Establishing a family office in the UK for an overseas family

Running a UK family office has unique issues, says Irwin Mitchell Private Wealth’s Alex Ruffel

Authorisation: If your family office platform falls within the scope of regulation and needs authorisation to perform its intended functions, it would need to apply to the UK regulator and receive approval prior to carrying out any of these activities. As with any regulated system, there will need to be certain disclosures and availability of resources before a licence is granted and it usually takes 4-6 weeks to prepare an application. Once completed, the regulator has six months to determine the application.

The authorisation itself process is ‘front loaded’, such that an applicant for a licence needs to be able to demonstrate it has the resources to comply with the rules at the point authorisation is given. There are three general phases which you will need to go through in order to achieve authorisation and these are listed below.

Phase 1 – Preliminary assessment

You will first need to establish what the family office wants to achieve and identify which regulatory category it will fall into. This will allow you to determine which permissions and authorisation you require and therefore which applications should be made. It will also assist you in establishing the capital, staffing and general conduct of the business, for example, whether the family office wants to merely transmit orders, give advice investment advice, exercise discretion and/or provide custodian services.
It will also need to be assessed who is in “control” of the family office, as the regulator will require further information about the parties who ultimately own or control the family office.

Phase 2 – Application to the regulator

This stage includes the preparation of an application and will involve completing forms and submitting documents/information such as a business plan, balance sheet and further regulatory information, such as capital.
Before granting a licence, the regulator will want to see that certain requirements are satisfied and that internal compliance policies and procedures are also in place.

Phase 3 – Implication Post-Authorisation

Once authorisation has been granted, you will be able to operate within the scope of regulation but you will need to ensure that you maintain regular checks and balances to ensure compliance with a number of rules and requirements.

Tags: Alex Ruffel | Family Office | Irwin Mitchell