For TP firms that hold or receive client assets, there will be some new rules. These will be set out in a new chapter 14 of the client assets sourcebook (CASS). The FCA is not applying all of the rules in CASS to TP firms, instead it is introducing certain reporting and disclosure requirements. In particular, the FCA is proposing to require TP firms to report to it their client assets arrangements. The frequency of reporting will depend on the TP firm’s business type and size of client assets holdings.TP firms will report to the FCA at the same frequencies and within the same submission deadlines for FCA authorised firms. The reporting period will start from April 1, 2019.
The FCA has also commented on the application of the senior managers and certification regime (SM&CR) to TP firms. For dual regulated EEA branch firms, the FCA will maintain its current SM&CR requirements as they apply to EEA branch firms throughout a TP firm’s time in the TPR. The SM&CR requirements as they apply to third country firms will be turned on once the TP firm has been fully authorised as a third country branch. For solo regulated firms, the approved persons regime as it applies to EEA branch firms before Brexit day will apply to TP firms. When the SM&CR is rolled out to solo regulated firms at the end of next year the existing approved persons regime functions will be converted into SM&CR functions for EEA branch firms. Once a solo regulated TP firm becomes fully authorised the third country branch requirements of the SM&CR apply.
In terms of services firms, the FCA notes that the SM&CR and the approved persons regime does not apply and does not propose to change this when these firms move to the TPR. However, where the services firm opts to establish a third country branch or subsidiary, the applicable SM&CR requirements will apply.