Question: How will FSA regulation affect my current trading arrangements?

ANSWER: Intermediaries should have identified which of their customers and trading partners, such as primary or secondary intermediaries, will need to be authorised. Having done this, the regulatory position of each of these will need to be ascertained and formal agreements (TOBAs) put in place with authorised trading partners.

For an authorised firm to knowingly trade with an unauthorised firm, the authorised firm (and approved persons therein) could potentially face an aiding and abetting conviction. And the FSA will take a very dim view of it too.

Intermediaries are therefore advised to plan a disengagement or exit strategy where their customer or trading partner will not (or is unlikely to be) authorised by 14 January. This plan should include:

  • The date on which the exit will become effective (Biba suggests that this be well in advance of 14 January 2005)

  • How the exit is to be implemented, including plans for dealing with customers (if appropriate)

  • When the exit will be advised to the customer/trading partner.

    • While executing the disengagement/exit plan may not be a pleasant business experience, it is a necessary part of planning for regulation.

  • Steve White is regulation and compliance manager at Biba

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