Time taken for FSA to authorise new businesses rises for third consecutive quarter
Date:07 June 2012
- Approaching post credit crunch peak of over five months
- Financial services firms express concern over effect of FSA break-up on authorisation times
The amount of time the FSA is taking to approve new firms has risen for a third consecutive quarter, according to data seen by City law firm RPC (Reynolds Porter Chamberlain LLP).
The average time new firms must wait for authorisation now stands at 19.6 weeks, up 13.2% from 17.3 weeks in Q2 2011.
RPC says the rise is particularly worrying because the FSA had started to reign in runaway authorisation times, but now delays are growing again. (see graph)
Average number of weeks for FSA decision on business authorisation
Steven Francis, Partner at RPC, explains: “Having to wait an inordinately long time for FSA approval has been a real bugbear in the financial services sector for the last two years.”
“Authorisation times rocketed after the credit crunch as the FSA started to scrutinise the business plans for financial services start-ups to an unprecedented degree. The FSA delays were starting to improve even though the FSA was still applying the same level of scrutiny but that’s no longer the case.”
Break-up of FSA could cause waiting times to balloon
RPC says that authorisation times could be affected by the reorganisation of the FSA to a ‘twin peaks’ model in preparation for its planned break-up in 2013.
From April 2nd, the FSA’s internal structure was reorganised to mirror the two separate regulatory bodies that the FSA will become, the Prudential Regulation Authority (charged with identifying systemic risk) and the Financial Conduct Authority (which will regulate market conduct).
Steven Francis says: “The FSA has started a very complex internal restructuring and it will be interesting to see whether that has an impact on its ability to carry out its workload. If there is a significant increase in FSA authorisation times in Q2 that will be a worrying sign that the twin peaks reorganisation is harming the FSA’s productivity.”
“New banks and insurers could be hit particularly hard by the shift to two regulators and the break-up of the FSA because they will need approval from both the new regulators. Hopefully the FSA’s replacement bodies will work closely together to avoid unnecessary delays.”
Loud complaints from new financial services firms on authorisation times
RPC says that financial services business owners are becoming increasingly vocal in complaining about delays to their FSA trading licence.
Recently Sir John Beckwith complained that his latest venture, a foreign exchange boutique called Argentex, had taken nearly six months to gain FSA approval.
Steven Francis comments: “Financial services businesses often complain that the FSA is understaffed, meaning their application to trade can take too long to authorise. That’s definitely been a problem for the regulator since the coalition announced it was going to break-up the FSA.”
“It can be incredibly frustrating for firms that have to wait nearly half a year for approval, as well as potentially very costly in terms of lost business opportunities.”
Steven Francis, Partner
Reynolds Porter Chamberlain LLP
+44 (0)20 3060 6000
Nick Mattison or Louis Auty
Mattison Public Relations
+44 (0)20 7645 3636