COND 1.3 General

The guidance in COND 2 explains each FCA threshold condition in Schedule 6 (threshold conditions) to the Act and indicates how the FCA will interpret it in practice. This guidance is not, however, exhaustive and is written in very general terms. A firm will need to have regard to the obligation placed upon the FCA under section 55B (The threshold conditions) of the Act; that is, the FCA must ensure that the firm will satisfy, and continue to satisfy, the FCA threshold conditions in relation to each regulated activity for which it has, or will have, permission.

1. (1)

   The FCA will consider whether a firm satisfies, and will continue to satisfy, the FCA threshold conditions in the context of the size, nature, scale and complexity of the business which the firm carries on or will carry on if the relevant application is granted.

2. (2)

   In relation to threshold conditions set out in paragraphs 2D to 2F of Schedule 6 to the Act in respect of firms which are not PRA-authorised persons and paragraphs 3C to 3E of Schedule 6 to the Act in respect of firms which are PRA-authorised persons, the FCA will consider whether a firm is ready, willing and organised to comply, on a continuing basis, with the requirements and standards under the regulatory system which apply to the firm, or will apply to the firm, and for which the FCA is responsible, if it is granted Part 4A permission, or a variation of its permission. These matters will also be considered if the FCA is exercising its own-initiative powers (see COND 1.2.3 G). Guidance to firms on the implications of this is given under each of those threshold conditions.

Although the FCA may consider that a matter is relevant to its assessment of a firm, the fact that a matter is disclosed to the FCA, for example in an application, does not necessarily mean that the firm will fail to satisfy the FCA threshold conditions. The FCA will consider each matter in relation to the regulated activities for which the firm has, or will have, permission, having regard to its statutory objectives. A firm should disclose each relevant matter but, if it is appropriate to do so, it is encouraged to discuss it with the FCA. This will enable the FCA to consider fully how material or significant the matter is and how it affects the ability of the firm to satisfy, and continue to satisfy, the FCA threshold conditions.

In determining the weight to be given to any relevant matter, the FCA will consider its significance in relation to the regulated activities for which the firm has, or will have, permission, in the context of its ability to supervise the firm adequately, having regard to the FCA's statutory objectives. In this context, a series of matters may be significant when taken together, even though each of them in isolation might not give serious cause for concern.

In determining whether the firm will satisfy, and continue to satisfy, the FCA threshold conditions, the FCA will have regard to all relevant matters, whether arising in the United Kingdom or elsewhere.

When assessing the FCA threshold conditions, the FCA may have regard to any person appearing to be, or likely to be, in a relevant relationship with the firm, in accordance with section 55R of the Act (Persons connected with an applicant). For example, a firm's controllers, its directors or partners, other persons with close links to the firm (see COND 2.3), and other persons that exert influence on the firm which might pose a risk to the firm's satisfaction of the FCA threshold conditions, would be in a relevant relationship with the firm.

In making its assessment, the FCA will consider the individual circumstances of each firm on a case-by-case basis.

Notes on the contents of a business plan are given in the business plan section of the application pack for Part 4A permission on the FCA's website.

1. (1)

   For ease of reference, the FCA threshold conditions in or under Schedule 6 to the Act have been quoted in full in COND 2.

2. (1A)

   Paragraphs 2A and 3A of Schedule 6 of the Act have not been quoted. These set out the application of the FCA threshold conditions to firms which do not carry on, or are not seeking to carry on, a PRA regulated activity and firms which carry on, or are seeking to carry on, a PRA regulated activity respectively. This application is summarised in COND 1.1A.

3. (2)

   As the FCA threshold conditions impose obligations, they are printed in bold type. The use of bold type is not intended to indicate that these quotations are rules made by the FCA.

4. (3)

   [deleted]

5. (4)

   Paragraph 1A of Schedule 6 of the Act sets out interpretative provisions that apply to the threshold conditions. These are repeated in COND 1.3.5 G below for ease of reference.