The Financial Conduct Authority has issued details of the application process to be followed by funeral plan providers and intermediaries who are intending to apply for authorisation.
The key date is July 29 2022, when the FCA assumes responsibility for regulating the sector. Providers will need to have made a successful authorisation application by this time if they wish to continue trading, while intermediaries will have the option of applying for full authorisation or becoming an appointed representative. An appointed representative is a person or firm that is not directly authorised by the FCA, but which is supervised by another firm which does hold this authorisation.
Applications must be made via the FCA’s online Connect system. These applications can be submitted from September 1 onwards and firms are advised to submit their applications as soon as possible after this time, to ensure that the FCA has time to review their application and make a final decision prior to July 29 next year. The application process can take six months, or even longer in some cases, especially where the FCA requires more information.
Prospective applicant firms are asked to familiarise themselves with the format of the application form, and with the information the FCA is likely to require. The regulator will expect to see evidence that the firm has systems in place to meet its standards, and that the firm can satisfy the Threshold Conditions – a series of basic requirements that all authorised firms from all sectors must meet. These are:
- The firm’s head office should be located in the UK
- The firm must be capable of being effectively supervised by the FCA
- The firm must have sufficient financial and non-financial resources
- The firm must be fit and proper
- The firm must have an appropriate business model
The FCA stresses that it won’t be sufficient for an application to explain how the firm will make changes to ensure it is compliant by July 2022. Instead, firms will need to have arrangements in place to ensure they comply with FCA obligations at the time they submit the application.
Any firm in the funeral plan sector that has not obtained FCA authorisation by July 29 2022 will need to cease trading until such time as an application has been approved.
Any firm from the sector which intends to exit the market rather than proceed to FCA regulation is asked to let the FCA know.