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Update on FCA Authorisations operating service metrics

FCA
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In October 2022 the Financial Conduct Authority published an update on their operating service metrics for authorisations timelines, which included a view of operating service metrics for the period April to September 2022.

The latest metrics, now showing April to September 2022 as 2 separate quarters (Q1 and Q2) and including performance for October to December 2022 (Q3) and January/February 2023. The FCA are no longer reporting on the voluntary metrics for Approved Persons Status or Payment Services Agent notifications. As they said in the October 2022 update, these targets are no longer appropriate due to the additional checks at the gateway.

For 2021/22 there were 8 Green metrics, 5 Amber and 6 Red. In January/February 2023 12 were Green, 5 Amber and 2 Red. The FCA expect to see further improvement and to be substantially meeting the targets by the end of March 2023. (For metrics without cases in January or February 2023 they have used the most recent period with cases as the reference).

As reported in October 2022, the FCA are continuing with their programme of investment in Authorisations. They have now recruited 125 additional permanent colleagues (vs 95 in October). From their peak at 12,500 in December 2021, caseloads have now fallen by almost 60% to 5,500 and are approaching more sustainable levels. The FCA’s enhanced triage processes are reducing the time it takes to allocate a case to a case officer and allowing them to determine straightforward cases quicker. They are improving their communications with applicants, and will further enhance this as their newly recruited colleagues gain experience. 

Service metrics are a lagging indicator and so take time to show decisive improvement. As performance improves and the FCA make determinations on previously aged cases this impacts the current reporting period. They continue to apply increased scrutiny at the gateway, including a holistic assessment of firms’ business models. In 2022/23 the number of firms not authorised continues to be 1 in 5, up from 1 in 14 in 2020/21. In some sectors the number not authorised is considerably higher.

The areas not meeting target in January/February 2023 were:

  • Approved Persons (Amber in January/February 2023 but significantly improved compared to 2021/22)
  • Change in Control applications (now very close to target, 99.1% in January/February 2023. The FCA have significantly reduced the time to allocate Change in Control notifications. They now allocate and begin work on Change in Control notifications within 3 days of receipt on average and expect to be allocating within 24 hours by the end of March 2023)
  • New Firm Authorisations (the FCA expect to meet this metric by the end of March 2023, except for regulatory reasons as explained below)
  • Payment Services and E-Money authorisations, registrations and notifications (where the FCA are seeing incomplete and poor-quality applications)

As noted in the October 2022 update, the increasing complexity of some cases means that the FCA will not always meet the target. In these cases, additional time is needed for greater scrutiny or engagement for good reasons, for example where required to meet their objectives effectively. Also, decisions are sometimes delayed at the request of the applicant.

The FCA still see incomplete and poor-quality applications. This remains a particular issue for Money Laundering Registrations, Payments Services Regulations and Electronic Money Regulations applications. To improve the quality of applications they have issued more detailed guidance on their website for cryptoasset businesses and mortgage intermediaries. The FCA will continue to enhance the guidance to firms in other areas. They are also testing a new digitised form for approved persons applications which if successful will be made publicly available in the summer.

The FCA have proposed that from Q4 2023 they will report operating service metrics performance quarterly and will include more detailed reporting on the time taken to process applications.

 

Source: FCA

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