FCA/APCC liaison meeting 16 January

Agenda 2 Review of APCC/FCA charter Crowdfunding update Permissions KPIs Review feedback from APCC September forums and progress to date Resourcing update AIFMD update Consumer Credit update

Review of APCC/FCA charter Some key differences: –Consultants/applicants to submit full, complete applications wherever possible –Applications will be prioritised based on quality and complexity (therefore not necessarily in date order) –Initial reviews will be completed within 24 hours of allocation wherever possible –If the case is incomplete, applicants will be informed why –Applicants will be informed as soon as applications are considered complete –We will aim to progress non-complex applications to subject to status within four weeks –Case officers will provide regular updates, and no later than every two weeks –We will be more transparent about the time taken to progress cases 3

Crowdfunding update Outcomes from HMT cross-industry meeting on Crowdfunding FCA consultation Closed 19 December Any further feedback from APCC members? General consensus from the industry on proposals Some concerns about intensity of authorisation process Feedback statement expected February) 4

Permissions KPIs Authorisations have issued performance against our statutory and voluntary service standards on our website on a quarterly basis for a number of years. In the spirit of becoming a more transparent and responsive regulator we have considered how we could change our published KPI data. Our aim is -To be clearer about how we are performing -Give better comparative data as to how our performance changes over time -Give some commentary as to the drivers of change -Better manage the expectations of applicants 5

Permissions KPIs: key stats As of December 2013 the average time to determination was: - Retail : 11.5 weeks for new firm authorisations, and 8 weeks for VoPs; - Wholesale : 25 weeks for new firm authorisations, and 15.5 weeks for VoPs; - Authorised Payment Institutions: 23.5 weeks for new firm authorisations; - Small Payment Institutions: 12.5 weeks for new firm registrations. The % of cases withdrawn is c10% for new FSMA authorisations and VoP applications, rising to c30% for non- FSMA authorisations/registrations. 6

Feedback from APCC September forums and progress to date Quick wins (now): –Process for lower risk (AR to directly authorised) now implemented –Process for lower risk VoPs fully implemented; also being extended to wholesale (strategy to be agreed) –General web pages soon to be updated with further guidance for firms on what information must be provided/common issues –Case officers are aware that regular, verbal communication is a minimum standard; we will continue to encourage this –Continuously challenging case officers to conduct full initial reviews focusing only on key risks –Specific training on wholesale and general insurance provided (by APCC members) –General reinforcement of minimum standards/agreed APCC charter 7

Feedback from APCC September forums and progress to date cont… Medium term (3-9 months): –More initial meetings/conversations should take place where appropriate –More conversations should be taking place (rather than comms) –Ongoing consistency discussions within teams –More sector specific guidance proposed for website –Guidance on making cases complete re-issued to case officers –Training on general insurance and wholesale firms provided by APCC members –Fees moving to monthly from April

Resourcing update We are adequately resourced in the Retail team However, we continue to face resourcing pressure, not least from increasing complexity of applications and volumes (AIFMD and VoPs) This is being felt most acutely in the Wholesale team and is caused by the ongoing pressure from AIFMD implementation. We have appointed a number of new individuals to the Wholesale team, but expect to see further challenges in 2014 We also have a number of strategic internal projects requiring significant business input We expect to benefit from efficiencies gained from INTACT by the end of the year in relation to VoPs and Cancellations. 9

AIFMD: operational update As at 13 January approximately half of the 250 applications received across all types had been allocated to a case officer. Significant additional resources brought onboard in early January. Allocation of applications received pre-Christmas will increase significantly over the next few weeks. We are prioritising the allocation of depositaries and full scope new applications. Within these groupings allocation is in date order but this will change as our Expert Triage function embeds (e.g. incomplete applications will not be allocated to a case officer in due course). We are currently allocating Full scope VoPs received in November, Full scope new auths received in November, Small authorised received in October, and Depositaries within two weeks of receipt. We continue to receive a steady stream of applications, including over the Christmas period. There have been no breaches of statutory deadlines. 36 applications have been determined including one depositary. 10

AIFMD: HMT transitionals Just before Christmas HMT announced their intention to amend the transitional arrangements. We do not know what these will be, but: Firms are still expected to be fully compliant with the Directive on 22 July, irrespective of when their application has been submitted. There is a risk that those wishing to passport will not be able to do so until fully authorised. Therefore, we encourage firms not to delay submission of their application. 11

AIFMD: key messages On 11 October we announced that where a full-scope AIFM application requests authorisation date more than three months after the date it intends to submit a complete application (six months for other application types), it is possible to request a deferral of determination beyond the normal three month (six months for other application types) statutory time limit, to 22 July at the latest. We hope that this encourages applications well in advance of 22 July If an application is incomplete there is no defined period within which we have to consider. A deferral cannot be considered until its complete because we cannot make a determination on an incomplete application 12

AIFMD: key messages The FCA will do all it can to determine complete applications as quickly as possible and within the relevant statutory deadline. 22 January deadline is indicative. We would prefer to receive higher quality applications that are a little bit ‘late’ than poorer quality applications. We have received the majority of the depositary applications we were expecting and have been progressing them as a matter of priority (hence much slower allocation of other application types pre-Christmas). However informal feedback from the largest depositaries indicates that some of them will ‘close their doors’ to accepting new AIFMs in Spring 2014 (to allow for systems changes or when they have reached their desired capacity). 13

Consumer Credit update -Consumer Credit project remains on track to deliver Consumer Credit Authorisations into FCA from OFT. -Current focus on recruitment and onboarding of staff which is on track -Very positive uptake of applicants for Interim Permission following our introduction of a discount rate for earlier applications. -CCP is our first introduction to the Salesforce platform which INTACT will be based upon for FSMA applications. This has been very successful. 14