Complete FCA Authorisation Guide
2025 Edition

1. Understanding FCA Authorisation

What is FCA Authorisation?

FCA authorisation is the regulatory approval required to conduct regulated financial services activities in the UK. The Financial Conduct Authority (FCA) is the primary regulator for financial services firms, responsible for ensuring firms meet appropriate standards to protect consumers and maintain market integrity.

The authorisation process is designed to ensure that only firms meeting the FCA's regulatory standards can operate in the UK financial services market. This includes demonstrating adequate resources, competent management, robust systems and controls, and appropriate business models that deliver fair outcomes for consumers.

Do You Need FCA Authorisation?

Determining whether you need FCA authorisation depends on the activities your firm intends to conduct. The FCA regulates a wide range of financial services activities, known as "regulated activities" under the Financial Services and Markets Act 2000 (FSMA).

Key regulated activities include:

• Accepting deposits - Taking money from the public with the promise to repay (requires PRA authorisation)
• Dealing in investments - Buying, selling, subscribing for, or underwriting securities or derivatives as principal or agent
• Arranging deals in investments - Bringing together buyers and sellers of investments, including platforms and introducers
• Managing investments - Discretionary portfolio management on behalf of clients
• Investment advice - Recommending specific investment products to clients
• Consumer credit activities - Lending, credit broking, debt advice, debt collection, and related activities
• Payment services - Money remittance, payment initiation, account information services
• Insurance distribution - Advising on, arranging, or dealing in insurance products
• Operating a multilateral trading facility (MTF) - Running an investment exchange
• Benchmark administration - Publishing and administering financial benchmarks

Timeline and Costs

Understanding the timeline and costs involved in FCA authorisation is crucial for business planning and resource allocation.

Typical Timeline

The FCA authorisation timeline typically consists of several phases:

• Pre-application preparation (8-12 weeks): Scoping your business model, preparing documentation, establishing systems and controls, and recruiting key personnel.
• Application submission (1-2 weeks): Completing and submitting the Connect forms, supporting documents, and payment.
• FCA assessment (12-16 weeks): The FCA's review of your application, which typically includes clarification questions, requests for additional information, and interviews with key personnel.
• Conditional approval (2-4 weeks): Meeting any conditions imposed by the FCA before final authorisation is granted.

Total timeline: 6-9 months from initial planning to full authorisation

With MEMA's streamlined process and regulatory expertise, we typically achieve authorisation in 12 weeks from submission, compared to the industry average of 20+ weeks.

Application Fees

FCA fees vary significantly depending on your permissions and sector. Key fee categories include:

• Application fee: £1,500 (standard) to £25,000+ (complex applications involving deposit-taking)
• Variation of Permission (VOP) fee: £250 to £1,500 for adding permissions to existing authorisation
• Annual fees: Based on your fee block and business size, ranging from £1,000 to £100,000+ annually

Additional Costs to Consider

Beyond FCA fees, budget for:

• Compliance consultancy: £10,000-£50,000 depending on complexity and level of support required
• Legal fees: £5,000-£20,000 for terms of business, client agreements, and regulatory documentation
• Systems and software: £5,000-£30,000 for compliance monitoring, transaction reporting, and client onboarding systems
• Professional Indemnity Insurance: £3,000-£15,000 annually depending on permissions and revenue
• Ongoing compliance costs: Budget for compliance officer salary/outsourcing (£30,000-£80,000 annually)

2. Pre-Application Preparation

Business Model Scoping

Before starting your FCA application, you must clearly define your business model and how it operates within the regulatory framework. This involves:

• Defining your target market: Who are your clients? Retail, professional, or eligible counterparties?
• Mapping your revenue model: How will you generate income? Fees, commissions, spreads, or other mechanisms?
• Identifying distribution channels: Direct to consumer, B2B, introducers, or partnerships?
• Determining operational scope: Geographic reach, product range, and service delivery model
• Understanding client journey: How clients discover, onboard, transact, and are serviced

Permissions Mapping

Accurately identifying the regulated activities and permissions your firm needs is critical to a successful application. Getting this wrong leads to delays, additional costs, or operating illegally.

Key steps in permissions mapping:

1. Identify all regulated activities: Review every aspect of your business against the Regulated Activities Order (RAO)
2. Determine permission scope: Full permissions vs. limited permissions (e.g., advising vs. dealing)
3. Specify investment types: Which instruments will you handle? (equities, bonds, derivatives, collective investment schemes, etc.)
4. Client categorisation: Will you serve retail clients, professionals, or both?
5. Consider future growth: Plan for permissions you'll need in the next 12-24 months to avoid costly Variation of Permission applications later

Resource Requirements

The FCA requires firms to have adequate financial and non-financial resources to conduct their business and meet regulatory obligations. This is assessed through the Threshold Conditions.

Financial Resources

• Initial capital requirement: Varies by permission, typically £20,000-£730,000
• Ongoing capital requirements: Monthly or quarterly calculations based on the higher of base capital, expenditure-based, or activity-based requirements
• Professional Indemnity Insurance: Minimum coverage levels specified per permission type
• Working capital: Sufficient funds to cover 12 months of operating expenses

Key Personnel Requirements

You'll need to identify and appoint individuals to fulfill key regulatory roles:

• SMF1 - Chief Executive: Overall responsibility for the firm's regulated activities
• SMF3 - Executive Director(s): Board-level responsibility for specific business areas
• SMF16 - Compliance Oversight: Responsibility for compliance monitoring and regulatory reporting
• SMF17 - Money Laundering Reporting Officer (MLRO): AML/CTF compliance and suspicious activity reporting
• Non-Executive Directors: Independent oversight and governance (if applicable to your firm size/structure)

Each individual must complete an Approved Persons/Senior Managers application demonstrating they are fit and proper through qualifications, experience, and regulatory history.

3. The Application Process

The FCA application is submitted through Connect, the FCA's online portal. The application consists of several components that must be completed accurately and comprehensively.

Connect Submission

You'll need to create a Connect account and navigate through several sections:

1. Firm Information: Legal entity details, corporate structure, ownership, and control
2. Permissions: Specific regulated activities and investment types you're applying for
3. Business Model: Detailed description of your business plan, revenue model, and target market
4. Senior Management: Details of all individuals performing Senior Management Functions
5. Financial Projections: Three-year forecasts including P&L, balance sheet, and cash flow
6. Supporting Documents: Upload of required policies, procedures, and governance documentation

Required Supporting Documents

A comprehensive FCA application typically requires 50-100 pages of supporting documentation including:

• Business plan with detailed market analysis and growth strategy
• Comprehensive financial projections with assumptions clearly stated
• Compliance manual covering all applicable FCA requirements
• Risk assessment framework (business risk, financial crime, operational risk)
• Anti-Money Laundering policies and procedures
• Complaints handling procedures
• Client classification and appropriateness/suitability processes
• Conflicts of interest policy
• Outsourcing arrangements and due diligence
• Data protection and information security policies
• Training and competence framework
• Client agreements and terms of business
• Marketing materials and financial promotions
• Management information reporting templates
• Statements of Responsibilities for all Senior Managers
• Organizational chart and governance structure
• Remuneration policies
• Professional Indemnity Insurance certificate

This is a preview of the Complete FCA Authorisation Guide. The full guide includes detailed sections on:

• Detailed threshold conditions analysis and how to demonstrate compliance
• Fit and proper assessments with interview preparation guidance
• SYSC requirements broken down by firm size and complexity
• Comprehensive financial crime frameworks including AML, CTF, and sanctions
• Client money and asset protection rules with worked examples
• Managing FCA queries and information requests during assessment
• Common reasons applications fail and how to avoid them
• Sector-specific requirements for payments, investments, lending, and insurance
• Post-authorisation compliance obligations and ongoing requirements
• Case studies from successful authorisations across all sectors