Change of Legal Status
If you are an authorised firm and you are thinking of changing its legal status, e.g., from a partnership to a limited company – you must apply for authorisation for the new company. The FCA will automatically cancel your firm’s previous legal entity when the authorisation for the new firm begins.
The application fee you will have to pay when applying is half the usual authorisation application fee. For example, a ‘straightforward’ application is £750, and a ‘moderately complex’ application is £2,500. Most financial advisers, mortgage brokers and general insurance intermediaries will be straightforward applications. The cost to change the legal status of a consumer credit firm is 50% of the application fee previously paid to be FCA authorised.
The FCA process most applications well within the statutory standards of 6 months for a complete application (where they do not require any additional information) or 12 months for an incomplete one.
The FCA will provide a new FCA firm reference number, and you will need to tell the product providers you deal with so they can update their records.
Changing members of a partnership
If someone resigns from a partnership, then providing that there is more than one remaining partner, you can continue with your existing authorisation, but will need to notify the FCA of the change in membership. The same applies if a new partner joins if the business activities are the same as before.
If you are left with only one remaining partner, you cannot continue to operate as a partnership. You will need to apply to change your legal status, to become either a limited company or a sole trader.
If you have any ongoing contractual agreements with your customers, you must contact them and agree either to amend their existing contracts or to agree new contracts to take into account the change in your firms legal entity. Otherwise you should let your customers know about the change in the legal entity as and when you next deal with them.
When applying to change your legal status, the FCA will require your firm to agree to deal with any complaints from existing customers in the same way that it would customers of your new legal entity. The FCA have this requirement to prevent firms leaving behind their obligations to their customers by changing their legal entity.
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