The FCA have today (14th June 2021) published an update to their webpage giving further insight into the process which Pre-paid funeral plan providers can expect when applying for authorisation.
The FCA will take responsibility for regulating the pre-paid funeral plan market on 29th of July 2022. Firms that wish to continue offering pre-paid funeral plans must be authorised by this date to continue providing their products and services.
Firms can apply from 1st of September 2021 via the FCA’s connect portal by submitting the application form and supporting documentation.
Upon submitting an application, the FCA will first seek to establish that the applicant firm meets the minimum requirement know as the Threshold Conditions.
The FCA’s Threshold Conditions are as follows;
- location of offices (i.e. a firm’s ‘mind and management’ must be domiciled in the UK),
- effective supervision (i.e. a firm’s corporate structure and record keeping systems must enable the FCA to effectively supervise the conduct of the proposed regulated activities),
- appropriate resources (i.e. a firm must have appropriate financial and non-financial resources),
- suitability (i.e. the individuals that will have significant influence within the applicant firm must be fit and proper) and,
- business model (i.e. the firm must demonstrate that it has a suitable and credible business strategy).
To enable the FCA to appropriately assess whether an applicant firm satisfies the Threshold Conditions, firms must provide the FCA with documentation to evidence its proposed business processes and to demonstrate that it will have appropriate systems and controls to satisfy and, once authorised, continue to satisfy the Threshold Conditions. For pre-paid funeral plan firms, the FCA will seek to inspect documents including but not limited to;
- Regulatory Business Plan setting out the applicant firm’s business strategy;
- Risk Register setting out the firm’s risk assessment to identify, measure, control and monitor risks of regulatory concern;
- Compliance Monitoring Programme setting out the firm’s proposed annual internal audit schedule;
- Governance Framework setting out the firm’s proposed human resources, senior management responsibilities and reporting lines relating to the proposed consumer hire offering;
- Senior Managers & Certification Regime related documents (i.e. Competency Assessment, Skills Gap Analysis, Induction Programme and a Training and Development Plan).
- Vulnerable Customers Policy setting out the firm’s arrangements for the identification and management of vulnerable customers in the context of its proposed consumer hire offering;
- Complaints Handling Policy and Procedure setting out the firm’s processes to reasonably and promptly handle complaints;
- Business Continuity Plan setting out the firm’s arrangements to ensure business continuity in the face of unforeseen interruptions, and;
- Financial Promotions Review Checklist to demonstrate the tool that the firm will use to review financial promotions and consumer communications against the FCA’s requirements prior to publication.
These documents must be reflective of the applicant firm’s specific business processes (as opposed to templates that may be removed from business practices).
The FCA have stated that if information that is submitted is substantively changed after a firm has submitted its application, the regulator will take this as an indication that the applicant firm are not ready, willing and organised. This may lead to the FCA suggesting the applicant firm withdraw the application and re-apply. While this will gives an opportunity to address any issues raised, it may mean the firm will not be authorised by 29 July 2022.
If a firm isn’t authorised by 29 July 2022, they will have to stop selling and administering funeral plans until their application for authorisation is approved.
It is for this reason that we recommend firms begin to prepare their application as soon as possible.