Improving regulatory efficiency on authorisations

Our ‘Improving regulatory efficiency on authorisations’ report puts forward recommendations for action that would transform the Financial Conduct Authority’s (FCA) and the Prudential Regulation Authority’s (PRA) approach to authorisations processes by improving speed, efficiency and effectiveness.

Financial services regulatory authorisations in the UK can be slow, inefficient and unpredictable. Regulators can often fail to meet their statutory deadlines for processing authorisation applications.

As a result, firms across the industry are incurring higher operating costs and losing confidence in the operational effectiveness of the regulators. There is also growing concern that if these problems persist they will negatively impact the UK’s competitiveness in attracting global financial business and investment capital.

We recognise and appreciate that both the FCA and PRA are taking forward measures to improve their authorisation processes and that their task is not an easy one. Below is a summary of our recommendations for further actions to help deliver meaningful improvements, which we hope the regulators and government will review in the constructive spirit with which they are intended.

Recommendations: summary

A. Adopting a more commercially aware, efficiency-focused mindset

  • 1. Follow through on the ambitions and tone being set by regulators’ senior leaders
    The regulators’ senior leadership has set a clear ambition for efficiency and commercial awareness in their firm-facing operations. The regulators should see these steps through and instill a long lasting cultural `service mindset’ in authorisations that reflects the high standards of speed, efficiency and good communication that regulators expect firms to operate to.
  • 2. Better understand the impact on firms
    The regulators should develop a better understanding of the impact of the authorisations process on firms.
    The FCA should reinstate its quarterly firms feedback survey and invite firms to meetings to discuss their experiences. Firms should also be transparent about where there are pinch points in these processes, where information requests are not clear and where the process might be impacting the UK’s attractiveness. This feedback can be used by the regulators to report on their potential new secondary statutory objective.
    Detrimental to the UK’s attractiveness Somewhat detrimental to the UK’s attractiveness Somewhat beneficial to the UK’s attractiveness Beneficial to the UK’s attractiveness

B. Embracing transparency, accountability and external engagement

  • 3. Publish better performance data on authorisations
    The government should direct regulators to publish quarterly granular data on key aspects of their performance - including authorisations - against specific metrics set by HM Treasury. We are pleased to see that both the FCA and PRA have already committed to the publication of more detailed data more frequently on their operational performance. We recommend that they publish quarterly granular data on authorisations service
    standards, including cases that have exceeded service standard timings, and the length of time taken to allocate case officers to applications. The industry should also feed back examples of requests that lacked clarity or were not clear and might have been causing delay. The feedback should be used by regulators to make their authorisations processes more efficient for themselves and industry.
  • 4. Offer better guidance to firms
    The regulators should offer more comprehensive guidance to firms on their authorisation process requirements and enable delegation of access to the authorisations IT system for trusted third parties, allowing them to assist clients. Firms should ensure the quality and completeness of their applications.
  • 5. Enhance engagement and communications with firms
    The regulators should engage more closely and openly with firms and set a minimum frequency for updating firms on the status of their applications.

C. Enhancing internal coordination, capabilities and case management

  • 6. Improve internal coordination and information sharing
    The regulators should improve their internal information sharing and coordination, to ensure that information is accessible from a single digital source across the organisation. This is particularly necessary between their authorisation and supervisory functions.
  • 7. Adopt a digital-first approach to authorisations
    The regulators should invest further in a digital first approach to authorisations, automating forms and using AI to reduce administration. They should then focus staff on adding value through experience and judgment. The FCA should link its new applications portal to its Register, RegData and CRM systems. The industry should also feed back to the regulators examples where a lack of clarity has contributed to delays. This feedback can be used by regulators to refine processes to be more efficient.
  • 8. Implement better training for authorisation staff
    The regulators should ensure that authorisation case officers have the knowledge, experience, and capability to process authorisations efficiently and effectively - for example, through more industry secondments. While we welcome the FCA recruiting a significant number of additional staff to work on authorisations, it is essential that all those staff get the right training, including on emerging business models. The industry should be amenable to seconding in case officers from the regulators in the knowledge that the more exposure to firms
    these individuals have, the better the quality of service from regulators.
  • 9. Streamline processes to improve efficiency
    The regulators should explore more commonality in definitions across processes to enhance efficiency and engage with firms to streamline processes for less complex applications – for example, certain senior manager applications. Additionally, we suggest that the regulators undertake end-to-end mapping of all authorisations processes to identify areas for further improvement.

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