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Applying for authorisation

CDC code in force: 1 August 2022

CDC schemes must be authorised in order to operateAP1, and this code describes the process for trustees to apply for authorisation.

The application for authorisation must be submitted by the trustees in our required formatAP2. Trustees must satisfy us that the scheme meets the authorisation criteria, and the application forms will guide them through the evidence that must be submitted.

If we are satisfied that the authorisation criteria are met, we must authorise the schemeAP3.

If we are not satisfied that a scheme meets all the criteria, we must refuse to authorise itAP4.

If we decide not to authorise a scheme, we will give reasons and you may refer the decision to the TribunalAP5.

Once operating, a scheme must continue to meet all authorisation criteria for it to remain authorised.

This section of the code covers:

  • the initial application process, including:
    • a summary of the evidence to be submitted
    • the process and timeline for an application
  • how to apply for authorisation for more than one section
  • how to apply for authorisation of an additional section of an authorised scheme
  • application fees

What to include in the initial application for authorisation

Authorisation criteria

Trustees must include the following in their applicationAP6:

In addition, for us to authorise an application we must be satisfied thatAP7:

Application timeline

Trustees can apply for authorisation at any time. However, we strongly encourage trustees to engage with us before submitting a formal application. We will consider that an application has been made once we have received a completed application form and supporting evidence for each of the authorisation criteria, and the authorisation fee has been paid. We will check that the application is complete and tell you within seven days if anything is missing.

Once we are satisfied that we have received a complete application, we will inform you that the assessment period has begun from the date the application was submitted. We must tell you within six months of this date whether the scheme has been authorisedAP8.

During the assessment period we may ask for information or clarification. We acknowledge that circumstances (such as corporate activity in the employer, or a change of trustee) may require you to update your application during the assessment period. Any changes should be sent to us, with reasons, as soon as possible. Because we have a statutory deadline of six months to make a decision, we are more likely to be able to take account of changes or new information if we are notified earlier in the assessment process.

Application fee

A standard fee of £77,000 must be paid by BACS transfer for us to accept receipt of a completed applicationAP9. If an application is withdrawn during assessment and then resubmitted, the resubmission will be treated as a new application and the full standard fee must be paid for it.

Applying for more than one section at initial authorisation

In applying to be authorised as a CDC scheme, trustees may seek authorisation for a scheme with one section (an undivided scheme) or authorisation for a section or multiple sections of a scheme (a divided scheme). The reasons for separating a scheme into different sections are set out in What is a CDC scheme?

For completeness, authorisation applies separately for each separate section providing qualifying benefits, and trustees must submit evidence about the authorisation criteria for each section they are seeking authorisation for, regardless of whether there is any duplication between sections.

Explain how the sections differ

When applying for a divided scheme, trustees should explain in a separate mapping document how the sections differ from one another, referencing sections where this is the case. This document will need to describe the following:

  • The reasons for having multiple sections.
  • The level of shared management dependency across multiple sections, including:
    • whether there are the same or separate systems and process in place across all sections, and
    • whether the same persons subject to fit and proper person requirements are common across all sections.
  • Any differences in scheme design between sections as each will be assessed on its own merits for soundness and financial sustainability.
  • The strategy for communicating with members across multiple sections, highlighting the subject areas that will be common to all sections or specific to one or more sections. Special care will be expected over messaging to members of more than one section.

Application fee

When submitting multiple sections, trustees must designate the “primary section” that the standard fee of £77,000 will apply toAP10.

The fee for authorising each other section is calculated on a cost-recovery basis and will not exceed the standard feeAP11.

We will check that the application is complete for each section and tell you within seven days if anything is missing. As part of this check, we will assess the additional work and complexity involved in evaluating a multiple-section scheme, after which we will specify a non-negotiable fee for each section submitted that is not the primary section.

It is in trustees’ interests to clearly state the commonality and differences between sections so we can accurately assess how much resource is required to authorise each section. Trustees should provide a detailed table showing where commonality and management interdependency sit across all sections of the scheme. For example:

  • if only the people already assessed as fit and proper in the scheme are to operate in another section, we will consider no further checks on their fitness and propriety necessary, but
  • if a section introduces new systems and processes that are not used for another section of the scheme, we will assess those new elements in full

Applying for a new section to be added to an authorised scheme

When assessing a new section to be added to an already authorised scheme, we will apply the principles described above for authorising a divided scheme, namely that trustees should explain how the new section differs from those already authorised.

When applying for a new section, trustees should inform us which section the existing authorisation will apply toAP12. For completeness, trustees must submit evidence for all the authorisation criteria for the new section even if there is duplication with a previously authorised sectionAP13.

Application fee

The fee will be based on the approach outlined above for the non-primary sections of a divided scheme and will:

  • be calculated on a cost-recovery basis
  • not exceed the standard feeAP14
  • be based on an upfront assessment of the level of duplication between the new and an existing section to estimate the level of analysis required

If there is a high level of commonality with an existing section, then the learning gained through supervising the existing section should help in reducing the resource and time required to assess the new application. As above, it will be in trustees’ interests to state clearly the commonality and differences between the new and existing sections.

Legal references

AP1 Section 7(1) of the Act

AP2 Sections 8(1) and (2) of the Act

AP3 Section 9(4) of the Act

AP4 Section 9(5) of the Act

AP5 Section 10 of the Act

AP6 Section 8(3) of the Act

AP7 Section 9(3) of the Act

AP8 Section 9(2) of the Act

AP9 Regulation 7(1) of the Regulations

AP10 Regulation 7(3) of the Regulations

AP11 Regulation 7(4) of the Regulations

AP12 Regulation 5(2) of the Regulations

AP13 Section 8(2) of the Act

AP14 Regulation 7(4) of the Regulations