The Financial Conduct Authority is considering granting new banking entrants and other firms interim authorisation to overcome the current “catch 22” situation for those applying for regulatory approval.
Speaking at a briefing on the FCA in Canary Wharf last week, FCA chief executive designate Martin Wheatley said: “We have this kind of catch 22 situation which says we will authorise you when you have got a business plan, when you have tested your IT, when you have shown you have got capital resources, and when you have a chief executive. But firms cannot do any of those things and do not want to invest £2m in IT unless they know they are going to be authorised.”
Wheatley said the regulator will work to speed up its authorisation process, but added it is also looking at other ways to help firms to gain approval.
He said: “What we have talked about, particularly in the banking space but it may apply to other areas, is to offer interim authorisation for people stuck in that catch 22 situation which would provide enough certainty for people to employ a chief executive and get financial banking. Firms could do a restricted amount of business with the restriction lifted when they have fully completed the authorisation tests.”
Jacksons Wealth Management managing director Pete Matthew says: “Interim authorisation seems like a pragmatic move. A stalemate situation is no help to anyone.”