Financial businesses and service providers often perceive the UK as a target location. That may be to open a flagship office or branch, leverage opportunities to raise capital, expand their presence among affluent demographics, or align with commercial strategies that focus on London as a global hub of commerce and finance.
One of the many challenges which affect businesses transitioning or extending their operations to the UK is the complex regulatory frameworks that exist. Even established, experienced directors and owners may find themselves with significant liabilities if they inadvertently breach the guidelines.
Thornbridge Investment Management, specialists in regulatory hosting and hosted fund management, explore some of the prevalent issues and risks of planning an expansion into the UK without support.
A Broad Strokes Overview of the Financial Services Regulatory System in Britain
Thornbridge is approached by a wide spectrum of businesses that require help offering regulated services. Firms considering operations in the UK need to be aware that activity that is not deemed regulated in other jurisdictions may fall under UK regulation. Thornbridge can review and evaluate potential ‘grey areas’ and clarify where FCA approval might be required.
British regulations are among the most stringent internationally, with the FCA collecting £176 million in fines last year alone. The regulator is known for its robust approach to investigatory and audit procedures.
Registration is mandatory, and offering regulated services without a licence can potentially have serious repercussions and sanctions. These include fines and the discontinuation of a service or business.
First Steps for Financial Services Companies Working Toward FCA Approval
Companies planning to apply for FCA authorisation need to find the support to better understand and familiarise themselves with the UK regulatory landscape and build their knowledge of the processes and requirements.
Eligibility requirements for FCA registration are rigorous, as are the processes used by us as regulatory hosts. Regulatory hosting offers access to expertise, advisory assistance, and support while developing infrastructure, reporting procedures, and business planning.
Working toward FCA registration with input from an established regulatory host may also prove advantageous for professionals and smaller firms that require a transition period. They will likely benefit from independent assistance to ensure they are well-versed in the requirements.
For example, they may need to prepare business plans and strategies, collate forecasts for the next three years, and compile information about the certifications and qualifications of senior management while having ongoing support to ensure they move forward strategically, cost-efficiently and in a compliant way.
Additional Risk Factors for Companies Establishing a UK Base Without Professional Support
FCA registration is only one of the stepping stones that might be relevant when setting up a firm, base, or office in the UK. Any company in any sector must ensure it is well-versed in the reporting and disclosure requirements, tax filing systems and the duties and responsibilities directors commit to when they accept an appointment.
British companies must, for example, file financial statements within nine months of each year-end, or within six months if the company is listed, and ensure that reporting aligns with International Financial Reporting Standards (IFRS) or UK Generally Accepted Accounting Principles (GAAP) guidelines, alongside the requirements set by the Companies Act 2006.
In contrast with many overseas locations, corporate filings are publicly available in the UK, which means late submissions can cause reputational damage, fines, and penalties. Larger businesses carry an additional obligation to conduct independent audits to analyse the accuracy of their reporting.
Directors of UK-registered businesses are personally obligated to comply with corporate governance and compliance rules, from filing annual confirmation statements, reporting changes in share capital or directorships, and adhering to the UK Corporate Governance Code for listed companies.
Why Professional Regulatory Hosting May Be a Good Fit for Firms Extending Regulated Services Into the UK
As we’ve outlined, the risks of pursuing an expansion into the UK without considering the timings, complexity and rigors of the FCA registration process is unwise and might become expensive.
The complexity of the necessary processes and challenges related to timing them efficiently make regulatory hosting a good option for some businesses. A host can help achieve a shorter, slicker process.
Becoming an appointed representative is a good option, which enables ambitious, smaller or multi-national businesses to partner with an established host that offers tailored and compliant solutions. Thornbridge’s solution-oriented approach can enable activities to move ahead swiftly.
Understanding the Advantages of Regulatory Hosting Support
Regulatory hosting, which can work hand in hand with hosted fund management, acts as an outsourced solution from our well-connected London team. We operate in a candid, direct and compliance-focused way to ensure our clients achieve their commercial objectives, with full adherence to all applicable rules and regulations.
Further information about Thornbridge Investment Management, its experienced team, outsourced solutions, international network and business partners is available through our website. There is also an informative News and Insights library and, for existing clients, access to our Portal.
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About Thornbridge Investment Management
We offer hosted fund management & regulatory hosting to appointed representatives. Based in the City of London, we provide outsourced solutions to investment firms and individuals under our regulatory umbrella. Our areas of focus are fund advisory, investment advisory and distribution. Thornbridge is authorised and regulated by the Financial Conduct Authority (FRN: 713859).
Published by: Steve OBrien