Preparing financial projections for the FCA

In this article, we briefly cover the financial projections that companies are expected to produce when submitting their application to the Financial Conduct Authority (FCA).

The FCA requires a 12-month forecast broken down monthly. This will generally include information around your Profit and Loss, Balance Sheet, Cash Flow, Regulatory Capital, and projected balance sheet figures for years 2 and 3.

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The financial projections need to be realistic for the size and nature of your business. We recommend erring on the side of caution and not being too overly optimistic in your revenue forecasts. Show any revenue from unregulated business separately as only revenue from the regulated activity is taken by the FCA when calculating your annual FCA fees.

You must demonstrate that you will have sufficient capital from the authorisation date and any projected start-up costs from lawyer fees, compliance consultant fees, and of course the FCA application fee. If you are forecasting trading losses, the amount of capital at authorisation covers these losses. The FCA would also expect you to have a buffer of around 10% of the capital you need to hold.

We assist firms in understanding their regulatory requirements and how best to navigate the myriad of obstacles facing businesses seeking authorisation.