Does an overseas firm need FCA authorisation to serve UK clients?

It depends on whether the activity is carried on in the UK and whether an exclusion applies. The overseas persons exclusion at article 72 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544) takes some cross-border business outside the authorisation requirement entirely, and the FCA's approach document treats firms relying on it as outside its scope. That makes the perimeter question the first one to answer, not the last: a firm that assumes it needs authorisation may be over-applying, and a firm that assumes it does not may be carrying on a regulated activity without permission.

Should we authorise a UK branch or set up a UK subsidiary?

The FCA is clear that firms can serve UK customers from an entity incorporated either outside or within the UK, so both routes are open. A UK subsidiary is framed as another option that may help reduce the risk of harm, and where branch risk cannot be adequately mitigated the FCA may invite a firm to apply for authorisation on that basis instead — in particular where retail customers are involved, or where client asset protections would be better served by UK incorporation because of the interaction between UK safeguarding rules and home-state insolvency law. For a branch carrying on MiFID activities, the FCA has said it needs comfort over the prudential rules applying in the home jurisdiction.

What does the FCA mean by a UK presence?

The FCA needs to be satisfied that day-to-day business decisions, and the central administrative, compliance and anti-money laundering functions, are being performed or overseen on a day-to-day basis in the UK. That second limb matters: UK-based oversight of functions performed elsewhere can be acceptable, so this is not automatically a requirement to relocate teams. It is a substance test rather than a registered-address test, and it flows from the effective supervision threshold condition.

Do our senior managers have to be based in the UK?

The FCA says it would typically expect senior managers directly involved in the UK activities to spend an adequate and proportionate amount of time in the UK — but it expressly recognises that individuals with purely strategic responsibilities for a UK branch may not be UK-based. The more practical point it makes is that senior managers should not be limited in how much time they can spend in the UK by, for example, their tax arrangements. It also expects those responsible for day-to-day management of the UK activities to exercise independent challenge over strategic decisions affecting the wider firm.

Does our existing home-state authorisation count for anything?

It is relevant context, not a substitute. The threshold conditions apply to the UK application on their own terms — effective supervision, appropriate resources, suitability and business model. A strong home-state track record helps evidence suitability, but it does not remove the need to demonstrate UK substance, UK governance, and a business model the FCA can supervise.

Enter The UK Market

UK Authorisation for International Firms

An overseas firm entering the UK is not judged on the strength of its home-state licence. It is judged on whether the FCA can supervise the UK entity and act against it — which is a question about where decisions are actually made, who makes them, and what happens to UK customers if the group fails.

We are an ex-FCA authorisations team. We scope the perimeter question first, settle the branch-or-subsidiary decision on evidence, and build the UK substance the threshold conditions actually require.

Talk to us about entering the UK

The Position

What the FCA is actually assessing when an international firm applies

The UK Presence Expectation

Substance, Not A Registered Address

The FCA must be satisfied that day-to-day business decisions, and the central administrative, compliance and anti-money laundering functions, are performed — or overseen on a day-to-day basis — in the UK. UK oversight of offshore functions can satisfy this; a UK entity that merely books business decided elsewhere does not.

Branch Or Subsidiary

A Structural Decision Taken Early

Both routes are open: the FCA says firms can serve UK customers from an entity incorporated outside or within the UK. It points towards a UK subsidiary where branch risks cannot be adequately mitigated — particularly around retail customers and client assets.

Head Office And Central Management

COND 2.2, And Time In The UK

COND 2.2.3G reads head office by reference to the location of central management and control — the directors and senior managers taking central-direction decisions, plus central compliance and internal audit. The FCA would typically expect senior managers involved in the UK business to spend adequate time here, though it accepts that purely strategic roles may sit elsewhere.

The Threshold Conditions

COND 2.1 To 2.7, Assessed Afresh

Legal status, location of offices, effective supervision, appropriate resources, suitability and business model are all assessed on the UK application's own terms. Location of offices (COND 2.2) bites on UK-incorporated bodies, requiring head and registered office in the UK — so it applies to the subsidiary route rather than to a third-country branch, which is itself part of the structural decision.

The Three Harms The FCA Is Testing For

The FCA’s approach to international firms names three specific risks of harm. An application that does not address them directly is answering a different question from the one being asked.

Retail harm: UK branches are generally subject to the same redress requirements and FSCS cover as UK firms. The harm is that redress and supervisory oversightcould be less effective in practice — particularly if the firm becomes insolvent or refuses to pay, because pursuing it in the home state is complex and expensive.
Client assets harm: That a mismatch between UK safeguarding rules and home-state insolvency law leaves client money or custody assets not ring-fenced in the way UK rules intend. This is the harm most often under-evidenced, because it only bites in a failure scenario.
Wholesale harm: That shocks originating in overseas offices are harder to detect or prevent, can be passed easily to the firm’s UK office, and could affect the stability and integrity of UK markets.

Which of the three dominates depends on the business model. A retail-facing branch and a wholesale trading operation are answering the same threshold conditions with very different evidence.

What We Do

From the perimeter question through to authorisation

Perimeter And Permissions

Whether the activity is carried on in the UK, whether the overseas persons exclusion is genuinely available, and exactly which permissions the business model requires. Settled before anything is drafted.

Branch Or Subsidiary

A reasoned recommendation against the FCA's own criteria — retail exposure, client asset arrangements, and how home-state insolvency law interacts with UK safeguarding — rather than whichever is cheaper to incorporate.

UK Substance Design

Placing day-to-day decision-making and the central administrative, compliance and financial crime functions under genuine UK performance or day-to-day oversight, in a way the application can evidence and the firm can actually operate.

Senior Managers And Governance

SM&CR mapping for the UK entity, time-in-UK expectations for senior managers involved in the UK business, and governance that gives the UK board genuine independent challenge.

Client Assets And Financial Crime

Safeguarding and CASS arrangements tested against the failure scenario, and a UK financial crime framework with an MLRO who is resourced rather than nominal.

Application And FCA Liaison

Regulatory business plan, financial projections, the policy suite, submission through Connect, and management of the FCA's questions through to determination.

What Slows International Applications Down

The recurring weaknesses are structural, and all of them are cheaper to fix before submission than after a first round of FCA questions.

Treating the UK entity as a distribution office while the decisions, the risk appetite and the compliance function all remain overseas.
Assuming a home-state licence carries evidential weight it does not have. It supports suitability; it does not answer effective supervision.
Senior managers who cannot evidence meaningful time in the UK, or who hold UK titles without the authority to overrule the group.
Client asset arrangements described in UK terms without testing what home-state insolvency law would actually do to them.
A UK compliance and MLRO function sized for the application rather than for the business the firm intends to write.
Applying before the perimeter question is settled — which risks either over-applying for permissions that are not needed, or carrying on a regulated activity without them.

Frequently Asked Questions

Select a question to view the answer.

Related Services

What international firms usually need alongside the application

FCA Authorisation Payment Services (API / SPI)SM&CR Implementation Financial Crime & AML Compliance Outsourcing Who We Help: Founders & New Entrants

Related FCA Guidance

Primary sources and deeper reading on the perimeter, evidence and client assets.

Perimeter

PERG: Perimeter Guidance

Whether what you intend to do in the UK is a regulated activity in the first place.

Evidence

FCA Authorisation Evidence

What the FCA expects to see rather than be told, and how to evidence it.

Handbook

CASS: Client Assets

Client money and custody rules — the area where cross-border structures most often fail on evidence.

Speak to a specialist

Tell us what you intend to do in the UK

Whether you are scoping a UK entry, deciding between a branch and a subsidiary, or already mid-application, tell us the position and we will come back to you.

0330 133 0811

Prefer to talk it through first? Call and you will speak to a consultant, not a switchboard.

Entering The UK Market?

The perimeter question and the branch-or-subsidiary decision shape everything that follows. Both are far cheaper to settle before an application than after the FCA's first round of questions.

Phone: 0330 133 0811

Email: contact@memaconsultants.com