FSA has published its consultation on how it will regulate reclaim funds assuming Treasury’s proposals discussed above go through. It plans a proportionate regime based on prudential regulation. The consultation looks at:
- the application process: this will be based on the banking application pack as FSA does not think it cost effective to develop a bespoke one for reclaim funds;
- prudential regulation: FSA plans to do this by implementing an "OIVOP" to vary the permission of a fund as it is authorised, so it can regulate the fund by means of requirements placed on its permission. In theory, authorised firms may apply to vary their permission to include reclaim fund activities, but FSA thinks this is unlikely;
- fees: FSA plans a £25,000 application fee and a £6,000 periodic fee; and
- application of FSA rules: in particular, the consultation covers SYSC requirements, rules on prevention of financial crime and the approved persons regime as well as specific conduct of business issues.
The consultation includes draft rules. FSA asks for comments by 30 April.