FCA authorisations Q4 results: How is the sector performing?

by George Iddenden, Reporter, TPA

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What is this article about?

The Financial Conduct Authority’s (FCA) final quarterly authorisations operating service metrics for 2023-2024.

Why is it important?

It provides transparency on the FCA’s performance and efficiency in handling authorisations and registrations, impacting regulated firms.

What’s next?

The FCA will continue improving its processes, encouraging firms to submit complete applications for faster approvals.

The Financial Conduct Authority (FCA) recently released its final quarterly authorisations operating service metrics for 2023-2024. This data provides transparency on its performance and covers January to March 2024.

Overall, the data reveals a predominantly high level of efficiency and effectiveness in meeting statutory targets, reflecting well on the regulator’s operational capacity.

The metrics only apply to solo-regulated firms, with the FCA and the Prudential Regulation Authority collaborating to authorise dual-regulated firms.

The regulator discloses the lower quartile, median, and upper quartile of the range of calendar days taken for determination in each application category. On its results, the FCA says: “The complexity of some cases means that we will not always meet our statutory targets.

“In these cases, it is right that we take the time to ensure greater scrutiny and engagement with the firms involved. We continue to see too many incomplete and poor-quality applications.”

Overall Performance

The Q4 metrics for the 2023/24 fiscal year showcase the regulator’s performance in handling various authorisations and registrations, revealing a respectably high level of efficiency and effectiveness in meeting the statutory targets.

Categories such as Approved Persons (SMCR-related) and Payment Services & E-Money registrations achieved near-perfect compliance rates of 98.7% and 100%, respectively. High efficiency was evident as most cases were determined within their statutory timeframes; this is highlighted by the 99.7% and 99.3% compliance rates for Change in Control and Variations of Permission, respectively.

According to the data, the FCA effectively managed a significant case volume, processing thousands of cases, such as the 1,550 SMCR-related and 1,323 AR-related Approved Persons cases, with minimal overdue cases.

Concerning determination times, they were relatively consistent throughout, with lower quartile, median, and upper quartile times ranging from 27 to 63 days.

Examining the data, the FCA has areas for slight improvement, with categories such as AR-related Approved Persons seeing a 95.3% compliance rate. Positively, the figures imply a robust system capable of handling large volumes efficiently for the most part, with minimal delays indicating effective procedures and a capable workforce.

Categories such as Payment Services & E-Money Registrations (PS3 to PS8) achieved 100% compliance across all relevant subcategories. This indicates that these categories are managed exceptionally well, with processes in place that ensure timely and accurate determinations.

Additionally, Payment Services under PSRs 2017, which achieved 100% compliance in the latest quarter, had lower compliance rates in previous quarters, indicating potential inconsistencies in the performance of the regulator in certain categories.

Case volumes and timelines

The regulator demonstrated strong volume management capabilities by efficiently processing a significant number of cases across various categories. For example, it determined 1,550 cases related to SMCR-approved persons and 1,323 cases for AR-approved persons.

Area
Cases determined Q4 2023/24
Cases determined past deadline Q4 2023/24
R1. 1a: Approved persons – of which SMCR-related
1,550
20
R1.1ai: Approved Persons – of which AR-related
1,323
62
A1.1: New Firm Authorisations
351
9
R5.1 Variations of Permissions
293
2
R6.1: Change in Control
353
1
A1.2: 3/4MLD
63
2
PS1: Payment Services & E-Money Authorisations & Registrations
10
0
PS2: Payment Services & E-Money Authorisations & Registrations
21
1
PS3: Payment Services & E-Money Authorisations & Registrations
20
1
PS4: Payment Services & E-Money Authorisations & Registrations
3
0
PS5: Payment Services & E-Money Authorisations & Registrations
2
0
PS6: Payment Services & E-Money Authorisations & Registrations
1
0
PS7: Payment Services & E-Money Authorisations & Registrations
6
0
PS8: Payment Services & E-Money Authorisations & Registrations
2
0
PS9: Payment Services Agents
2,058
28
R8.1: Cancellations
1,296
11

Despite the high volume, only a small fraction of cases exceeded the statutory deadlines. Specifically, only 20 out of 1,550 SMCR-related cases and 62 out of 1,323 AR-related cases missed their deadlines.

Additionally, 28 Payment Services Agents-related cases missed their deadlines out of 2,058, and 11 Cancellations-related cases exceeded the deadline out of 1,296.

Notably, only two Payment Services & E-Money Authorisations & Registrations-related cases missed their deadline out of a possible 65.

Area
Lower Quartile Determination Time (Days)
Median Quartile Determination Time (Days)
Upper Quartile Determination Time (Days)
R1.1a: Approved persons – of which SMCR-related
27
41
63
R1.1ai: Approved Persons – of which AR-related
8
26
59
A1.1: New Firm Authorisations
63
111
199
R5.1 Variations of Permissions
31
67
131
R6.1: Change in Control
24
50
83
A1.2: 3/4MLD
26
46
84
PS1/2/3/4: Payment Services & E-Money Authorisations & Registrations
81
100
111
PS5/6/7/8: Payment Services & E-Money Authorisations & Registrations
62
98
222
PS9: Payment Services Agents
0
0
3
R8.1: Cancellations
3
10
67

In relation to the determination of days taken to authorise, Polymath Consulting Director David Parker tells Payments Intelligence: “What’s interesting is that the average and worst times are not very different, and even the best is not significantly less.

“So now there’s a clear process, and you can tell a company that if they submit a good, complete application worthy of a license, the approval process should take 3 to 6 months. You could argue that the approval rate is low, but that’s a separate issue. The ones the regulator considers good enough are being approved in a reasonable period.”

Thistle Initiatives Head of Payment Services Lorraine Mouat echoes Parker’s thoughts, stating that this “suggests more of a standardised and predictable process.” She claims this would allow firms to anticipate a typical approval time of 3 to 6 months better, but only if the firm submits a well-prepared application.

Implications for businesses

It is clear that firms with well-prepared and complete applications can expect their approval process to take anywhere from three to six months. The data shows that the quickest approvals take around three months. The average wait is around five months, with the longest taking up to six months.

The small difference between the shortest (three months) and longest (six months) means that even for the longest wait times, the process is not significantly longer than the average, ensuring a fair and transparent process. This predictability can help companies better plan their operational timelines and manage expectations regarding the approval of their applications.

The regulator’s Q4 2023-2024 authorisations operating service metrics highlight a solid performance in regulatory efficiency and effectiveness. The high compliance rates across various categories, particularly in Approved Persons and Payment Services & E-Money registrations, demonstrate the regulator’s capacity to handle substantial volumes of applications with minimal delays. Although some areas, like AR-related Approved Persons, show room for improvement, the overall data reflects a competent and robust system.

For businesses, the predictability of the approval timelines—ranging from three to six months for well-prepared applications—provides valuable insights for operational planning.

Thistle Initiatives’ head of payment services, Lorraine Mouat, has praised the performance of the regulator this quarter; however, she maintains there is still work to be done.

She tells Payments Intelligence: “The data suggest that the FCA is operating within the statutory deadlines, indicating strong adherence to regulatory timeframes and efficient processing, which is a positive trend in performance compared to previous quarters.

“However, there appears to be a significant number of applications which were incomplete or of poor quality. This clearly impacts the speed of processing, and I’d therefore encourage firms to ensure they submit comprehensive and complete applications to avoid delays and ensure smoother processing.

Overall, Mouat believes the regulator is performing well regarding meeting deadlines and maintaining its service quality, but she believes “there is room for improvement in the completeness and quality of submissions from firms.”

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