5 Steps on How to Become FCA Authorised

  • If your business involves any sort of regulated activity, it’s vital that this is authorised.
  • The Financial Conduct Authority is the responsible for regulating UK consumer credit.
  • In order to become authorised for your regulated activity, you’ll have to apply for authorisation with the FCA. 

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. 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.

The process in which to become authorised by the FCA can often feel overwhelming. This is particularly the case for businesses new to the financial services scene. To help make this journey into FCA authorisation a little easier, we’ve broken down the process into 5 simple steps:


Step 1: Establish What Needs to Be Authorised


If your business involves activity that is regulated, chances are it will need to be authorised by the FCA in order to operate such activities.

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.

It’s essential to establish exactly what types of activities within your business are regulated. If you’re still unsure what parts of your business are regulated, you can check this through the FCA guidance on when and where authorisation is necessary. If you’re still unsure, it’s best to speak to an expert for FCA compliance advice and training.


Step 2: Explore and Ready for the Impacts of FCA Authorisation


Once your business has established the activities that are regulated and will thereby require FCA authorisation, it’s then important to understand how such compliance will impact the business – e.g. the impact being regulated will have on costs and capital, and which members of your workforce will need to go through approval for the Approved Persons Regime and the Senior Managers and Certification Regime.


Step 3: Collect The Relevant Documentation for the FCA


Whilst only certain documents will be immediately required at this stage of the FCA authorisation process, it’s important to gather any and all relevant paperwork for if the FCA ask to inspect it. There are numerous different pieces of documentation the FCA may require to examine from an applicant, these depending on the type of activities your business needs regulating and thereby specified regulations that surround such activities.

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.


Step 4: Complete the Application


Once all necessary details and documentation have been prepared, you’ll then have to fill in the application. For new firms applying, you’ll have to register in order to use the FCA Connect system, of which is used for firms to make applications and further notifications. When completing the application, businesses will have to provide an extensive range of details, including, but not exclusive to, the following:

  • The type of permission being applied for
  • Business plans
  • Regulatory fees
  • Your business continuity plan
  • Confirmation that procedures for compliance are in place
  • Information on owners
  • Information on corporate partners

To finalise the application process, firms will have to submit a signed declaration that all of the information provided is accurate.


Step 5: Submit!


After filling in all of the application’s necessary details, the last thing firms will have to do is submit the form for approval. When submitting, you’ll also have to pay the necessary application fee to complete submission properly.

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.


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 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.