Management Clinic - Closing down: Heading for the door

Selling your book with a view to later closing the company is an easier route than selling your shares from a regulatory perspective because, had you intended to sell your company, you would have had to give the Financial Services Authority notice of a change of controller, the identity of the acquiring firm and seek FSA approval before completing any deal. So, the disposal process becomes easier.

If you have a Gabriel six-monthly return outstanding and if that relates to the period ending while you were still trading, it is still incumbent upon you to complete that return in the normal way; at least it will be your last one.

You also need to make sure that you have paid your authorisation fees for the current year because the FSA will not cancel your permissions until all fee payments are up to date. It will come as no surprise to you that, unlike an insurance policy, there is no pro rata (or even short-period) return of fees in respect of mid-term cancellations.

Paperwork
In order to inform the FSA that you wish to cancel your part-four permissions (that's FSA speak for ceasing to be an authorised firm) you will need to complete the appropriate form. You can find this at http://bit.ly/ceaseFSAauthorisation. The page also outlines how the FSA will handle your application and the timescale. The FSA looks to deal with straightforward cases within three months but the rules say that they can take up to six.

The form seeks to establish that you have satisfied a number of requirements, such as advising your clients, that you have dealt with any outstanding complaints and that all the firm's approved persons have been advised of the application.

You will need to supply details of the firm that is acquiring your book of business but, unlike a change of ownership of the shares, the acquiring firm will not need specific permission to take on the business. If it is a firm that is applying for authorisation rather than an existing regulated business then it will have to obtain its own authorisation before the FSA will allow it to acquire your book.

Importantly, you will need to ensure that your client statutory trust account is closed in good order, with all insurers paid, all refunds made and commissions withdrawn.

So, download the form and make sure you can tick all the boxes. See you on the first tee.

Online notifications
From the end of September, firms will be able to request a cancellation of permissions from the FSA oonline using Online Notifications and Applications (ONA). While this will include cancellations, variations of permissions, notifications of approved persons and appointed representatives among others, applications for authorisation will still be needed in paper form.

See www.fsa.gov.uk/Pages/Doing/Regulated/ona/faqs/index.shtml for more information.

Source: Professional Broking – September 2010