This chapter applies to:

1. (1)

   an applicant for Part IV permission (including an applicant for top-up permission) which has made an application to carry on regulated activities in the United Kingdom; and

2. (2)

   a person for whom an application for approval under section 59 of the Act (Approval for particular arrangements) has been made with an application for Part IV permission (including an application for top-up permission).

AUTH 8 gives applicants an overview of how their applications for Part IV permission and for approval of a candidate under section 59 of the Act will be determined. This overview includes a summary of the decision making procedures which apply to those decisions, within the scope of AUTH, that are subject to a statutory requirement to issue formal notices.

Statutory notices include warning notices and decision notices. If the FSA proposes or decides to take certain action in respect of an application within the scope of AUTH, it is required by the Act to give a warning notice or a decision notice. These statutory notices have specified procedures and specific actions and protections.

This chapter is only a summary and is not part of the FSA's formal statement of procedure under section 395 of the Act (The FSA's procedures). An applicant needing further details of the FSA's procedure should refer to the Decision making manual (DEC).

For guidance on the FSA's procedures before it determines an application, see:

1. (1)

   AUTH 3 (Applications for Part IV permission) for applications for Part IV permission; and

2. (2)

   AUTH 6 (Approved persons) for applications for approval of a candidate under section 59 of the Act, made with an application for Part IV permission.

A decision to determine an application for Part IV permission, or an application for approval under section 59 of the Act, is taken in one of two ways:

1. (1)

   by internal staff procedures involving FSA staff at an appropriate level of seniority, if the decision is to grant the application on the terms applied for (this decision does not involve giving a statutory notice); or

2. (2)

   by the FSA's Regulatory Decisions Committee (RDC), in any other case (this decision does involve the giving of a statutory notice).

The decision on an application will be taken by the RDC where FSA staff have recommended:

1. (1)

   the refusal, or proposed refusal, of:

   1. (a)

      an application for Part IV permission (sections 52(7) and 52(9)(c)) of the Act (Determination of applications)); or

   2. (b)

      an application for approval under section 59 of the Act made with an application for Part IV permission (sections 62(2) and 62(3) of the Act (Applications for approval: procedure and right to refer to the Tribunal)); and

2. (2)

   the grant, or proposed grant, of an application for Part IV permission subject to a limitation or requirement which was not applied for by the applicant or with a narrower description of regulated activity than that to which the application relates (sections 52(6)(a) and 52(9)(a) of the Act).

The FSA Board has given FSA staff the authority to grant applications on the terms applied for. The majority of applications are determined by internal staff procedures.

As part of its application for Part IV permission, an applicant may apply for permission which includes a limitation (for example, a limitation on client categories), or a requirement (for example, a requirement not to hold or control client money). Limitations and requirements may be applied for in the application pack, or in a revision to the application pack submitted by the applicant if, for example, its business plans have changed. In those situations, FSA staff have authority to grant the application, on the terms applied for, using internal staff procedures.

1. (1)

   Internal staff procedures for decisions within the scope of AUTH are intended to ensure that decisions will, so far as possible, be taken by FSA staff with a good knowledge and understanding of:

   1. (a)

      the application concerned; and

   2. (b)

      other relevant factors in the general context of the application.

2. (2)

   They are also designed to ensure that applicants with routine applications obtain a decision as quickly as the nature of their application allows.

1. (1)

   Internal staff procedures provide for relevant aspects of the application to be taken fully into account and require that decisions are taken by FSA staff with appropriate experience. Decisions to grant the majority of applications for approval of a candidate, which are more routine in nature, may be made by a single individual, subject to appropriate oversight.1

2. (2)

   The FSA has established staff committees which may grant an application for Part IV permission, or approval under Part V of the Act, as appropriate. The Authorisation and Approvals Committee will consider an application where, for example, it is complex or sensitive and the recommendation is to refer the application to the RDC to give a warning notice. The chairman of the Authorisation and Approvals Committee is the director responsible for authorisation decisions and its members are senior staff at the FSA.1

The FSA keeps a record of each decision taken by internal staff procedures. This includes the names of the FSA staff taking the decision, the nature of the decision, the date it was taken and the information taken into account in arriving at the decision.

FSA staff are required by their contract of employment to comply with a code of conduct which imposes strict rules to cover the handling of conflicts of interest which may arise from personal interests or associations. FSA staff who are subject to a conflict of interest must declare that interest to the person to whom they are directly responsible for the decision. This individual to whom the conflict of interest is declared will decide whether that conflict precludes the involvement of the FSA staff member in making a decision.

The RDC is appointed by the FSA Board to exercise certain regulatory powers on behalf of the FSA Board. It is fully and directly accountable to the FSA Board for the decisions it makes. The RDC is a body outside the FSA's management structure.

The RDC has a Chairman, one or more Deputy Chairmen, and other members. Other than the Chairman, none of the members of the RDC is an employee of the FSA. Members are:

1. (1)

   current and recently retired practitioners with financial services industry skills and knowledge; and

2. (2)

   other suitable individuals representing the public interest.

For full details of the RDC and its procedures see DEC 4 (The decision maker). All decisions involving giving of statutory notices within the scope of AUTH will be determined by the RDC (see AUTH 8.2.2 G).

FSA staff are responsible for assembling and assessing the information required by the RDC and making recommendations to the RDC. Section 395 of the Act, however, requires the FSA to have procedures under which a decision which gives rise to a statutory notice is "taken by a person not directly involved in establishing the evidence on which that decision is based." So, the RDC is not directly involved in establishing the evidence on which decisions are based.

A statutory notice includes a warning notice (see AUTH 8.3.2 G to AUTH 8.3.5 G) and a decision notice (see AUTH 8.3.8 G to AUTH 8.3.10 G). A final notice will also be given to a person which has received a decision notice (see AUTH 8.3.14 G to AUTH 8.3.16 G). See AUTH 8 Annex 1 G.

A warning notice warns the recipient that the FSA proposes to take certain action and gives an opportunity for representations to be made to the FSA before a decision is made.

FSA staff will review each application that falls within the scope of AUTH. Where they consider that the application should be refused, or should be granted subject to a limitation or a requirement which was not applied for, or with a narrower description of regulated activity than that to which the application relates (see AUTH 8.2.2 G), they will recommend to the RDC that a warning notice be given.

After considering the FSA staff recommendation, the RDC may decide to grant the application on the terms applied for. However, the RDC will decide to give a warning notice to the applicant, or, in the case of applications for approval under section 59 of the Act, to all interested parties, if it proposes that any of the following actions be taken:

1. (1)

   grant an application for Part IV permission either with a limitation or requirement which was not applied for, or with a narrower description of regulated activity than that to which the application relates (see AUTH 3), under section 52(6)(a) of the Act; or

2. (2)

   refuse to grant an application for Part IV permission (see AUTH 3) under section 52(7) of the Act; or

3. (3)

   refuse to grant an application for approval under section 59 of the Act (see AUTH 6) under section 62(2) of the Act.

For full details of warning notices and the warning notice procedure, see DEC 2.2 (Warning notice procedure).

The warning notice will contain a statement that the person concerned is entitled to make representations to the RDC. It will specify a reasonable time period, of not less than 28 business days from receiving the warning notice, within which the person to whom it is given may make representations to the RDC.

The procedures for making representations to the RDC are set out in DEC 4.4 (Representations).

A decision notice states the action the FSA has decided to take. For the purpose of an application within the scope of AUTH, the decision notice represents the FSA's determination of the application.

After considering any written and oral representations, the RDC may decide to grant the application on the terms applied for. However, the RDC will decide to give a decision notice to the persons to whom the warning notice was given if it decides that any of the following actions be taken:

1. (1)

   grant an application for Part IV permission with a limitation or requirement which was not applied for, or with a narrower description of regulated activity than those to which the application relates (see AUTH 3), under section 52(9)(a) of the Act; or

2. (2)

   refuse to grant an application for Part IV permission (see AUTH 3) under section 52(9)(c) of the Act; or

3. (3)

   refuse to grant an application for approval under section 59 of the Act (see AUTH 6) under section 62(3) of the Act.

For full details of final notices and the final notice procedure, see DEC 2.3.10 G to DEC 2.3.11 G

1. (1)

   Any person who receives a decision notice is entitled to refer the FSA's decision to the Tribunal.

2. (2)

   Under section 133(1) of the Act (Proceedings: general provision), any reference must be made within 28 days of the date when the decision notice is given, or within any other period that may be prescribed in the Tribunal rules.

3. (3)

   The Tribunal is appointed by the Lord Chancellor's Department.

A reference to the Tribunal will be a full rehearing and not an appeal. See DEC 5.1 (The Tribunal) for the procedure on referring cases to the Tribunal.

Any party to a reference to the Tribunal may appeal against the Tribunal's decision on a point of law to the Court of Appeal or, in Scotland, to the Court of Session.

The FSA will give a final notice to the person that received a decision notice if the FSA:

1. (1)

   takes the action set out in the decision notice (if a reference to the Tribunal has not been made and the time limit for making references has passed); or

2. (2)

   takes action in accordance with any directions given by the Tribunal or the court under section 137 of the Act (Appeal on a point of law) where the matter was referred to the Tribunal.

The final notice will state the action being taken and the date on which it is to be taken.

For full details of final notices and the final notice procedure, see DEC 2.3.10 G to DEC 2.3.11 G

Details on the publication of decisions are set out in DEC 5.2 (Publication).

In the case of a decision within the scope of AUTH, the FSA's policy is to publish relevant details about the decision. The details may include the identity of the applicant or the name of any person who is the subject of an application such as an application for approval under section 60 of the Act. Other details may include the nature of the application and grounds for the decision. The FSA will seek to publish these details in a way which is fair to the person who is named and which is not prejudicial to the interests of consumers. 1

The FSA's decision making procedures for applications involving warning notices and decision notices