FCA authorisation interviews: what the FCA asks and how to prepare

An FCA authorisation interview is a conversation between a case officer and the people who will run the firm, usually the directors, the Compliance Officer and the MLRO. Its purpose is to test whether those individuals understand their regulatory obligations and can run the business as described in the application. Prepare by knowing your own documents line by line, being able to explain every decision in plain words, and checking that no two documents contradict each other.

This guide covers payment and e-money applications as well as FSMA approvals. It uses the FCA's own published material and questions we have seen in recent FCA interviews, including a recent payment institution interview. Our FCA interview preparation service page explains how we support candidates; this article sets out what the questions look like.

Want the full walk-through? Our free guide, Preparing for an FCA interview, follows an illustrative firm through the whole call, with strong and weak answers side by side, a document-reconciliation grid, questions to ask the case officer and a four-week preparation plan, with a PDF to download.

Why the FCA interviews, and why "not formal" still counts

For payment institutions, the legal test sits in the Payment Services Regulations 2017 (PSRs). For an authorised payment institution, regulation 6(7)(b) requires the applicant to satisfy the FCA that "the directors and persons responsible for the management of the institution and, where relevant, the persons responsible for the management of payment services, are of good repute and possess appropriate knowledge and experience to provide payment services". Regulation 14(7) sets the same test for a small payment institution. The Electronic Money Regulations 2011 contain an equivalent test in regulation 6(6)(b).

A form can show a person's CV. It cannot show whether they understand the business. That is the gap an interview fills. The FCA also has the power to ask: for a small payment institution, regulation 13(4) lets it require "such further information as it reasonably considers necessary to enable it to determine the application".

The FCA's guidance on applying for authorisation says of your case officer: "They'll usually have follow-up questions and may ask for further documentation or want to hold a call or meet with you." Interviews for senior manager approvals work in the same spirit. The FCA's page on how it assesses senior management function (SMF) candidates says it may invite a candidate for interview, that the panel is kept "as small as possible", and that it "may invite the candidate back for another interview".

In a recent payment institution interview, the case officer said the meeting was labelled an interview but was not a formal one, and that its purpose was to assess knowledge, understanding of regulatory obligations and readiness. Treat that as a description of format, not of stakes. The answers still go into the assessment of whether the individuals are of good repute and have appropriate knowledge and experience.

What to expect on the day

Expect a call of about an hour with the case officer and often a colleague. The FCA says on its authorisation page: "If we hold a call with you, we might record it (capturing the audio and visuals) to help us assess your application." In the interview we have seen, the case officer opened with a recording and accuracy warning: what you say will be recorded and must be accurate, and the officer said they might re-watch the recording afterwards.

Three practical points follow:

• Speak for yourself. The FCA says "we expect to deal directly with you in correspondence and meetings, not your adviser or compliance consultant". Advisers can help you prepare. They cannot answer for you.
• Do not guess. If you do not know something, say so and say how you will find out. An inaccurate answer is worse than an honest gap, because it is on the record.
• Ask what the call will cover. For SMF approvals the FCA says "We will tell you in advance what areas we wish to explore at the interview." For payment applications, ask the case officer for the topics and the attendees.

The themes the FCA covers

Across the interviews we have seen, the questions fall into five themes. The table shows what each theme is testing and what to have ready.

Question bank by theme

These are the kinds of questions asked, drawn from a recent payment institution interview and from preparation work we have done for firms. They are not a script. Use them to find the answers you cannot yet give.

1. Career and capacity

• Give a high-level overview of your career. Have you held any contracting positions?
• Confirm the positions you hold now.
• How is your time split between firms? If you split your time across firms, what does that mean in hours a week?
• If two firms share an office, how does that work in practice? Will this firm be fully remote?
• Do you hold any other role, and is it shown on a professional register?
• Describe your knowledge of the payment services you will provide, and how it equips you for this role.

2. Group structure and agent model

• Why is this entity applying rather than the group technology company?
• How did the principal and agent relationship come about?
• Are the same directors or individuals responsible at the agent and the principal?
• What conflicts of interest exist between the firms and how are they managed?
• Will you have any other agents?
• Would you accept a VREQ that the group company is your only agent? What would it take to have that lifted?

3. Governance and independence

• Who sits on the board, how often does it meet, and who takes which decision?
• If the MLRO and the Compliance Officer each hold 50 percent of the votes, how will the MLRO's decisions be impartial and independent?
• Who can overrule the MLRO, and what happens if they disagree with the board?
• How do you handle a conflict between commercial interests and a compliance decision?

4. Safeguarding and regulatory status

• Your application form says the firm will not safeguard, but the business plan mentions safeguarding and reconciliations. Explain.
• Which permissions are you applying for, and does every document describe the same ones?
• Walk through how customer money moves, from receipt to payout.

5. AML and financial crime

• Walk us through how the business-wide risk assessment was put together and approved.
• Who carries out AML tasks day to day, and which third-party systems do you use for screening, ID verification and customer records?
• How will you keep AML controls fit for purpose as the business grows?
• How do you onboard a customer? If checks come back amber or red, what happens? What extra information do you ask for, and who signs it off?
• Have you ever completed a suspicious activity report (SAR)?

Our guide to preparing for an MLRO interview with the FCA goes further on theme 5, with answer outlines.

What good answers show

Good answers share four features:

1. Specific. "We review the risk assessment every six months, and the MLRO presents changes to the board" beats "we review it regularly".
2. Consistent. The answer matches the application form, the business plan, the policies and what the other director says. The FCA may ask the second director the same question to see whether the answers align.
3. Owned. The person says "I do", not "the team does". If they delegate a task, they can explain how they oversee it.
4. Honest about limits. They say what the firm cannot yet do, for example that agent onboarding documents are not final, and what will change before it starts trading.

The FCA's page on how it assesses SMF candidates sets out what it expects candidates to understand: "their regulatory responsibilities", their role, and "how their knowledge or experience equips them to carry out their duties and meet our expectations". It also lists areas it may explore, including the firm's business model and strategy, risk management, governance and the regulatory framework.

Common traps

• The business plan contradicts the form. A firm that says on the application form that it will not safeguard, but describes safeguarding accounts and reconciliations in its business plan, will be asked which is true. Regulation 23 of the PSRs places the safeguarding duty on "an authorised payment institution", and Schedule 2 asks for a description of safeguarding measures "where regulation 23 (safeguarding requirements) applies". Whichever status you choose, every document must say the same thing. See how to write an FCA business plan.
• Time across other roles. The FCA's fitness and propriety guidance for SMF candidates asks "whether the person has adequate time to perform the controlled function and meet the responsibilities associated with that function" (FIT 2.2.1G). The same question is asked of payment and e-money individuals. A percentage without hours, or a list of roles with no overlap analysis, invites follow-up.
• Conflicts in group structures. If the group technology company is also your agent, shares directors or shares an office, explain who decides when the firms' interests differ. For authorised payment institutions, regulation 6(6)(a) requires "robust governance arrangements... including a clear organisational structure with well-defined, transparent and consistent lines of responsibility".
• MLRO independence where the MLRO is also a 50 percent owner. A control function that can be outvoted or dismissed by the people it supervises is hard to call independent. Explain the safeguards: a direct line to the board, a right to escalate to the FCA, and a rule that the MLRO's decisions on high-risk customers cannot be reversed by owners.
• Unprepared on the second director. The FCA may put questions to each person. Both should know the plan.

Possible outcomes

An interview does not usually end with a decision on the day. In the interview we have seen, the case officer said many gaps had been filled, said they would re-watch the recording, said they might request further documents (such as an agent onboarding manual), said they would explain a proposed VREQ by email and scheduled a follow-up meeting.

The FCA's authorisation guidance describes the tools. It says "you may apply for voluntary requirements to be added to your permissions" and that it sees "restrictions and limitations on firms who are testing their offerings", which "can include restrictions e.g. on the number of customers the firm can onboard". It also warns: "if you make substantive changes which indicate that you're not ready, willing and organised, we may ask you to withdraw your application and reapply."

For SMF candidates, the FCA says the outcomes are approval, conditional or time-limited approval, or refusal.

A VREQ at authorisation is usually time-limited and tied to something you can fix, such as submitting finalised agent onboarding documents and a training manual. Read the wording closely before you agree. Our guide to FCA voluntary requirements explains how they work, and our voluntary requirements service covers support.

Preparation checklist

1. Re-read the full application as filed: the form, business plan, policies, financial forecasts and any later correspondence.
2. Reconcile every document against the others. List differences on one page and fix them with the FCA before the interview.
3. Write down your career, current roles and weekly hours in a single table. Share it with the other individuals.
4. Draw the group structure, the agent relationships and the flow of customer money. Be ready to explain each line.
5. List every conflict of interest and how it is managed, with the person who decides.
6. Confirm who holds control functions, their shareholding and their reporting lines.
7. Refresh your knowledge of the regulations that apply, for example the PSRs, the Money Laundering Regulations 2017 and the FCA's financial crime guidance.
8. Rehearse aloud with someone who has not read the plan. Time the answers.
9. Agree who answers what. Each person should be able to cover the whole plan.
10. Prepare a short list of questions for the FCA, and a note of any follow-up you promised.

How MEMA can help

MEMA Consultants prepares directors, Compliance Officers and MLROs for FCA calls and meetings. We review the documents, find the contradictions, rehearse the difficult ground and agree actions. We do not script answers or promise outcomes. Start with the FCA interview preparation page, or see our guidance for firms seeking authorisation. If you want to talk it through, book a call.