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The FCA's Change in Control notification process

In this article, we look at the intricacies of the FCA's change of control process.

1. Understanding the FCA Change of Control Process

The FCA Change of Control process is a regulatory framework established by the Financial Conduct Authority in the United Kingdom. Its primary objective is to oversee and regulate changes in ownership and control of financial services firms. Any change of control, whether through mergers, acquisitions, or other means, must be reported to the FCA for approval before the transaction can proceed.

2. Key Steps in the FCA Change of Control Process

a. Initial Assessment: The process begins with the acquiring firm, typically referred to as the applicant, submitting a comprehensive application to the FCA. This application should provide detailed information about the proposed change of control, including the parties involved, the structure of the transaction, and potential impacts on consumers and markets.

b. FCA Suitability Assessment: Upon receiving the application, the FCA conducts a thorough assessment to determine the suitability of the acquiring firm. This assessment includes an evaluation of the financial standing, reputation, and competence of both the acquiring firm and its key individuals.

c. Supervisory and Prudential Considerations: The FCA examines the impact of the change of control on the acquiring firm's compliance with relevant regulations and its ability to meet prudential standards. This evaluation ensures that the firm will continue to operate effectively and safely following the change in ownership.

d. Consumer Considerations: Protecting consumers' interests is paramount in the FCA Change of Control process. The FCA assesses whether the proposed change of control will have any adverse effects on customer service, continuity, and protection. Safeguards must be in place to address any potential risks to customers.

e. Approval or Modifications: Based on its assessment, the FCA will either approve the change of control application or propose modifications that need to be implemented for approval. The applicant must address any concerns raised by the FCA to secure the necessary approval.

3. Additional Considerations in the FCA Change of Control Process

a. Timing: It is essential to consider the timing of the change of control process, as the FCA requires timely notification and sufficient lead time to conduct the assessment. Early engagement with the FCA is recommended to avoid unnecessary delays.

b. Regulatory Co-operation: In certain cases, where the change of control involves firms regulated by multiple authorities, close cooperation between the FCA and other relevant regulators is necessary. This collaboration ensures a comprehensive assessment of the proposed change of control.

c. Ongoing Obligations: Following the change of control, the acquiring firm is responsible for complying with ongoing regulatory obligations, such as reporting requirements and maintaining adequate systems and controls. Non-compliance can result in penalties or other enforcement actions.

Here's how Buckingham Capital Consulting can help

Engaging the services of an expert consultant can greatly facilitate the FCA Change of Control process.

- Expertise and Guidance: we specialise in regulatory compliance and financial services and can provide invaluable expertise and guidance throughout the change of control process. We possess in-depth knowledge of the FCA's requirements and can navigate the complexities of the application and assessment procedures.

- Application Preparation: we can assist in preparing a comprehensive and well-structured application, ensuring all necessary information is included. We can help identify potential areas of concern and address them proactively, increasing the chances of a smooth approval process.

- Regulatory Assessment: we can conduct a thorough assessment of the acquiring firm's suitability, identifying any gaps or deficiencies that may hinder approval. We can provide guidance on strengthening compliance frameworks, addressing any regulatory issues, and improving overall suitability.

- Compliance Framework Enhancement: We can can help enhance the acquiring firm's compliance frameworks to align with the FCA's expectations. We can provide recommendations on governance structures, risk management systems, and internal controls to ensure ongoing regulatory compliance after the change of control.

- Liaison with the FCA: We can act as a liaison between the acquiring firm and the FCA, facilitating clear communication and timely exchange of information. We can address any queries or concerns raised by the FCA and help navigate any discussions or negotiations required during the assessment process.

- Ongoing Support: Even after the FCA's change of control is approved, we can continue to provide ongoing support to ensure the acquiring firm meets its regulatory obligations.


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