES) 2 Scope of Permission required
2
Scope of Permission required
Background
When applying for authorisation you are responsible for ensuring that the
regulated activities requested adequately cover the activities the applicant
firm intends to carry on.
You need a Scope of Permission Notice that matches the applicant firm's
needs and covers every aspect of regulated business it wants to carry on.
Getting the applicant firm's permission notice right at the outset is
fundamental. In the event that the applicant firm is authorised with the
wrong permission notice, it will be breaching our rules.
The permission notice shows the range of regulated activities the applicant
firm will be authorised to carry on, as well as the investment instruments and
type(s) of client it can carry on business with for each specific regulated
activity. It will also contain what we refer to as 'requirements' and
'limitations'. Broadly speaking, limitations are included in the descriptions of
specific regulated activities (e.g. not to carry on business with retail clients)
and requirements are on the firm to take or not to take specified actions (e.g.
not to hold client money).
FSMA states that no person may carry on a regulated activity in the UK, or
purport to do so, unless that person is either authorised or exempt. This is
known as the general prohibition. If the applicant firm carries on a regulated
activity that is not set out in its permission notice it could be in breach of
FSMA and subject to enforcement action.
Finally, please be aware that these details are recorded on our public
register, available on our website.
Wording of the Scope of Permission Notice
The Scope of Permission Notice will follow the wording in the Perimeter
Guidance PERG 2 (Annex 2). You can find this at:
www.fshandbook.info/FS/html/FCA/PERG/2
Permission profile
2.1 Which permission profile does the applicant firm wish to apply for?
Select one of the permission profiles (on pages 9 to 11 of these notes) as
appropriate to the applicant firm's proposed business, as follows:
Permission profile 1 – has been left blank with a list of all the regulated
activities and investment types applicable for a non-MiFID Adviser; nonMiFID arranger with the option of giving advice; or a MiFID arranger.
Permission profile 2 – has been left blank with a list of all the regulated
activities and investment types applicable for a non-MiFID Corporate
Finance Advisory firm with the option of arranging and a MiFID
Corporate Finance Advisory firm (which advises and arranges).
Permission profile 3 – has been left blank with a list of all the regulated
activities and investment types applicable for a Local.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 6
(NOTES) 2 Scope of Permission required
For further guidance on MiFID, please refer to page 2 of these notes.
How to complete your permission profile
Which regulated activities does the applicant firm need?
The applicant firm will need to look at the list of regulated activities within
the respective permission profiles and decide which are relevant to its
proposed business. You should use the answers given in Section 1, to
help you to decide which permission profile to apply for. You will then
need to build up each of these regulated activities by selecting the
appropriate investment types and considering whether any additional
requirements or limitations are applicable.
Regulated activities
You can find a description of each regulated activity in PERG 2.7 at:
www.fshandbook.info/FS/html/FCA/PERG/2/7.
You may also find it useful to look at the Handbook Glossary:
www.fshandbook.info/FS/html/FCA/Glossary
Which investment types do I need for each regulated activity?
You can find a full description of these investments, including guidance on
what is excluded from each definition, in PERG 2.6 (specified investments: a
broad outline) at:
www.fshandbook.info/FS/html/FCA/PERG/2/6.
You should continue to build your Permission Profile using this information.
If the applicant firm carries on a regulated activity that is outside the scope
of its permission notice, it could be in breach of FSMA. So it is important to
let us know if there are any other regulated activities, investment types
and/or customer types the applicant firm might wish to apply for.
Standard requirement for firms that will be exempt from MiFID
2.2 You must tick the box below if the applicant firm is exempt from
MiFID by virtue of one or more exemptions in article 2 MiFID.
If you will be exempt from MiFID by virtue of one or more exemptions in
article 2 MiFID, or article 3 MiFID you will need to have a standard
requirement. See PERG 13, esp. 13.1, 13.5 and Annex 1 Flow chart 2
(www.fshandbook.info/FS/html/FCA/PERG/13).
Standard requirement for exempt Capital Adequacy Directive (CAD)
firms (Applicable for MiFID firms only)
2.3 You must tick the appropriate box below if the applicant firm is
seeking authorisation to be an ’exempt CAD firm’.
If you will be an exempt CAD firm you will need to have the relevant
standard requirement. See PERG 13, Q58
(www.fshandbook.info/FS/html/FCA/PERG/13) for further conditions relating
to exempt CAD firm status, including the need to have a client money
requirement which prevents you from holding client money in relation to
MiFID business.
For a list of standard client money requirements and an outline of their effect
for the purposes of MiFID and the Capital Requirements Regulations (CRR) /
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 7
(NOTES) 2 Scope of Permission required
Capital Requirements Directive (CRD), see Annex 5 of the 'MiFID Permissions
and Notifications Guide' on our website.
Standard Requirement – for BIPRU firms
2.4 Is the applicant firm seeking to become authorised as a BIPRU firm?
A BIPRU firm is a firm, as defined in article 4(1)(2)(c) of the EU CRR that
satisfies the following conditions:
(a) it is authorised to provide one or more the following investment services:
(i) execution of orders on behalf of clients;
(ii) portfolio management; and
(b) it may provide one or more of the following investment services:
(i) reception and transmission of orders in relation to one or more
financial instruments;
(ii) investment advice.
2.5 You must confirm below if the applicant firm requires the following
requirement:
Unable to carry on the MIFID investment service and activity of placing of
financial instruments without a firm commitment basis (Annex 1, Section A7
of MiFID)
No additional notes
2.6 You must confirm that the applicant firm has completed and attached
the permission profile for which it is applying.
No additional notes.
2.7 The permission profiles include standard limitations and
requirements. If the applicant firm wants other limitations or
requirements on its permission notice, you must give details here.
Do I need to limit the scope of any activities?
Limitations are specific to a particular regulated activity and will limit in some
way how it is carried on.
A limitation may come about as a result of either a request by you or a
decision by us to impose one.
Should any requirements apply to the applicant firm's permission?
Limitations apply to specific regulated activities (see above) whereas
requirements apply to a firm. Requirements are placed on a firm to take or
not to take a specified action, for example, the applicant firm must not hold
or control client money.
As with limitations, a requirement may be because you request it or we
decide to impose one. If it is the latter, we will discuss this with you when
processing your application.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 8
(NOTES) 2 Scope of Permission required
Permission profile 1 – Arranger and/or adviser
Permission profile 1 has been left blank with a list of all the regulated
activities and investment types applicable for a non-MiFID Adviser; nonMiFID arranger with the option of giving advice; or a MiFID arranger. The
applicant firm can use this to complete its own specific Scope of Permission
Notice.
You must tick all the investment types and regulated activities that the
applicant firm intends to conduct.
Regulated
Agreeing to carry on
a regulated activity
Arranging (bringing
about deals)
Making
arrangements with a
view to transactions
in investments
activity
Advising (excluding
pension
transfers/opt-outs)
Investment type

Share
Debenture
Government and Public Security
Warrant
Certificates representing certain
security
Unit
Option (excluding a commodity
option)
Future (excluding a commodity
future)
Contract for difference
Rights to or interests in
investments (security)
Commodity option and option on
commodity future
Commodity future
Spread Bet
Rolling Spot Forex
Rights to or interests in
investments (contractually based
investment)
Limitations
Investment activity in rights to or
interests in investments (security) and
The firm can
agree to carry on
rights to or interests in investments
(contractually based investment) is
limited to the other investment types
granted for this activity.
only the
regulated
activities
specified in this
notice
Not to hold or control client money
Requirement
The firm must not conduct any designated investment business with retail
clients other (or except) than corporate finance business.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 9
(NOTES) 2 Scope of Permission required
Permission profile 2 – Corporate Finance Advisory Firms
Permission profile 2 has been left blank with a list of the regulated activities
and investment types usually applicable for a non-MiFID Corporate Finance
Advisory firm with the option of arranging and a MiFID Corporate Finance
Advisory Firm (which advises and arranges). The applicant firm can use this
to complete its own specific Scope of Permission Notice.
You must tick all the investment types and regulated activities that the
applicant firm intends to conduct.
Regulated
Agreeing to carry on
a regulated activity
Arranging (bringing
about deals)
Making
arrangements with a
view to transactions
in investments
activity
Advising (excluding
pension
transfers/opt-outs)
Investment type

Share
Debenture
Government and Public Security
Warrant
Certificates representing certain
security
Unit
Option (excluding a commodity
option)
Future (excluding a commodity
future)
Contract for difference
Rights to or interests in
investments (security)
Rolling Spot Forex
Rights to or interests in
investments (contractually based
investment)
Limitations
Investment activity in rights to or
The firm can
interests in investments (security) and
rights to or interests in investments
(contractually based investment) is
limited to the other investment types
granted for this activity.
agree to carry on
only the
regulated
activities
specified in this
notice
Not to hold or control client money.
Requirements
Not to conduct designated investment business other than corporate finance
business.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 10
(NOTES) 2 Scope of Permission required
Permission profile 3 - Local
Permission profile 3 has been left blank with a list of all the regulated
activities and investment types applicable for a local firm. The applicant firm
can use this to complete its own specific Scope of Permission Notice.
You must tick all the investment types and regulated activities that the
applicant firm intends to conduct.
Regulated
Agreeing to carry on
a regulated activity
activity
Dealing as principal
Investment type

Option (excluding a commodity
option and an option on a
commodity future)
Future (excluding a commodity
future and a rolling spot forex
contract))
Contract for difference (excluding a
spread bet and a rolling spot forex
contract)
Commodity option and option on
commodity future
Commodity future
Rights to or interests in
investments (Contractually Based
Investment)
Limitations
Investment activity in rights to or interests in
investments (security) and rights to or interests in
investments (contractually based investment) is
limited to the other investment types granted for this
activity.
The firm can agree to
carry on only the
regulated activities
specified in this notice
Not to hold or control client money
Not to conduct designated investment business other than:

dealing for its own account on the futures or options exchange it is a
member of; or

dealing for the accounts of other members of the same futures and
options exchange; or
Requirements

making a price to other members of the same futures and options
exchange; or

dealing for its own account in the capacity of a customer; and

dealing for its own account in securities.
The performance of the firm's contracts must be guaranteed by and the
responsibility of one or more of the clearing members of the same futures
and options exchange.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 11
(NOTES) 3 Financial resources
3
Financial resources
Prudential sub-category
The Capital Requirements regulations (CRR), the Capital
Requirements Directive (CRD) and the Markets in Financial
Instruments Directive (MiFID)
Broadly speaking, the CRR/CRD only applies to some firms to which MiFID
applies and there are other categories of MiFID firms which are subject to
different prudential regimes. The prudential rules these firms need to follow
are contained in the Prudential Sourcebook for Investment Firms (IFPRU), the
Prudential Sourcebook for Banks, Building Societies and Investment Firms
(BIPRU), and the General Prudential Sourcebook (GENPRU) and the Interim
Prudential sourcebook: Investment Firms (IPRU(INV)).
Applicant firms using the supplement for Securities and Futures firms (non-complex)
may be applying for permission to carry on regulated activities covered by MiFID.
MiFID instruments include shares, debentures, government and public securities,
warrants, certificates representing certain securities, units, and derivatives where
they relate to financial instruments and certain commodity derivatives.
Guidance on MiFID and prudential categorisation (whether CRR/CRD or BIPRU) and
whether firms will be affected by either directive is set out in the Handbook, see
PERG 13: www.fshandbook.info/FS/html/FCA/PERG/13 .
Full requirements for prudential sub-categories
The full requirements for each prudential sub-category of investment firm
subject to the CRR/CRD are contained in IFPRU,
The prudential rules for firms to which MiFID applies but which are not
subject to the CRR/CRD are contained in the GENPRU and BIPRU and
IPRU(INV), as applicable. Of these:

BIPRU and GENPRU apply to an investment firm to which MiFID
applies but is exempt from the CRR /CRD and is permitted to remain
on the CRD III regime, namely a BIPRU firm (see PERG Q58A).

IPRU(INV) applies to firms to which MiFID applies and are exempted
from the CRD and CRR, namely exempt CAD firms, exempt BIPRU
commodities firms and exempt IFPRU commodities firms (see notes
to 3.1 below).Securities and futures firms not subject to MiFID are
generally subject to the relevant rules in IPRU (INV).
A high-level summary of the provisions that will apply to those securities and
futures firms subject to IPRU (INV) is set out below:
Firm category
IPRU (INV) chapters
Securities and futures firm (which is not a
MiFID investment firm)
1&3
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 12
(NOTES) 3 Financial resources
Securities and futures firm (which is an
exempt BIPRU commodities firm or an
exempt IFPRU commodities firm)
1&3
An exempt CAD firm
1&9
Locals
1&3
Please note that there are bespoke provisions for exempt BIPRU commodities
firms (see IPRU (INV) 3-1D G Table.
Only where a local is subject to MiFID (i.e. because it is a local firm), will it be
subject to IPRU (INV) chapter 9.
The applicant firm can use the notes to Question 3.1, below, in conjunction
with the Handbook, to help to work out its prudential requirements.
Prudential sub-category
3.1 Which prudential sub-category applies to the applicant firm?
Section A – MiFID firms under the IFPRU rules
Base Capital Resources Requirement
€50K
€125K
an IFPRU 50K firm is one which

is not authorised to deal for own account in, or underwrite
issues of financial instruments on a firm commitment basis;

offers one or more of the following services:
o
reception and transmission of orders;
o
execution of orders; or
o
management of individual portfolios of investments;

does not hold client's money and/or securities and is not
authorised to do so; and is not a UCITS investment firm;

and does not operate a multilateral trading facility.
an IFPRU 125K firm is one which


is not authorised to deal for own account in, or underwrite
issues of, financial instruments on a firm commitment basis;
offers one or more of the following services:
o
€730K
reception and transmission of orders;
o
execution of orders;
o
management of individual portfolios of investments;

can hold client money or securities, or is authorised to do so;
and is not a UCITS investment firm;

and does not operate a multilateral trading facility.
an IFPRU 730K firm is an investment firm subject to the recast
CAD but is not an IFPRU 50K firm, an IFPRU 125K firm or a
UCITS investment firm.
For further information, see PERG 13.6, questions 60-62.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 13
(NOTES) 3 Financial resources
Capital Resources Requirement
For full scope IFPRU investment firms, the minimum capital resources
requirement will be calculated as the higher of the base requirement or the
sum of the credit, market and operational risk requirements.
For IFPRU limited activity firms, the minimum capital resources requirement
will be calculated as the higher of the base requirement or the sum of the
credit, market risk and the fixed overheads requirement (FOR).
For IFPRU limited licence firms, the minimum capital resources requirement
will be calculated as the higher of the base requirement or the sum of credit
and market risk requirements or the FOR.
Full scope
IFPRU
investment
firm
An investment firm that is neither an IFPRU limited
activity firm nor an IFPRU limited licence firm.
IFPRU
limited
activity
firm
An investment firm that deals on own account only for
the purpose of fulfilling or executing client orders, or
gaining entrance to a clearing and settlement system or
a recognised exchange when acting in an agency
capacity or executing a client order.
BIPRU
limited
licence
firm
An investment firm that is not authorised to provide the
investment services of dealing on own account or
underwriting and/or placing financial instruments on a
firm commitment basis, or a UCITS investment firm and
which generally may be either an IFPRU 50K firm or an
IFPRU 125K firm or a BIPRU firm.
For further details, see PERG 13.6 Q64-66.
Section B – MiFID firms not generally subject to GENPRU, IFPRU or BIPRU
Exempt CAD firm
For guidance for exempt CAD firms, see PERG 13, Q58 and 59. See Chapters 1 and 9
IPRU (INV) for the prudential requirements for exempt CAD firms.
Exempt CAD firms that also conduct other non-MiFID scope activities that are
within the scope of FCA regulation will still need to meet the financial
resource requirments of other applicable chapters of IPRU (INV) that
appropriately reflect their non-MiFID business.
Exempt BIPRU commodities firm / Exempt IFPRU commodities
firms
An exempt commodities firm should refer to article 498 of the CRR (applicable to
investment firms to which the CRR/CRD apply) or Transitional Provision 15 to the
BIPRU rules for investment firms (applicable to investment firms which are exempt
from the CRR/CRD and apply CRD III) in the Handbook which sets out the rules that
apply to such firms: www.fshandbook.info/FS/html/FCA/BIPRU/TP/15. See, also,
PERG 13, Q57 www.fshandbook.info/FS/html/FCA/PERG/13 and IPRU (INV) Chapter
3.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 14
(NOTES) 3 Financial resources
Section C – Non-MiFID firms
Prudential sub-category: Non-MiFID adviser
Main regulated activities: a) advising on investments
Requirement:
Not to hold or control client money.
Prudential Rules:
Tangible net worth and net current assets must be
positive.
The firm is subject to IPRU(INV) 3-60(4) which should be
calculated in line with IPRU(INV) 3-61, as set out in Table
C on pages 25 and 26 of these notes (please note that
the financial resources requirement in table B is not
applicable for this prudential sub-category).
Please refer to IPRU (INV) 3 for further details.
Prudential sub-category: Non-MiFID arranger
Non-MiFID arranger also giving advice
Main regulated activities: a) advising on investments
b) arranging (bringing about deals) in investments
c) making arrangements with a view to transactions in
investments
Requirement:
Not to hold or control client money.
Prudential Rules:
Maintain financial resources in excess of the financial
resources requirement.
The firm is subject to IPRU(INV) 3-60(2) which should
be calculated in line with IPRU(INV) 3-61 and
IPRU(INV) 3-70, as set out in Table C on pages 25 and
26 of these notes.
Please refer to IPRU (INV) 3 for further details.
Prudential sub-category: Non-MiFID Corporate Finance Advisory firm
Non-MiFID Corporate Finance Advisory firm also
arranging
Main regulated activities: a) advising on investments
b) arranging (bringing about deals) in investments.
c) making arrangements with a view to transactions in
investments
Requirements:
Not to hold or control client money.
Not to carry on designated investment business other
than corporate finance business.
Prudential Rules:
Maintain tangible net worth and net assets greater than
£10,000.
The firm is subject to IPRU(INV) 3-60(3) .
Table C on pages 25 and 26 of these notes may be
useful in your calculations.
Please refer to IPRU (INV) 3 for further details.
Prudential sub-category: Local
Main regulated activities: a) dealing as principal
Requirements:
Not to hold or control client money.
To be a member of a recognised futures and options exchange
Not to carry on designated investment business, other than:
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 15
(NOTES) 3 Financial resources

dealing for own account on that futures or options exchange;
or

dealing for the accounts of other members of the same
futures and options exchange; or

making a price to other members of the same futures and
options exchange.
The performance of the firm's contracts must be guaranteed by –
and the responsibility of – one or more of the clearing members of
the same futures and options exchange.
Prudential Rules:
Tangible net worth must be positive
The firm must be able to meet its liabilities as they fall
due.
Please refer to IPRU(INV) 3 for further details.
Section D – BIPRU firms
Some investment firms can stay on the les, and be subject to IFPRU.
Whether or not a firm qualifies depends on which investment services and
activities they carry out, as defined in the Markets in Financial Instruments
Directive (MiFID).
Such a firm cannot carry out any of the following MiFID investment services
and activities:
 (3) dealing on own account
 (6) underwriting of financial instruments and/or placing of financial
instruments on a firm commitment basis
 (7) placing of financial instruments without a firm commitment basis
 (8) operation of Multilateral Trading Facilities
Also, a firm cannot:
 carry out MiFID ancillary service (1) safekeeping and administration
of financial instruments for the account of clients, including
custodianship and related services such as cash/collateral
management, or
 be permitted to hold money or securities belonging to their client
if you are a BIPRU firm, you are subject to base capital resources requirement of
€50,000 (see GENPRU 2.1.48R) and for the calculation of the variable capital
requirement for a BIPRU firm (see GENPRU 2.1.45R).
For information about how MiFID investment services and activities correspond with
the regulated activities set out in the Regulated Activities Order, please refer to PERG
13 in the FCA Handbook: www.fshandbook.info/FS/html/FCA/PERG/13
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 16
(NOTES) 3 Financial resources
Credit risk/ICAAP
3.2 Is the applicant firm a BIPRU or an IFPRU investment firm?
The Pillar 2 Handbook chapters:
GENPRU 1.2
BIPRU 2.2
IFPRU 2.2
CRR Permission
3.3 Is the applicant an IFPRU investment firm?
IFPRU investment firms must apply for a CRR permission to confirm that the
instrument(s) that they are treating as Common Equity Tier 1 qualify to be
treated as such.
Firms must complete and submit the Article 26(3) self-assessment form as
additional supporting documentation in their CRR permissions application http://www.fca.org.uk/firms/being-regulated/waiver/crr-permissionapplication-guidelines
Financial resources
3.4 Which type of firm is the applicant firm?
No additional notes.
Limited company
3.5 You must state the amounts of the different sources of the applicant
firm's capital.
We need to know the sources of the capital in the applicant firm and how
these amounts are made up. Capital is the money or assets in your
business. The different types are described briefly below.

Fully paid-up ordinary shares: These are ordinary shares that the
applicant firm has been paid for in full. Ordinary shares are the most
common type of share. They carry full voting and dividend rights and
their owners are the owners of the company.

Share premium account: This is a reserve of money set up in the
applicant firm's accounts to account for the issue of new shares
above their par value. i.e. if you issue some shares at £1 each, and
you keep some back which you then sell at £1.50 each, you put the
extra 50p into the share premium account.

Preference shares: These are shares that pay a fixed dividend.
Holders of preference shares receive their dividend before holders of
ordinary shares. For our defined term, please see the Handbook
Glossary entry for preference share at
www.fshandbook.info/FS/html/FCA/Glossary/P.

Audited reserves: These are past earnings that the applicant firm
has retained, as verified by its auditors. For firms not required to
appoint an auditor for their accounts under the Companies Act 1985,
these will be unaudited.

Verified interim net profits: These are the net profits made after the
applicant firm's last annual financial statement, as verified by its
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 17
(NOTES) 3 Financial resources
auditor. For firms not required to appoint an auditor, under the
Companies Act 1985, these will be interim profits which have not
been verified by an auditor.

Revaluation reserves: These are reserves kept to allow for the
depreciation of any assets.

Subordinated loans: These are loans that rank below other
unsubordinated debt in the queue for repayment if the applicant firm
is wound up. They can only count as part of its capital if they satisfy
the conditions laid out in the relevant prudential rules in our
Handbook (such as in GENPRU 2.2 or in IPRU (INV)). We require
more details about subordinated loans in Question 3.12.
Where assets are included in the applicant firm's financial resources and they
are subject to depreciation, you should take this into account when
calculating the value of those assets.
3.6 You must attach the following:
Companies House Form SH01 specifies how the applicant firm's shares are
allotted.
Sole traders
3.7 You must attach the following:
You need to send us a statement of your personal assets and liabilities,
together with a statement of your business assets and liabilities. The
statement of assets and liabilities should detail all assets (i.e. anything with a
positive value including money, property and investments) and all liabilities
(anything with a negative value) (see below).
Where assets are included in the applicant firm’s financial resources and they
are subject to depreciation, you should take this into account when
calculating the value of those assets.
Partnership
3.8 You must attach the following:
You need to send us a statement of personal assets and liabilities for each
partner. You also need to send us a statement of business assets and
liabilities for each partner. The statement of assets and liabilities should
detail all assets (i.e. anything with a positive value including money, property
and investments) and all liabilities (anything with a negative value) (see
below).
Where assets are included in the applicant's financial resources and they are
subject to depreciation, this should be taken into account in the calculation of
the value of those assets.
Statements of assets and liabilities – for completion by partnerships
and sole traders
Before completing the statement of personal assets and liabilities or the
statement of business assets and liabilities please note:
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
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(NOTES) 3 Financial resources

Only include your share of any assets and liabilities that are jointly
owned by another party, such as your wife/husband.

Current market value (not the price paid or nominal value) of quoted
investments – only include readily realisable securities, unit trusts
and other packaged products.

Where applicable current market value (e.g. property) should be
estimated.

Guarantees – include the maximum liability of a personal guarantee
given to a third party.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 19
(NOTES) 3 Financial resources
STATEMENT OF PERSONAL ASSETS AND LIABILITIES
For
(full personal name)
as at ____________________________
Assets
(date)
Liabilities
House
_______
Mortgage(s)
_______
Other real property
_______
Loan(s)
_______
Contents
_______
_______
Motor vehicles
_______
_______
Investments (specify)
_______
_______
Bank balance(s)
_______
Overdraft(s)
_______
Cash deposits
_______
Credit card balance(s)
_______
Other assets (specify)
_______
Other liabilities
(specify)
_______
TOTAL
=======
TOTAL
=======
Guarantees (specify)
_______
TOTAL
=======
Signed
Date
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 20
(NOTES) 3 Financial resources
STATEMENT OF BUSINESS ASSETS AND LIABILITIES
For
(full trading name)
as at
(date)
Assets
Liabilities
Bank/cash deposits
__________
Taxation
___________
Commission due within
90 days
__________
Credit cards
___________
Other investments
__________
Bank overdraft balance
___________
Property
__________
Indemnity commission
___________
Motor vehicles
__________
Unsecured loans
___________
Office equipment
__________
Hire purchase/secured
loans
___________
__________
Other liabilities (please
specify)
___________
__________
Mortgage
___________
Contingent liabilities
___________
Guarantees
___________
Other assets (specify)
TOTAL
=========
TOTAL
==========
Goodwill
__________
Bank overdraft limit
___________
TOTAL
==========
Signed
Date
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 21
(NOTES) 3 Financial resources
Limited Liability Partnership (LLP)
3.9 You must state the amounts of the different sources of the applicant
firm's capital
A LLP is a vehicle incorporated under the Limited Liability Partnership Act
2000, which limits the liability of each of the partners to their respective
capital contributions.
You must tell us how the capital in the partnership is sourced. Capital is the
money or property or other assets owned in by the business. The different
types of sources are described below:

Members' capital agreement. This is the legal agreement between
the members of the LLP, showing the make-up and value of the
capital that they have invested in the LLP.

Members' reserves. These are the past earnings of the applicant firm
that have been retained by it on its balance sheet.

Subordinated loan. These are loans that rank below other
unsubordinated debt in the queue for repayment if the applicant firm
is wound up. They can only count as part of its capital if they satisfy
the conditions laid out in the relevant prudential rules in our
Handbook. We require more details about subordinated loans in
Question 3.12.
Where assets are included in the applicant firm's financial resources and they
are subject to depreciation, you should take this into account when
calculating the value of those assets.
3.10 You must attach the following:
A copy of the members' capital agreement with this form. For an example of
a members’ capital agreement, please see the next page.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 22
(NOTES) 3 Financial resources
Members’ Capital Agreement
XYZ LLP
EXAMPLE OF A MEMBERS' CAPITAL AGREEMENT


IPRU (INV) sets out the financial resources
requirements.
XYZ LLP will meet these requirements as the Members
of the LLP will transfer into the LLP the following assets
as long-term capital:
£
Cash
Other assets (list)
……….
TOTAL INITIAL CAPITAL
……….


We confirm that this initial capital is intended as longterm capital (i.e. not to be withdrawn within two years).
We also confirm that the value of the other assets
(listed above) is not less than the market value of those
assets.
Signed by the Members:
………………………………………
………………………………………
………………………………………
………………………………………
Date …………………………
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
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(NOTES) 3 Financial resources
Other applicant firms
3.11 You must provide details of the applicant firm's constitution and the
different sources of the applicant firm's capital.
You must tell us how the capital in the applicant firm is sourced. Capital is
the money, property or other assets in your business.
Sources of external funding
Subordinated loans
3.12 Does the applicant firm have any subordinated loans?
A subordinated loan is a loan that ranks below other unsubordinated debt in
the queue for repayment should the applicant firm be wound up.
The financial resources requirements permit certain types of borrowings or
facilities to be treated as part of an applicant firm's capital resources. The
most common example is that of a subordinated loan.
For subordinated loan agreement forms see IPRU(INV) Annex D Required
Forms – Chapter 3.
Other funding
3.13 Does the applicant firm have other external funding?
Examples of external finance would include a bank overdraft or a business
loan.
Other documents
3.14 All applicant firms must provide the following.
No additional notes
3.15 Is the applicant firm currently trading?
No additional notes
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 24
(NOTES) 4 Personnel
4
Personnel
Controlled functions
4.1 List the names of the persons who will perform the following
controlled functions. A person may perform more than one controlled
function.
You must ensure that no person performs a controlled function until the
applicant firm has been authorised by us and we have approved the person
to perform controlled function(s). If granted, approval is effective from the
date of authorisation.
Please note that CF10 (Compliance oversight) is a required function i.e. every
firm must appoint a person with this function.
CF11 (Money Laundering Reporting Officer) is also a required function unless
the applicant firm is a sole trader with no employees.
What is an approved person?
An approved person is a person who is approved by us to perform a
controlled function for an authorised firm or an appointed representative. To
be approved and to continue to be approved to perform a controlled function,
a person must:

meet, and maintain, our criteria for approval (the 'fit and proper
test'); and then

perform their controlled function(s) in line with our Statements of
Principle and Code of Practice, known as APER for Approved Persons.
What is a controlled function?
A controlled function is a function for a regulated business that has particular
regulatory significance.
There are different controlled functions relevant to the different types of
businesses we regulate. Some controlled functions are required for every
firm, others will depend on the nature of your business.
Each controlled function has a 'CF' number. You can find a full list of all the
controlled functions and an explanation of each one at:
www.fshandbook.info/FS/html/FCA/SUP/10
On the next page is a summary of the controlled functions relevant to a
Securities and Futures firm (non-complex) – although not all of them will be
relevant to every firm. You may find it useful to review the description of
each controlled function in the list and tick the ones that apply to the
applicant firm.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 25
(NOTES) 4 Personnel
Function
Type
CF No.
Governing
functions
CF1
Director
CF2
Non executive
director
CF3
Chief
executive
CF4
Partner
Required
functions
Customer
function
Name of
Controlled
Function
CF10
Compliance
oversight
CF11
Money
laundering
reporting
CF 30
Who would need this?
Does
my
firm
need
this?
A person (other than a non-executive
director) responsible for directing a
company's affairs on the firm's
governing body will require this
controlled function.
A director who has no responsibility
for implementing the decisions or the
policies of the governing body of a
firm.
An individual at a firm who has the
responsibility under the immediate
authority of the governing body, for
the conduct of the whole of the
business.
Partners within a partnership
(including limited liability partnerships)
responsible for directing affairs.
A director or senior manager who has
responsibility for oversight of the firm's
compliance and reporting to the
governing body in the case of firms
who are not common platform firms
means compliance with the rules in
COBS, COLL or CIS and CASS of the
Handbook (see the Handbook:
www.fshandbook.info/FS/html/FCA/)Al
though a firm may choose to use the
services of an external compliance
consultant, the responsibility for the
compliance oversight function remains
with one or more directors or senior
managers of the firm.
A common platform firm should refer
to SYSC 6.1.4 R and SYSC 6.1.5 R
(see the Handbook:
www.fshandbook.info/FS/html/FCA/SY
SC/6/1
Someone with a sufficient level of
authority within a firm who acts in the
capacity of the money laundering
reporting officer of a firm. See SUP
10.7.13R.
The customer functions has to do with
giving advice on, dealing and
arranging deals in and managing
investments. For further information
please refer to SUP 10.10.7A:
www.fshandbook.info/FS/html/FCA/SU
P/10/10.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
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(NOTES) 4 Personnel
4.2 You must fill in ‘Form A - Application to perform controlled functions
under the approved persons regime’ for each person who will be
performing a controlled function that you have listed in Question 4.1.
This form is available in the build your own application form page.
Alternatively, you can find this form at:
http://fshandbook.info/FS/docs/sup/sup10_annex4D.doc
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 27
(NOTES) 5 Compliance arrangements
5
Compliance arrangements
Compliance procedures
5.1 You must confirm the applicant firm has documented compliance
procedures in place.
When assessing this application we need to be satisfied the applicant firm has
the appropriate compliance arrangements in place to meet its regulatory
obligations, both when we authorise it and on an ongoing basis.
You should not send the compliance procedures to us when submitting this
application. However, they must be ready for inspection at any time. They
will also need to be in place so that you can prepare the Compliance
Monitoring Programme (see Question 5.2).
Remember that this manual should be designed so it is specifically tailored to
the business, easy to use as well as easy to amend and to keep up to date.
If you are in any doubt about what you need to put into the compliance
manual you should seek professional advice.
Common platform firms should, in particular, consider carefully the
obligations in SYSC 6.1. Firms which are not common platform firms are
referred, in particular, to SYSC 3.2.7 – 3.2.9G.
Compliance monitoring programme
5.2 You must confirm you have attached a compliance monitoring
programme.
This will need to be included as part of your application.
An example of a compliance monitoring programme can be found on
following page.
Please note that the applicant firm will need to devise its own compliance
monitoring programme, based on its own proposed business.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 28
(NOTES) 5 Compliance arrangements
Example of the contents of a compliance monitoring programme
Business risks and regulatory requirements
Action to be taken by firm
Action to be undertaken
by whom?
New business records are maintained.
Financial promotions undertaken are up to date and correct. This includes stationery and
terms of business letter.
Status disclosed on all stationery.
Clients are properly classified and given the appropriate range of advice.
Adequate complaints records are kept
Adequate recruitment records are kept for new advisers.
Personal account dealing procedures are maintained.
Training and competence records are maintained (including Key Performance Indicators)
The fitness and propriety of individuals are established and the applicant firm ensures this
is maintained.
Approved persons are approved by us and recorded under the correct controlled functions.
Conflict of interest records are kept
Financial requirements are maintained
Notify us immediately of any material breaches of FCA principles/rules.
We must grant approval for changes to:
• accounting date;
• permitted regulated activities; and
• directors and partners.
Adequate management information maintained and provided to senior management.
Documented compliance procedures maintained, used in conjunction with an up-to-date
copy of the Handbook
Anti-money laundering regulations are complied with.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 29
Frequency
(NOTES) 5 Compliance arrangements
Compliance arrangements
5.3 You must confirm that all senior management of the applicant firm
are aware of and understand the compliance procedures.
Please note this is an ongoing requirement and must be complied with at all
times.
Financial crime
5.4 You must briefly describe the procedures the applicant firm has put
in place to counter the risks that it might be used by third parties to
further financial crime (this includes any offence involving a) fraud or
dishonesty, b) misconduct in, or misuse of information relating to,
financial markets or c) handling the proceeds of crime (SYSC 3.2.6
and 6.3).
This could be a summary of the applicant firm's anti-money laundering
procedures including the following:
Anti-money laundering controls
SYSC 3.2.6 and 6.3 gives details of the scope and application of the antimoney laundering regime.
Fraud
You could also describe the procedures the applicant firm has put into place
for notifying us if the firm identifies any irregularities in its accounting
records, regardless of whether there is evidence of fraud (SUP 15.3).
Market conduct
5.5 You must briefly describe the steps the applicant firm has put in
place to counter the risk that it or its staff may engage in activity
which constitutes market abuse.
This could be a summary of the applicant firm's market conduct systems and
controls including monitoring procedures.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 30
(NOTES) 6 Fees and levies
6
Fees and levies
If we authorise the applicant firm to conduct investment business then it is
likely to be allocated to one or more of the following FCA fee blocks:

A12 or A13 – Advisory arrangers, dealers or brokers, either holding
and controlling client money/assets (A12) or not holding and
controlling client money/assets (A13); and/or

A14 – Corporate finance advisers.
The fee for each of these is based on tariff data submitted within Section 6.
We use your answers to calculate your firm’s fees and levies for the first fee
period. We will also use this for calculating fees in the following fee period for
firms authorised between 1 January and 31 March. Please ensure the data
you submit is accurate as we will only accept changes to the data provided
here in exceptional cases; for instance where the business plan has been
revised.
When reporting monetary fee tariff data, firms should provide a projected
valuation, covering the first 12 months from the date of authorisation
(measured according to the relevant tariff base(s)). Monetary figures should
be denominated in pound sterling. Please do not leave any section blank, if
relevant enter Nil. FEES 4 Annex 1 of the Handbook has detailed notes on
the fee blocks and tariff bases and this is located at:
www.fshandbook.info/FS/html/FCA/FEES/4/Annex1 .
All authorised firms pay a minimum fee to cover the annual costs of being
regulated. Where a firm’s business in any fee-block exceeds the amount
covered by the minimum fee, the firm will be subject to an additional fee. If
you want to work out your firm’s forthcoming fees please use the Fee
Calculator on our website. To do this you will need to know which fee blocks
your firm will fall under and the fee tariff data you have entered in Section 6.
To find out which fee blocks your firm will fall into please see Fees 4 Annex
1R Part 1.
If you need further help with completing Section 6, please contact the
Customer Contact Centre on 0300 500 0597.
FCA fees
From 1st April 2013 the tariff base for fee-blocks A12/A13 and A14 is
changing. For these fee-blocks firms are not required to provide information
on approved persons, instead firms will provide information on income.
6.1/2 FCA fee blocks A12 and A13 – Advisory Arrangers, Dealers or
Brokers
How many approved persons with customer function 30 (CF30) will
the applicant firm have at the date of authorisation? Please exclude
those persons who will be acting in a capacity of investment
manager only or solely advising clients in connection with corporate
finance business.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 31
(NOTES) 6 Fees and levies
A firm authorised for investment business is likely to be in fee-block A.12
(holding client money) or A.13 (not holding client money). Fees in both A.12
and A.13 are based on the number of approved persons holding control
function CF30. A firm must exclude those individuals who will act solely as an
investment manager or solely corporate finance adviser. An individual acting
as investment manager and/or advising clients in connection with corporate
finance business should be included if they carry out other investment
related functions.
Please note: If an applicant firm will have individuals registered as CF30 it
must complete this section as it is likely that investment firms or managers
will also fall within A.12/A.13.
See the fees section of our website for detailed guidance on this fee block,
please select A.12/A.13.
6.3
Fee blocks A12/A13 – Advisers/Arrangers
How much annual income does the applicant firm estimate for the
first year of authorisation in relation to the regulated activities for
fee-block A12/A13 (see FEES 4, Annex 1R, Part 1) advisors,
arrangers, dealers or brokers holding and/or controlling client
money/assets OR advisors, arrangers, dealers or brokers not holding
or controlling client money/assets. Please exclude income arising
from corporate finance business.
A firm authorised for investment business is likely to be in fee-block A12
(holding client money) or A13 (not holding client money). From 1st April, fees
in both A12 and A13 are based on income. A firm must exclude income from
corporate finance business.
From 1st April 2013 both A12 and A13 are based on the net amount of
income retained from the regulated activities proscribed in fee blocks A12
and A13. This includes income from:
Advisory and consultancy charges
Brokerage
Fees
Commissions
Related income arising from the proscribed activities (e.g. administration
charges, overriders, profit shares etc.)
Interest earned from above income
Firms should deduct:
Rebates to customers
Fees or commissions passed to other authorised firms – for example, where
there is a commission chain (this is to avoid double counting).
Business expenses cannot be deducted. A firm must exclude advisory activity
income arising from its corporate finance business.
6.4
Fee block A14 – Corporate Finance Advisers
How many approved persons will the applicant firm have at the date
of authorisation, with customer function 30 (CF30) who advise
clients in connection with corporate finance business? Please count
individuals who are doing so exclusively or in conjunction with other
types of advising/arranging activities.
A firm authorised to carry on corporate finance business is likely to be in feeblock A.14. In A.14 please report the number of individuals who will be
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 32
(NOTES) 6 Fees and levies
approved to perform CF30 and can advise clients in connection with
corporate finance business, at the date of authorisation.
Please count individuals who will be advising on corporate finance exclusively
and those providing corporate finance advice in conjunction with other types
of investment advising/arranging activities.
See the fees section of our website for detailed guidance on this fee block,
please select A.14.
6.5
Fee Block A14 – Corporate finance advisers
How much annual income does the applicant firm estimate for the
first year of authorisation in relation to the regulated activities for
fee-block A14 – corporate finance business.
From 1st April 2013, fees in A14 are based on income. A firm must include
income retained from its corporate finance business. Please include advisory
activity income arising exclusively from corporate finance and no other
investment business.
The ombudsman levy
The ombudsman service’s general levy is based on relevant business.
Relevant business is business conducted with consumers. If an applicant
firm will conduct business with eligible complainants who are not consumers
then it should report “nil” in this section.
The tariff data are calculated in the same way as they would for the FCA fee
blocks with adjustments made for relevant business only.
See the fees section of our website for detailed guidance on the fee blocks
below selecting the appropriate file.
If the firm will not conduct any business with eligible complainants it can
apply for an exemption from the FOS levy. We define an 'eligible
complainant' under DISP 2.7 of the Handbook:
www.fshandbook.info/FS/html/FCA/DISP/2/7 . To apply for an exemption,
please complete the declaration section on the supplementary form.
6.6/7 Fee block I008 – Advisers, Arrangers(holding client money)
How many relevant approved persons with customer function 30
(CF30) will the applicant firm have at the date of authorisation?
Please exclude those persons who will be acting in the capacity of an
investment manager only or solely advising clients in connection
with corporate finance business.
The data submitted here will be used to calculate the firm’s ombudsman
service’s general levy in respect of investment arranging and non
discretionary advising and related activities. Please only include individuals
that will perform the above customer functions with consumers. If the
applicant firm’s entire business with be carried on with consumers only then
the data reported here will be the same as FCA fee block A.12/A.13.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 33
(NOTES) 6 Fees and levies
6.8
Fee blocks I008/I009 – Advisory/arrangers/dealers/brokers
How much relevant annual income does the applicant firm estimate
for the first year of authorisation in relation to advisors, arrangers,
dealers or brokers holding and or controlling client money or assets
OR not holding or controlling client money or assets. Please exclude
income from corporate finance business.
The data submitted here will be used calculate the firm’s ombudsman
service’s general levy in relation to investment business. If all the applicant
firm's investment business is conducted with consumers then the data you
report here will be the same as that reported under the FCA data.
6.9
Fee block I010 – Corporate Finance Advisers
How many relevant approved persons will the firm have at the date
of authorisation, with customer function 30 (CF30) who advise
clients in connection with corporate finance business? Please count
individuals who are doing so exclusively or in conjunction with other
types of advising/arranging activities.
The data submitted here will be used to calculate the firm’s Ombudsman
general levy in respect of corporate finance advising activities. Please only
include individuals that will perform the above customer functions with
consumers. If the applicant firm’s entire business with be carried on with
consumers only then the data reported here will be the same as FCA fee
block A.14.
6.10 Fee block I010 - Corporate finance advisers
How much relevant annual income does the applicant firm estimate
for the first year of authorisation in relation to in relation to the
regulated activities for fee-block I010 - corporate finance business.
The data submitted here is to calculate the firm's Ombudsman Service levy in
relation to corporate finance business.
Financial Services Compensation Scheme (FSCS) levy
The FSCS levy comprises three parts:

Base Costs - operating costs not directly related to the payment of
compensation.

Specific Costs - operating costs that are directly related to the
payment of compensation arising from valid claims.

Compensation Costs - provides the funds to make valid
compensation payments.
As a newly authorised firm your first invoice will only cover the Base Costs of
the FSCS levy, which is based on your FCA fees. From the subsequent fees
period the firm will be liable for the full FSCS levy. The tariff data provided
here will be used to calculate your FSCS levy in the second fee year if your
firm receives its permission between 1 January and 31 March.
The FSCS funding model for compensation and specific costs uses five board classes:

deposits,

life and pensions,

general insurance,

investments, and

home finance.
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 34
(NOTES) 6 Fees and levies
With the exception of the deposits class, each broad class is divided into two "subclasses" based on provider/intermediation activities. Each sub-class is made up of
firms which are providers or intermediaries and engage in similar styles of business
with similar types of customer.
The sub-classes are based on the activities a firm undertakes (and are aligned to
their FCA permissions). A firm could be allocated to one or more sub-classes
according to the activities that it undertakes.
The FSCS levy is calculated by reference to a firm’s estimated eligible business.
Eligible business refers to business conducted with eligible claimants. An eligible
claimant is a person or entity that is able to bring a claim for compensation to the
FSCS under COMP 4.2 of the Handbook. See
www.fshandbook.info/FS/html/FCA/COMP/4/2#D7 for detailed list of persons that
qualifies for FSCS compensation.
If the applicant firm will not carry on any business with eligible claimants, it
can apply for an exemption from the FSCS specific and compensation levy.
Please complete the declaration section on the supplementary form to apply
for an exemption.
6.11 Sub Class SC02 – Life and Pensions Intermediation
How much annual eligible income does the firm estimate for the first
year of authorisation in relation to its life and pensions
intermediation (including pure protection) business only?
The data submitted here is to calculate the firm's FSCS levy in relation to life
and pensions investments and long term insurance contracts
intermediation activities. Life and pensions contracts mean long term
insurance contracts (including pure protection) and rights under a
stakeholder pension scheme or a personal pension scheme.
Detailed information on how to calculate AEI for SC02 is provided in the fees
section of our website: www.fshandbook.info/FS/html/FCA/FEES/6/Annex3
6.12 Sub Class SD01 – Fund Management
How much annual eligible income does the applicant firm estimate
for the first year of authorisation in relation to fund management
business only?
The data submitted here is to calculate the firm's FSCS levy in relation to
fund management business. It also includes activities relating to collective
investment schemes, authorised unit trust schemes, and acting as depositary
of an open-ended schemes.
Income expected from assets managed on a non-discretionary basis, being
assets that the applicant firm will have a contractual duty to keep under
continuous review but in respect of which prior consent of the clients must be
obtained for proposed transactions should be reported in sub class SD02.
Detailed information on how to calculate AEI for SD01 is provided in the fees
section of our website: www.fshandbook.info/FS/html/FCA/FEES/6/Annex3
6.13 Sub Class SD02 – Investment Intermediation
How much annual eligible income does the applicant firm estimate
for the first year of authorisation in relation to investment
intermediation business only?
The data submitted here is to calculate the firm’s FSCS levy for the
investment intermediation activities. It includes all intermediation activities
in relation to designated investment business except activities that relate to
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 35
(NOTES) 6 Fees and levies
long term insurance contracts for rights under a stakeholder pension scheme
or a personal pension scheme. Investment mediation activities relating
to long term insurance contracts should be reported in sub class
SC02 where applicable.
Detailed information on how to calculate AEI for SD02 is provided in the fees
section of our website: www.fshandbook.info/FS/html/FCA/FEES/6/Annex3
Declaration of ongoing FCA fees liability
6.14 You must confirm that the applicant firm understands that it is liable
and remains liable to pay fees until such time as the FCA cancels its
permission. This is irrespective of whether it is trading, or even if it
has notified us of intention to case trading or submitted an
application to cancel.
No additional notes
Declaration of FSCS and Ombudsman service exemption
6.15 The ombudsman service exemption – if the applicant firm will not
conduct business with eligible complainants and do not foresee doing
so in the immediate future, please tick the box below.
Please read the Ombudsman exemption guidance before completing this
section. This can be found on our website
Applicant firms that do not conduct business with eligible complainants
qualify for exemption from the Ombudsman general levy. Exemption will
mean the applicant firm will not have to pay an ombudsman general levy.
If this application has highlighted that the applicant firm will conduct
business with retail clients then an exemption is unlikely to be available. This
is because retail clients are likely to qualify as eligible complainants.
If the applicant firm will not carry out business with eligible complainants
please tick the relevant box within section 6.10. If at any point in the future
the applicant firm is to initiate business with eligible complainants it must
notify us immediately.
6.16 FSCS Exemption – if the applicant firm will not conduct business that
could give rise to a protected claim by an eligible claimant and do not
foresee doing so in the immediate future, please tick the box below.
Please read the FSCS exemption guidance before completing this section.
This can be found on our website.
Applicant firms that will not conduct business with eligible claimants can
qualify for exemption from the Specific and Compensation costs of the FSCS
levy. Please note that all applicant firms will pay toward the Base cost of the
FSCS regardless of exemption unless there are non-participant firms. Nonparticipants firms include authorised professional firms who are members of
the Law Society in England and Wales or Scotland. Please refer to
www.fshandbook.info/FS/glossary-html/FCA/Glossary/P?definition=G837 for
the full list of non-participant firms.
If this application has highlighted that the applicant firm will conduct
business with retail clients then exemption is unlikely to be available. This is
because retail clients are likely to qualify as eligible claimants. For a full
definition of an 'eligible claimant' see COMP 4.2 of our handbook at:
www.fshandbook.info/FS/html/FCA/COMP/4/2
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 36
(NOTES) 6 Fees and levies
If the applicant firm will not conduct business with eligible claimants please
tick the relevant box within section 6.11. If at any point in the future the
applicant firm is to initiate business with eligible claimants it must notify us
immediately.
Please note the ombudsman service and FSCS exemption(s) are not
automatic and are subject to approval. You will be notified if your
exemptions are not granted.
End of supplement
FCA  Application for Authorisation Supplement (Notes) Release 4  April 2015
page 37
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