COND 1.2 Purpose

COND gives guidance on the threshold conditions. The FCA3 threshold conditions represent the minimum conditions for which the FCA is responsible,3 which a firm is required to satisfy, and continue to satisfy, in order to be given and to retainPart 4A permission. A PRA-authorised person or, as appropriate, a firm seeking to become a PRA-authorised person must also satisfy, and continue to satisfy, the threshold conditions for which the PRA is responsible in order to be given and to retain Part 4A permission (these threshold conditions are not the subject of the guidance in COND).3

1. (1)

   Under section 55B(3) of the Act3, in giving or varying a Part 4A permission,3 imposing or varying any requirement or giving consent3, the FCA3 must ensure that the firm concerned will satisfy, and continue to satisfy, the FCA3 threshold conditions in relation to all of the regulated activities for which it has or will have permission.

2. (2)

   If, however, the applicant for permission is an incoming firm seeking top-up permission, or variation of top-up permission, under Part 4A3 of the Act (Permission to carry on regulated activities), then under paragraphs 6A and 7A3 of Schedule 6 to the Act (Threshold conditions)3, the FCA will have regard only to satisfaction of the FCA3 threshold conditions specified as applicable in COND 1.1A.4 G3, as relevant to the regulated activities for which the applicant has, or will have, Part 4A permission3.

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1. (1)

   If, among other things, a firm is failing to satisfy any of the FCA3 threshold conditions, or is likely to fail to do so, the FCA3 may exercise its own-initiative powers under either section 55J (Variation or cancellation on initiative of regulator) or section 55L (Imposition of requirements by FCA) of the Act3. Use of the FCA's own-initiative powers3 is explained in SUP 7 (Individual requirements), and EG 8 (Variation and cancellation of permission on the FCA's3 own initiative and intervention against incoming firms)1.

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2. (2)

   If, when exercising its own-initiative powers3 under section 55J or section 55L3 of the Act, the FCA3 varies a firm's permission, or imposes or varies a requirement, then, under section 55B(3)3 of the Act, the FCA3 must ensure that the firm concerned will satisfy, and continue to satisfy, the FCA3 threshold conditions in relation to all of the relevant3 regulated activities for which it has or will have permission. However, section 55B(4)3 of the Act states that the duty imposed by section 55B(3)3 of the Act does not prevent the FCA3 taking such steps as it considers necessary in relation to a particular firm in order to advance any of its operational objectives.3

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3. (3)

   The FCA3 can also exercise its own-initiative powers3 under section 55J or section 55L3 of the Act in relation to the top-up permission of an incoming firm. But this is only on the grounds that the incoming firm is failing, or likely to fail, to satisfy the FCA3 threshold conditions specified as applying to incoming firms under COND 1.1A.4 G.3

1. (1)

   Under section 185 of the Act (Assessment: general) the FCA may, subject to consultation with the PRA where the conditions in section 187B of the Act are satisfied, object to an acquisition of an FCA-authorised person if there are reasonable grounds to do so on the basis of the matters set out in section 186 of the Act (Assessment: criteria) or if the information provided by the section 178 notice giver is incomplete. Section 186(d) of the Act (Assessment: criteria) specifies one such criteria as whether an FCA-authorised person will be able to comply with its prudential requirements (including the threshold conditions in relation to all of the regulated activities for which it has, or will have, permission.)

2. (2)

   Under section 191A of the Act (Objection to control), subject to consultation with the PRA in the circumstances specified in that provision, the FCA may object to a person's existing control of an FCA-authorised person on the grounds specified under section 186 of the Act.