Overseas P2P platforms will need a UK office
Peer-to-peer lending platforms from overseas will need a place of business in the UK if they wish to operate here.
In its publication into how international companies can operate in the UK, the Financial Conduct Authority (FCA) said that it expects firms seeking authorisation to have an active place of business in the UK to enable the regulator to effectively supervise its UK activities.
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The City regulator cited three potential ways that international firms can create different risk or harm.
The FCA said there’s the potential for retail harm because protection for retail customers, through redress and supervisory oversight, could be less effective and that there could be harm to clients’ assets with UK rules protecting their money and assets in the UK office.
Also, the regulator said there’s the potential for wholesale harm as shocks or risks that originate from the international firm’s overseas offices could, in some circumstances, be more difficult to detect or prevent and could be passed easily to its UK office.
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The FCA said international firms planning to serve retail customers will need to demonstrate that they adequately mitigate the risk of retail harm and international firms planning to safeguard client assets will need to show that they can adequately mitigate the risk of client assets harm.
The regulator said that international firms planning to provide wholesale financial services will need to show that they adequately mitigate the risk of wholesale harm.
For most firms, this risk will be small, as they are unlikely to have the scale or scope to have an impact on wider market integrity, the FCA added.
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“Our approach to authorising international firms, including EEA firms currently in the Temporary Permissions Regime, is to mitigate the risks of harm to UK customers and ensure market integrity,” said Nausicaa Delfas, executive director of international at the FCA.
“Any firm intending to apply for FCA authorisation, should take note of our expectations set out in the approach document and be ready to meet our standards.”