The watchdog said that applications for authorisation or to vary firms’ permissions need to be completed by 3 July to ensure that the FCA can process them in time for the 3 January 2018 deadline.
Mifid II introduces new processes for authorising investment firms. As a result, it will have a significant impact on a range of authorised persons, recognised investment exchanges, and some currently unauthorised businesses.
“Firms who have not already done so should therefore submit applications as a matter of urgency to help us identify as soon as possible what, if any, further information is needed to complete the application,” the FCA said.
Consequences
The regulator warned that there are consequences for firms who undertake regulated activities without the required permissions under the Financial Services and Markets Act 2000 (FSMA); including civil, regulatory and/or criminal prosecution.
The FCA said it receives over 8,500 reports of potential unauthorised business in the UK each year. The majority of which come from consumers and firms.
Unauthorised firms
Businesses and individuals carrying out regulated activities in the UK that are not authorised or exempt are in breach of section 19 of the FSMA, which is a criminal offence.
Additionally, any contracts signed or agreed risk being unenforceable.
The regulator added that firms and individuals breaching section 21 of FSMA in relation to financial promotions are also committing a criminal offence.
Those found breaching sections 19 and 21 can find themselves faced with injunctions and restitution orders.
Acting without the correct permissions
Authorised firms undertaking regulated activities without the appropriate permissions contravene section 20 of FSMA.
The financial watchdog warned that it can impose disciplinary sanctions; including public censure, financial penalties or suspending or restricting a firm’s permissions.
Additional powers include injunctions and restitution orders.
The regulator also said it may take action against individuals where, for example, there has been misconduct by those responsible for a firm’s regulatory compliance.
Mifid II
The Markets in Financial Instruments directive (Mifid) became law in the UK in November 2007 and was designed to encourage competition between Europe’s trading venues.
The objectives of Mifid are to strengthen investor protection, reduce the risks of a disorderly market, reduce systemic risks, and increase the efficiency of financial markets and reduce unnecessary costs for participants.
