Delays in processing new licenses to operate financial services businesses in the United Kingdom have surfaced, as the Financial Conduct Authority (FCA) has doubled the length of time it takes to obtain a license in the last two years.
According to a report by the Financial Times, companies which provide financial services and wish to expand into new areas have experienced delays which have increased twofold since the FCA was established in 2013, taking over from the long-established Financial Services Authority (FSA) after 27 years.
Within that report, recent data stated that the FCA took took an average of 18.5 weeks in the last quarter of 2014 to grant permission to companies to launch new business lines, compared with an average of just 10 weeks at the beginning of 2013.
Whilst it is worthy of note that applying for a new FCA license for an FX brokerage can take up to 15 months, depending on the requirements of the broker and the assessment by the regulator, but the average time is 18.5 weeks, representing almost double that of two years ago, when the FSA which oversaw the entire financial markets industry in the UK was discontinued and divided into two new authorities, the Prudential Regulation Authority which is responsible for banks, and the FCA which is responsible for regulating the non-bank financial sector.
Last year, LeapRate reported that the Australian Securities and Investments Commission (ASIC) had begun to delay the processing of applications for new AFS licenses to operate in Australia, specifically delaying applications made by retail FX firms, whilst other financial services businesses were able to obtain licenses quickly.
Following that particular report by LeapRate, it emerged that ASIC had begun to take an extremely conservative view with regard to margin FX activity being offered to retail clients in Australia, a matter that the regulator subsequently made clear in its enforcement reports, and in its issuing of methodologies which clamp down on how firms offer margin FX to retail customers.
The FCA is clearly taking a cautious approach toward approving firms and individuals across the entire financial sector, an attribute of which the Financial Times report considers the post-financial crisis landscape, and various scandals that questioned regulatory decision-making, such as the FSA’s 2010 rubber-stamp of the Co-operative Bank’s appointment of Paul Flowers as chairman as two factors.
Mr Flowers, a former Methodist minister, was charged with drugs offences in 2014 and received a fine, while the bank he used to chair almost collapsed because of a £1.5bn hole in its balance sheet.
A further matter of concern for the FCA is that in today’s electronic and highly technologically advanced financial markets industry, unscrupulous companies could defraud vulnerable senior citizens out of their life savings, with the regualtor’s chief executive, Martin Wheatley, flagging pension reform as an area that the regulator will be making a priority during the next year.