FCA cancels TPR granted to a Paris-based firm for failing to apply for authorization

The UK’s regulator, the Financial Conduct Authority (FCA), recently revealed that it was forced to revoke the TPR (Temporary Permissions Regime) of a French company Lyonnaise de Banque. The company, based in the capital of France, Paris, missed its deadline and failed to apply for authorization “in a timely manner,” as the regulator put it. This was the first time that the FCA had to revoke TPR for this reason in its history.

There were other instances where the regulator had to kick out companies that operated under TPR in the past, usually for issues such as violations of various regulations. One example includes four Cypriot companies, which were suspended early in 2022. All of the firms operated under TPR, and the permissions had to be revoked.

The regulator also revoked the permissions in 2021, when two CFD brokers — Finteractive Ltd and EverFX, were found to be in violation of local laws. However, never before did the regulator have to take away the permissions because of failure to apply for authorization.

What is TPR for?

The TPR was introduced a few years ago when the fact that the UK would leave the European Union was confirmed. It was unnecessary while the country was a part of the EU, as financial firms of EU members can simply passport their licenses. In other words, if a company is licensed in any of the countries that are EU members, it has the right to operate in any other member state. There was no need to seek new licenses or authorization from the local regulators.

However, this changed in the UK after Brexit, and now any foreign firm that wishes to operate in the UK needs to obtain TPR and then proceed with getting a local license while operating under this temporary permission. As such, TPR is meant to be a temporary solution so that the firms can start working and offering their products and services right away. Meanwhile, the lengthier, more complex process of obtaining the official license would be taking place in the background.

Due to the complexity of the process and various restrictions, there are many firms that can only operate with TPR.

EU uses the same program

TPR was also introduced in the EU after Brexit, and in countries that are EU members, the UK firms have to obtain TPR in order to start while waiting to obtain full approval from the regulators. With TPR, UK-registered firms are allowed to operate in the 27-country bloc with rather similar restrictions and permissions.

The Cypriot regulator said in 2021 that around 88 UK-headquartered firms now operate in various EU nations under the TPR program, so the UK companies have been using it in Europe as much as other companies used it in the UK.

The FCA noted that in early 2022, it stated that it expected TPR companies to apply in time. Any that miss their landing slots, and fail to apply by December 31st, 2022, will be expected to cancel their TPR voluntarily. If they fail to do so, the licenses will be revoked. So far, Lyonnaise de Banque has been the only one to find itself in this situation.