From 1 June 2021 the FCA will no longer be accepting Change of Legal Status applications. Going forward, if firms are thinking of changing their legal status, they will need to submit a New Authorisation application or, depending on the legal structure of the previous entity and the new entity, a SUP 15 notification.
When submitting an application for the new legal entity, a signed declaration (by way of a Deed Poll document) will be required accepting the rights and obligations of the regulated activities carried on by the previous entity. Once the new firm has been authorised, the previous firm will need to submit a cancellation or permissions application. In setting out its reasons for the change in approach the FCA has stated that a review of how it assesses firms changing their legal status showed it is faster and more efficient for firms to submit new applications through the Connect system.
The FCA says it found that where firms were required to submit a change in legal status application these were often incomplete, causing delays in the assessment process. By making these changes, the Regulator’s intention is to improve the process for firms changing their legal status, minimising any delays to the assessment process. With regard to the treatment of a firm’s customers, if a firm that will require a new authorisation has any ongoing contractual agreements with its customers it must contact them and agree either to amend their existing contracts or to agree new contracts to take into account the change in the firm’s legal entity.
Otherwise firms should let their customers know about the change in the legal entity as and when they next deal with them. The FCA has produced a useful table on its website outlining the circumstances where different types of firms would need to make a new authorisation application or make a SUP15 notification.