ABS authorisation delays cause frustration

There is increasing frustration being voiced at the length of time it is taking for the SRA to deal with applications for firms to become alternative business structures (ABS), and the lack of clarity in the process.

It is known that almost 150 stage 1 applications have been submitted to the SRA and therefore it is no great surprise that there is some pressure on the licensing authority in the initial phase.  However, applicants are voicing frustration about a lack of clarity, and that the delays are now impeding transaction timetables. 

The main problems seem to stem from the fact that the information that the SRA requires at stage 2 of the process is determined on a case-by-case basis rather than through a standardised process and documentation, making it difficult for applicants to ensure prior to a process beginning that they have all the information they need.

There is also concern regarding timetables.  The SRA has 6 months within which it must have adjudicated on applications, but it is not clear from when the clock starts running.  The SRA’s website states that

“We intend to process most applications well within the statutory standards which are set out in the Legal Services Act. We will try to meet any relevant dates you tell us about, but it would help us if you make your application in plenty of time. We will make a decision within (i) six months of receiving your complete application, or (ii) nine months if we require an extension, which we are required to tell you about in writing.” 

Given that the stage 2 application process is bespoke, then it may be some considerable time after submission of the initial expression of interest forms before the 6 month time-period is counted, as the process of agreeing the information required for the stage 2 application can be protracted.

The Lawyer reports that Parabis has been forced to delay its ABS deal with private equity house Duke Street because of the SRA delays.  Parabis agreed a £50m funding deal with private equity house Duke Street in January with the aim of going live at the end of February. That could now be delayed until the end of April.

The Lawyer is also reporting that Silverbeck Rymer, which agreed a deal with AIM-listed Quindell Portfolio in January, is also facing regulatory hurdles that are causing delays to the deal going live.