How to Become FCA Authorised // January 22, 2018

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On April the 1st 2014, the Financial Conduct Authority became the responsible body for regulating consumer credit in the United Kingdom. The FCA took over this position from the Office of Fair Trading.

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The FCA provide a guide for consumer credit which must be followed by all participating firms. In addition, there is a Consumer Credit Sourcebook which is commonly referred to as just CONC. This contains a list of conduct standards that companies must adhere to.

So, for any company which provides loan, insurance or investment services it is vital to have the compliance and regulatory framework in place to then start to continue to trade in their industry. If you carry out anything dubbed a credit or financially related activities without authorisation, you could be facing severe consequences in the form of a fine or even imprisonment.

To help you out, we have provided some answers to the most common questions surrounding FCA authorisation. We also provide the information you need to successfully apply. Speak to an expert for FCA compliance advice and training.

Do I need to be FCA authorised?

If your company offers any kind of consumer credit or certain financial products, you will be required by law to have a FCA authorisation. This will include things like:

  • Payday Loans
  • Guarantor Loans
  • Logbook Loans
  • Insurance Companies
  • Investment Providers

And, the full list of regulated activities:

  • Dealing with investments (buying, selling etc.) or offering or agreeing to so, and in the case of insurance contracts, carrying out the contract
  • Accepting deposits
  • Collective investment scheme units
  • Arranging investment deals
  • Asset administration and safekeeping
  • Investment management and advising on investments
  • Lloyd’s syndicates
  • Dealing with debentures, loan stock, bonds etc. This includes government bonds
  • Computer or web-based investment transactions
  • Creating, winding up or running collective investment schemes
  • Loans secured on land and other arrangements involving land
  • Dealing with securities, for example, stocks and shares, or options and futures.

Can I be FCA registered rather than authorised?

It is the case that some firms which are considered ‘low-risk’ can just be registered rather than full-blown authorised. This includes people behind the payment service providers, technology providers and community lenders.

Not-for-profit organisations such as credit unions and charities require a different set of regulations under the Prudential Regulation Authority.

Is anyone exempt from FCA authorisation?

Yes, some firms and representatives are exempt from FCA authorisation. These are as follows:

Professional Firms – Lawyers, solicitors and accountants alike which work alongside insurance companies and lenders are not required to be authorised to carry out their work since it runs alongside their main business.

Appointed representatives – Companies, websites or individuals which have been carefully appointed by a company which has the full license which is required to carry out regular activities. This is particularly common for affiliate websites, brokers, introducers and comparison websites.

The Application Process

To apply to be FCA authorised, click here.

Some the most prevalent features of this application process include having:

  • A business plan
  • Capital requirements (in other words, enough money to lend out)
  • Checks for the most important members of the company

A core details form

This will require you to fill out factual information about the business structure, management, controllers and personnel.

 Supplement for investment managers

This part of the form covers the applicant’s regulatory business plan, investment strategy and customer types, as well as the scope of regulatory permissions required. This part of the form also requires you to provide information on all of your financial resources and your cash flow projections.

 Individual Forms

The form is for individuals who are wanting to perform “controlled functions” and will be responsible for running the organisation and making very key decisions. This person is also likely to pass on compliant culture throughout their company

Ultimately, the FCA needs to essentially confirm that the people who are running the company are fit to handle all the responsibility that will come their way.

 IT Controls Form

This is for those firms who are particularly dependant on IT systems and will need to provide the appropriate supporting documents including financial information, organisational charts and compliance procedures to name a few.

 How long will it take to become FCA authorised?

It can take around 12 to 18 months to receive your FCA authorisation, but you will normally receive some sort of feedback within the first 6 months after applying. Since some companies will need constant feedback, it is not unheard of to wait up to 24 months from start to finish.

 How much does an FCA authorisation cost?

There is a fee which is fixed at £5,000 to submit a moderately complex application, but the price can vary on the nature and complexity of your business:

  • Straightforward – £1,500
  • Moderately Complex – £5,000
  • Complex – £25,000

Source: FCA authorisation application fee

There are also some additional start up costs, expert adviser costs, as well as capital costs. To find out about these in more details, click here.

 The Importance of FCA authorisation

It is very important that each customer is treated equally and fairly. A customer must be able to trust a company not to pass on their personal information to companies who will use it inappropriately. FCA forbids the actions of passing on customer information, so having this in place is essential to security.

With the FCA regulations in place, applicants for loans or insurance and the like can be confident that they can do so without the fear of upfront fees or their personal details being sold to third parties.

To check whether a site is FCA authorised, you can check the register on the main FCA website. You may also want to look out for the licence number on the footer of every site which will indicate its status as FCA authorised.