In Depth: Why IFAs want to be banned by the FSA
FTAdviser examines the de-authorisation process and asks why so many advisers have simply dropped out of the industry.
Early this year the industry witnessed a rash of bans from the FSA. Those subject to the bans were mostly small adviser firms, and mostly struck off due to failure to pay fees.
Some commentators speculated that ceasing to pay fees was simply an easy method of leaving the industry, without having to undergo the rigamarole of de-authorisation.
Except, what is the de-authorisation process exactly, and how rigorous is it? An enquiry to the regulator yielded nought but a single hyperlink to a page on its website which outlines the steps a company must take to officially leave the party.
Before you can even begin the process, a firm must have stopped carrying on regulated activities or be on its way to stopping within six months of its application.
As well as this, the firm must have told its clients of its intention to quit the industry, paid all its outstanding fees, filed any due regulatory returns, resolved any complaints against it and have arrangements in place to deal with complaints and liabilities levelled against it after it has had its permission cancelled.
Got all that? I hope so because otherwise the regulator will bounce your application so fast that, to quote Eminem, it would “knock your clothes backwards like Kriss Kross”.
Now, in most cases you can apply electronically via the regulator’s Online Notifications and Applications page. This method does not require you to pay a fee.
Before logging in to the FSA website make sure you have all the necessary information at hand. Then in you go, click the Cancellation of Part IV Permissions link, fill out the fields and then just confirm your intentions and understanding and click send.
And then you simply sit back and wait.
But what about fees? You pay enough to the regulator as it is, do you have to continue paying while this whole process plays out? Well, like so many other things when it comes to financial services regulation, it depends.
The most important point to note is that the regulator does not charge pro rata. This means not only that you should not expect a refund of fees for whatever portion of the year you are not regulated, but that if you apply after 31 March, you can expect to pay a full year’s worth of fees and levies regardless of how quickly you become de-authorised.
Doubtless to say that the end of March is peak season for de-authorisation traffic. If you’re going to go, go as early in the year as possible to avoid paying fees you might feel you no longer owe.
If all goes according to plan, the FSA will acknowledge your application, appoint you a case officer, and approach you to fill in any information gaps they need before proceeding, including the type of firm you are, the type of clients you serve and how the business will be disposed.