4 Supervisory activity (paras. 124-150)
This section describes how we supervise firms in practice, including the tools we use and the legal and enforcement powers available. In line with our key principles, this engagement will be proportionate to the size and potential impact to financial stability of any given firm. Our supervision is focused on the most material risks that a firm has the potential to pose to financial stability.
124. As set out in Section 2, our supervisory approach follows three key principles – it is: (i) judgement-based; (ii) forward-looking; and (iii) focused on key risks. These principles require us to utilise a broad range of tools in gathering quantitative and qualitative data to inform our supervisory judgements. Box 3 below outlines our approach to authorising new applicant firms, while the remainder of Section 4 refers to our engagement with firms following Authorisation.
Box 3: Authorising new firms
Firms wishing to undertake deposit-taking activities must apply to us for authorisation to do so. The application process is a joint assessment between us and the FCA. We assess applicant firms from a prudential perspective with the focus of the FCA being on conduct. The applicant firm will only be authorised if both regulators are satisfied that the firm will meet each regulator's respective Threshold Conditions, at the point of authorisation and on an ongoing basis. This includes an assessment of whether the applicant firm could be resolved in an orderly way. As provided for in the MoU, we lead and manage a single administrative process, and, as the lead regulator, we will act as the decision maker on the application.