London Feb 25 (IFR) - London-based investment banks are
growing increasingly concerned that a split of the Financial
Services Authority in April will delay approvals for
senior-level employees, with two rubber stamps becoming
necessary instead of one.
Some have already begun to press their case to the FSA -
which will be split into the Prudential Regulatory Authority and
Financial Conduct Authority in just a few weeks' time - amid
concerns that improvements in the time taken to get approval
over recent years may now be reversed.
All banks in the UK currently have to obtain approval from
the FSA when appointing someone for what are termed controlled
functions. After the split, they will apply through one of the
institutions depending on the position, but will then need
approval from the other body.
FSA figures show that between April and December of last
year, some 91% of the 15,487 applications received were
processed within five to ten days, with 1,422 cases taking up to
The numbers represent a gradual improvement over the last
two years (see chart), which has seen a steady decline in the
number of applications taking longer than 10 days - something
aided by a drop in the number of applications from 47,305 a few
Ronit Wolfson, a spokesperson at the FSA, told IFR that the
process would effectively be the same after the split, and that
banks should not expect more complications. Nonetheless, banks
and their lawyers who sometimes represent individuals in the
approval process are nervous.
"It's too early to say, because the split has not happened
yet," said a lawyer in London who represents several financial
institutions. "But there is an expectation that things might get
interesting in the new regime where they might pull in different
"It has become more complicated because they will have an
internal process for approving from both sides," he said. "It
already can take up to three months, which in theory is their
Bankers describe a process that has nearly gone full circle.
Many said it used to be a "rubber-stamp joke" which became much
tougher after the collapse of Northern Rock. That remained the
case until about two years ago, when the FSA refocused its
attention on prosecutions, fines and the Libor scandal.
FSA chief executive Hector Sants said last year only in
extreme cases would it interview non-executive directors for
approval. According to an earlier report in the Financial Times,
standards do seem to have become relaxed. In 2010, 7.3% of
so-called significant influence function applications were sent
back for review. That has since declined to 4.6% in 2011 and
2.3% last year.
In October, the FSA released a 183-page document detailing
how the system would work under the new regime. The report
stated that it wanted a more fluid procedure and went into
extensive detail on which functions each regulator would have.
However, it acknowledged that there were certain circumstances
that could be more complicated, such as when a SIF position had
responsibilities that were regulated by both bodies.
"The truth is we don't know how it will work until it
happens," said the country head of a European bank based in
London. "I think that they have recognised that their resources
are put to better use on other matters, but we worry that this
might become a new distraction."