Here is how to prepare for your FCA Authorisation interview.
Not every application for authorisation gets a meeting with the FCA, but if they do then it’s useful to know what to expect. This article explains how to prepare in order to make the best impression and show the FCA that you are ready to operate as a regulated firm.
Know Who Needs To Be There
Normally the FCA meeting will include the SMF persons listed on the FCA application form. If for example you have listed someone as SMF3 then they will be expected to attend and provide detailed explanations of the executive direction of the regulated activities for which that person is responsible. If you have listed someone as SMF16 then they will be expected to provide detailed explanations of the compliance arrangements for the regulated activities for which that person is responsible.
Reread Your Own Application Properly
Bring a copy of your application and business plan. Re-read the application and ensure that you are able to provide further explanation of the information included within it. You will often be asked to refer to specific figures, statements and proposals within the business plan. Be able to explain the basis upon which you arrived at a particular figure (e.g. 500 customers by the end of year one) and how you will address any problems which may arise and go against your proposals.
Be Ready To Talk Customers, Not Just Policy
A firm’s customer treatment policy is not sufficient to demonstrate an understanding of the required treatment of customers. The applicants must be able to provide examples of how complaints by customers would be handled and how requests for repaid amounts would be dealt with. The firm’s proposed business activities must be discussed in terms of the applicants’ proposals for dealing with customers who are having problems with repayments. The applicants must provide examples of how staff would handle such problems on an average Tuesday.
Know Your Numbers Month By Month
Even if you know the Capital Requirements for Day 1, understanding how your financial resources will hold up over the following 12 months will also be scrutinised. How will you cope if a key contract is late by 2 months? What if your first quarter’s income is half of what you’ve forecasted. Don’t rely on a spreadsheet that only works if everything has gone according to plan. Walk the interviewer through your worst month.
Understand Your Systems And Controls Cold
Be able to describe your Systems & Controls in full detail. In the vast majority of cases, ‘someone will check that’ is not a sufficient answer to questions about them. You need to be able to demonstrate your Systems & Controls in full detail to give confidence to the interviewer that your business is suitable for authorization.
Practise Explaining What Happens When Something Goes Wrong
Make sure you can describe what will happen after your compliance monitoring has identified a problem. Use an example of a monitoring check discovering that a customer file is missing a required disclosure. Explain who will be told and how quickly, and describe the resulting changes.
Think Through A Few Stress Scenarios
This is not an exam. As long as you have given some thought to 2 or 3 scenarios which might occur in your business, are realistic and could happen within the next few months, then you are ready. Rehearse these scenarios and the responses that you would make. Even very simple answers to a scenario are far better than no answer at all, and certainly better than just sounding confident.
Remember What The Interview Is Checking
The whole process of FCA authorisation is a test to see whether someone who is seeking authorization actually understands what running a regulated business entails. The FCA’s interview with the senior management is a test to see whether they have described the business in the application form correctly and that the people listed as SMF holders understand what is expected of them in practice. If the application form has been written by someone else and the senior management appointed as SMF holders later, this will become apparent very quickly in the interview.
Be able to describe your business better than the application form. If you are able to clearly and confidently describe your business in the interview, then it will become a conversation rather than an examination.
