The Financial Conduct Authority (FCA) must approve a financial advisory firm or client bank purchase before it can be finalised. This includes having processes and a plan in place, to ensure a smooth transition for acquired clients and firms.
Therefore, we think it’s really important to get under the skin of the buyer – to make sure no stone has been left unturned – and that all appropriate documentation has been implemented, to make the FCA approval process easier.
Try asking yourself the appropriate questions, and, if you don’t know what these are, seek professional advice!
Following the FCA’s Supervision Review, we’ve highlighted our key takeaways from the report…
Section 178 Notices
Individuals or companies that wish to acquire or increase control in a company – which the FCA regulates – must seek prior approval. Regulated firms are also obliged to notify the organisation of any proposed or actual changes in control immediately (see SUP 11.4 in the Handbook for further information).
In addition, it is a criminal offence under FSMA section 191F to:
- Acquire or increase control without notifying the FCA first
- Fail to obtain prior approval in such circumstances
Notifications for changes in control are known as Section 178 notices – as soon as you have made the decision to acquire partial or full control in an authorised business, you should send this directly to the FCA. This includes circumstances where a proposed controller decides not to take any action, to prevent or reduce its increase in control to below the relevant threshold.
The FCA has 60 working days (excluding any interruption period) to assess a change of control case. This period begins on the day your 178 notice has been acknowledged.
How do I submit my application?
If your organisation is regulated by the FCA only, the notification for changes can be sent using the online system ‘Connect’. Similarly, if you’re seeking to be a controller of a firm authorised under the Markets in Financial Instruments Directive (MiFID), you can also complete it digitally, via the MiFID version of the form.
Are you regulated by both the FCA and PRA? If so, you can send the notifications document to both regulators via post or email. Alternatively, you can use ‘Connect’ to submit the paperwork to the FCA, and then send to the PRA separately, via post or email.
What should I send?
In addition to the above, you should also send the following supporting documents:
Post-transaction structure charts
CVs for individual controllers and directors/members of corporate controllers
Proof and source of funding
Accounts for corporate controllers
Comprehensive business plan
Negative disclosure supporting information/documents
We hope this has been useful in helping you to better understand how to notify the FCA of any changes in control. If you have any questions or would like someone to support you through this process – to ensure you cover all bases – please feel free to get in touch with one of our helpful team members here.
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