FSA justifies five-month wait for companies seeking authorisation
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The Financial Services Authority has defended the length of time it takes to authorise firms, after it was revealed last week that the process takes an average of five months.
Research by law firm Reynolds Porter Chamberlain shows the average number of weeks it takes for the regulator to decide whether or not to authorise a company to do financial services work jumped 71% last year from 11.4 in Q1 2009 to 19.5 in Q1 2010.
Before the credit crunch began firms only had to wait an average of 7.5 weeks in Q1 2007.
But a spokeswoman for the FSA says it has increased the intensity with which it scrutinises applications and has publicised its approach extensively.
She adds: “Authorisation time-scales are also driven by other factors including the complexity of the business, the number of individuals needing approval and the accuracy with which firms complete their applications.”
She says it aims to complete authorisations within six months of receiving accurately completed applications and 12 months for incomplete applications.
Jonathan Davies, regulatory partner at RPC, says: “Delays in authorising new entrants damage consumers by reducing competition and they also harm the country’s international competitiveness.”
Davies says that after the collapse of Northern Rock it was understood that the FSA might want to exercise more due diligence but it seems absurd that the time taken for authorisation is still rising more than three years later.
He adds: “Delays prevent financial services firms from starting up, depriving them of revenue and the public of services.”
RPC points out that some businesses could be waiting longer than 19.5 weeks because that figure is just an average.
Davies says: “Some decisions might be breaching the maximum six-month statutory limit.”
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