Navigating the FCA authorisation process can be complex and time-consuming for businesses seeking to offer regulated financial services in the UK. As specialist financial services lawyers, we regularly guide firms through this journey and understand the challenges they face.
Our Financial Services Regulation solicitors have compiled this comprehensive FAQ addressing the most common questions we receive about getting started with FCA authorisation, from initial considerations to ongoing compliance.
Contents:
Getting started
How much does it cost to get FCA authorisation?
FCA application fees range from £270 to £217,500, based on your business complexity (the FCA categorises firms into three groups (straightforward, moderately complex, and complex). This one-off fee is non-refundable and payable before submission.
Annual fees after authorisation vary with firm income and category, starting from £1,750 for smaller firms and potentially exceeding £50,000 for larger operations. The FCA also provides an annual fee calculator to assist firms in estimating their fees.
What is the FCA’s ‘fit and proper’ test?
The Fit and Proper Test is an assessment conducted by the FCA to determine whether individuals in key roles within a firm, such as senior managers, are suitable to carry out their responsibilities. The test evaluates three primary areas:
- Honesty, integrity, and reputation;
- Competence and capability; and
- Financial soundness.
This means the FCA will look at a candidate’s past conduct, qualifications, experience, and financial history to ensure they can meet the regulatory standards.
What are the typical timeframes for FCA authorisation?
The FCA aims to process complete applications within 3-12 months, though timeframes can vary significantly based on the complexity of your business and the quality of your application. The FCA has:
- 3 months to assess complete payments and e-money applications
- 6 months for other complete applications
However, in practice, the FCA rarely considers applications ‘complete’ when initially submitted. In our experience, complex applications often take longer due to multiple rounds of FCA questions.
Business readiness and planning
Can I continue to operate while my FCA authorisation application is being processed?
You cannot carry out any regulated activities, or communicate any financial promotions, while your FCA authorisation application is being processed. You must wait until the FCA grants you authorisation before engaging in regulated activities. Operating without authorisation is a criminal offence and can result in enforcement action or penalties.
What financial resources do I need for FCA authorisation?
The FCA requires firms to demonstrate sufficient capital to meet regulatory obligations, cover risks, and maintain stable operations. While financial resources must typically be in place at authorisation, the exact requirements depend on your business's nature, scale, and complexity. Preliminary approval with partial funding is not standard practice, though specific circumstances may be discussed with the FCA.
Can I apply for permission for multiple regulated activities under a single application to the FCA?
Yes, you can apply for multiple regulated activities in a single FCA application, provided they are related to your business model. The application fee will be based on the highest-risk activity you're applying for. However, you'll need to demonstrate compliance capabilities for each type of regulated activity.
What trading names can firms use when applying for registration?
The FCA reviews trading names during authorisation to ensure they don't mislead consumers or imply unauthorised services. While FCA guidance states firms can generally choose their trading name, it should accurately reflect their permitted business activities, and should not overstep the firm's regulatory permissions. A trading name must not mislead customers, including suggesting that a firm is, or is associated with, another unconnected firm.
What top tips can you give when preparing for the FCA application process?
Based on our experience, successful applications require thorough preparation:
- Documentation gathering: Structures, finances, personnel, compliance.
- Key appointments: Appoint senior managers and assess compliance resources.
- Pre-application planning: Plan governance, and policies and identify regulatory gaps.
- Resource planning: Budget for application costs and operational readiness.
Can we start preparing aspects of our business while waiting for authorisation?
Yes, there are several activities or productive steps you can take while awaiting authorisation:
- Business development (within limits)
- Start planning your technology, infrastructure, security, etc.
- Launch permitted activities that don't require authorisation
- Build brand awareness
- Establish support functions
It is crucial to ensure these activities don't cross into regulated territory. We can provide specific guidance on what activities are permitted during the waiting period for your business model.
High-risk areas and special considerations
Can I apply for FCA authorisation if I have previously been refused authorisation?
You can reapply after a refusal, but you must demonstrate how you've resolved the original issues before applying again. The FCA will scrutinise your new application, particularly focusing on improvements to areas that previously caused concern, which could include your firm's structure, governance, or compliance processes.
What are the common reasons for FCA application rejections?
Based on our experience handling FCA applications, the most common issues include:
- Incomplete applications
- Business model concerns
- Personnel issues
- Financial weaknesses
- Concerns with systems and controls
Understanding these common pitfalls can help firms better prepare their applications and avoid unnecessary delays.
Application process and documentation
Does the CEO, CFO, COO and CTO of Small Electronic Money Institutions get interviewed during the authorisation process?
Small Electronic Money Institutions (SEMIs) undergo registration rather than full authorisation. Senior managers (CEO, CFO, COO, CTO) must register as Payment Services Directive (PSD) individuals, demonstrating their conduct and competence. While the FCA can interview these individuals, they rarely do so unless specific concerns arise about past conduct or the location of senior management, or if other factors warrant closer scrutiny.
How long should our Compliance Procedures be?
The FCA doesn't mandate a specific length for Compliance Procedures - they should be comprehensive enough to address your business's regulatory requirements, including governance, risk management, and anti-money laundering (AML) controls.
What options do we have to expedite approval or launch faster?
The FCA authorisation process can be time-consuming, and unfortunately, there’s no guaranteed way to significantly speed it up. However, there are steps you can take to avoid unnecessary delays:
- Prepare a complete and thorough application.
- Engage with the FCA early.
- Use experienced advisors.
- Plan for interim solutions (e.g. launching non-regulated activities first).
Our legal experts can help streamline your application by identifying potential issues early, ensuring documentation meets FCA requirements.
What are the key sections of an FCA application that firms most commonly struggle with?
Based on our experience supporting clients through the application process, firms typically face challenges with:
- Regulatory business plan
- Financial projections
- Systems and controls
- Wind-down planning
- Owner and influence structure
We recommend focusing particular attention on these areas during preparation, as they often generate additional questions from the FCA. We are here should you require further guidance.
Senior management and personnel
How does the FCA assess multiple roles across different firms (such as being a director or compliance officer)?
The FCA evaluates multiple positions based on your ability to meet threshold conditions and manage conflicts effectively. For directors, past company involvement isn't automatically problematic, but any history of financial impropriety or conduct concerns will be scrutinised. For compliance officers serving multiple firms, you must demonstrate and document specific measures for:
- Managing potential conflicts of interest
- Handling sensitive information appropriately
- Maintaining impartial oversight across firms
- Meeting regulatory requirements independently for each firm
- Ensuring one firm's interests don't overshadow others.
It is critical to be able to demonstrate that you can effectively execute all responsibilities while maintaining regulatory integrity across roles.
Can I be an appointed representative for both vehicle leasing and insurance broking?
Yes, but this requires a multiple principal agreement between the firms to ensure coordinated oversight and prevent regulatory gaps. The agreement must demonstrate how both principals will maintain effective supervision and compliance monitoring under their respective regulatory frameworks. All arrangements must comply with specific FCA requirements for multiple appointments.
Maintaining authorisation
Does FCA authorisation expire?
No. While there's no expiration date, firms must continuously meet FCA threshold conditions, pay annual fees, and submit regular regulatory reports. Authorisation can be revoked if firms fail to maintain compliance standards or cease operations.
Can I transfer or change my authorisation?
FCA authorisation cannot be transferred to another entity. Ownership of the firm can change, with the FCA’s approval (where required) for a change in control. Permission can be varied by applying to the FCA, though the approach taking to assessing that is of a similar depth to becoming authorised.
How often does the FCA review authorised firms?
The FCA employs risk-based supervision, with review frequency based on firm size, activities, and risk profile. Higher-risk firms face more frequent oversight. Regular reporting requirements include annual returns, financial statements, and specific event-driven notifications. The FCA can also conduct targeted multi-firm reviews or investigations if concerns arise.
What are the main responsibilities of being FCA authorised?
Key responsibilities include significant initial and ongoing compliance costs, regulatory fees based on business type/size, and extensive reporting requirements. Firms must maintain robust compliance systems, conduct regular staff training, and submit to regulatory scrutiny. Operational restrictions may limit business activities, and serious non-compliance can result in fines, sanctions, or authorisation withdrawal.
Are short-term, interest-free payment plans regulated?
These may be unregulated if they meet specific criteria: they must be used to pay for the purchase of goods or services, for up to 12 repayments in 12 months, and free of interest and ‘other charges’ (which can require significant analysis, as what may be considered a charge is not specified by regulations).
Can I appeal a rejected FCA application?
Yes. The process begins with responding to the FCA's warning notice and presenting evidence addressing their concerns. If rejected, you'll receive a final notice (the application fee is non-refundable). Appeals can then be made to the Upper Tribunal (Tax and Chancery Chamber), requiring proof that the FCA either failed to follow procedures, failed to take account of all the circumstances (or gave weight to irrelevant factors), or misinterpreted relevant law. It is advisable to seek legal guidance before you submit an appeal.
Expert legal advice for FCA authorisation applications
Understanding FCA authorisation is essential for entering regulated financial services. While this guide addresses common questions, each firm's journey presents unique challenges based on its business model and activities.
Our Financial Services Regulation team provides tailored support from initial planning through to post-authorisation compliance. Contact us to discuss your specific needs.
