Glossary term
Authorisation (Regulatory)
Subject: Compliance and Regulation, Regulatory Supervision and Enforcement
Also known as: Regulatory approval, Licence, Licensing
Regulatory authorisation is the formal permission a regulator gives a firm or person to carry on a regulated activity, such as banking, insurance or investment advice, usually after meeting set conditions.
Explanation
Many activities are lawful only with the regulator's consent. A firm applies, and the regulator tests the business plan, capital, ownership, systems and the fitness of directors and key managers. If satisfied, it grants a licence, registration or authorisation, often with conditions or limits on the activities allowed. The words differ: some regimes use a full licence for high-risk activities and a lighter registration for others. Authorisation is not the end, since the firm is then supervised and can face conditions, suspension or withdrawal if it breaks the rules. Operating without it is usually an offence. Applicants meet it as a gate they pass once and a set of conditions they live under afterwards.
Example
A start-up wants to offer payment services. It submits an application with its business plan, arrangements to protect customer funds, and details of its directors. After several months of questions, the regulator grants authorisation limited to domestic payments. The start-up must seek approval before adding foreign transfers.
Not to be confused with
- Delegation of Authority (DoA)
- Delegation of authority is internal approval of who may sign or spend. Regulatory authorisation is external permission to run a regulated business.