Do I Need FCA Authorisation?

A practical guide to understanding when FCA authorisation may be required, which regulated activities to consider, and the key questions businesses should ask before applying.

What is FCA authorisation?

The Financial Conduct Authority (FCA) regulates financial services firms and financial markets in the UK.

Under the Financial Services and Markets Act 2000 (FSMA), a person generally cannot carry on a regulated activity in the UK unless they are authorised or exempt. This is commonly referred to as the general prohibition.

FCA authorisation gives a firm permission to carry out specified regulated activities.

Importantly, becoming authorised does not simply give a business unrestricted permission to operate within financial services. A firm's regulatory permissions define the activities it can undertake and may also contain limitations or requirements.

This is why determining the correct regulatory activities and permissions is an important part of the authorisation process.

When does a business need FCA authorisation?

A business may need FCA authorisation where it carries on one or more regulated activities in the UK and no exemption or exclusion applies.

The assessment is highly dependent on the business model.

Questions that can affect the outcome include:

  • What product or service does the business provide?
  • Who are the customers?
  • Does the business advise customers?
  • Does it arrange or facilitate transactions?
  • Does it receive, control or transfer customer money?
  • Is it providing payment or electronic money services?
  • Does it act as an intermediary between a customer and another financial services firm?
  • What investments or financial products are involved?
  • Does another regulated firm have responsibility for any part of the activity?
  • Are any exemptions or exclusions available?

Two businesses that appear commercially similar can therefore have very different regulatory requirements.

What are regulated activities?

A regulated activity is an activity that legislation brings within the UK financial services regulatory framework when the relevant conditions are met.

Depending on the business model, regulated activities can include activities connected with:

  • investments
  • consumer credit
  • mortgages and home finance
  • insurance
  • pensions
  • payment services
  • electronic money
  • claims management
  • certain other financial products and services

For example, activities such as advising on investments, arranging transactions, dealing in investments or managing investments can potentially require regulatory permission depending on the circumstances.

Payments and electronic money businesses operate under separate regulatory frameworks, including the Payment Services Regulations 2017 and Electronic Money Regulations 2011, and may require FCA authorisation or registration depending on their activities and structure.

The key point is that regulatory status should be determined by analysing the activities being performed rather than relying solely on the type of company or technology being used.

Common activities that may require FCA authorisation

FCA regulation can apply across a much wider range of business models than traditional banks and investment firms.

A business may need to investigate its FCA regulatory position if it intends to:

Provide financial advice

Giving recommendations relating to certain regulated financial products can constitute a regulated activity.

Arrange financial transactions

A business does not necessarily need to provide the underlying financial product itself to fall within regulation. Acting as an intermediary or making arrangements for certain transactions can also be relevant.

Provide consumer credit services

Certain lending, credit broking, debt-related and other consumer credit activities can require FCA permission.

Carry on insurance distribution

Advising on, arranging or assisting with certain insurance contracts can potentially fall within the regulatory perimeter.

Provide investment services

Dealing in, arranging, advising on or managing certain investments can require FCA authorisation and the appropriate permissions.

Provide payment or electronic money services

Businesses involved in payment processing, money remittance, electronic wallets or issuing electronic money should consider whether FCA authorisation or registration is required.

The FCA itself notes that almost all firms providing financial services in the UK need to be authorised or registered.

However, this does not mean every company that interacts with financial services automatically requires FCA authorisation.

When might FCA authorisation not be required?

There are several circumstances in which a business operating in or around financial services may not require direct FCA authorisation.

These can include situations where:

  • the activities being carried out are not regulated activities
  • a specific exclusion applies
  • the firm qualifies for an exemption
  • the business operates as an Appointed Representative of an authorised principal for activities capable of being carried on under that regime
  • a different form of FCA registration applies
  • the business provides technology or infrastructure without itself carrying on the regulated activity

The FCA confirms that exemptions and exclusions can apply in certain circumstances, including for some professional firms, certain payment-by-instalment arrangements and appointed representatives.

But exemptions should not be assumed.

Similarly, describing a business as a technology company, platform, marketplace, FinTech or software provider does not by itself determine whether the business is regulated.

What matters is the underlying activity.

For example, a software provider supplying infrastructure to an authorised financial institution may have a very different regulatory position from a platform that actively arranges transactions or controls the movement of customer funds.

Could I operate as an Appointed Representative instead?

For some business models, becoming an Appointed Representative (AR) of an FCA-authorised firm may provide an alternative to obtaining direct FCA authorisation.

Under the AR model, an authorised firm — known as the principal — accepts regulatory responsibility for specified activities carried on by the Appointed Representative.

However, the AR regime is not available for every regulated activity or every business model. The activities an AR can undertake must fall within the scope permitted by the regime and covered by the arrangement with its principal.

The question therefore should not simply be:

“Can I become an Appointed Representative?”

It should be:

“Can the specific activities in my business model legally be carried on under the Appointed Representative regime?”

That distinction matters.

What happens if you carry on regulated activities without authorisation?

Businesses should establish their regulatory position before launching regulated services.

The FCA states that firms must not begin performing regulated activities while an authorisation application is being considered unless an applicable exemption or temporary permission allows them to do so.

Carrying on regulated activities without the required authorisation can be a criminal offence and can result in FCA enforcement action.

Regulatory analysis should therefore form part of the business planning process — not something considered only after a product has launched.

Before you submit an FCA application

Identifying that FCA authorisation may be required is only the first step.

You also need to understand what you need authorisation for.

An FCA application should reflect the firm's actual business model and the permissions required to operate it.

Before applying, businesses should typically have clarity around:

  • their regulated activities
  • the products and services they will provide
  • their target customers
  • the customer journey
  • whether client money or assets will be held
  • governance and senior management
  • compliance arrangements
  • financial resources
  • systems and controls
  • outsourcing arrangements
  • risks created by the business model

The FCA expects applicants to be ready, willing and organised and specifically warns that regulatory business plans should be tailored to the individual firm rather than generic.

Applying for the wrong permissions — or beginning an application before the regulatory model has been properly understood — can create unnecessary delays, additional work and cost.

Start by understanding your regulatory path

For many founders, the difficult part is not knowing that financial services are regulated.

It is determining which part of the regulatory framework applies to their particular business.

That is why the first question should not necessarily be:

“How do I apply for FCA authorisation?”

It should be:

“What regulatory path applies to my business?”

That means working through your activities, products, customer types, money flows and operating model before deciding whether you require:

  • FCA authorisation
  • FCA registration
  • an Appointed Representative arrangement
  • another regulatory route
  • or no FCA authorisation for the proposed activities

Find your regulatory path with CoreVetta

CoreVetta’s Authorisation Navigator is designed to help businesses work through these questions in a structured way.

By answering questions about your business model, activities, customers and how your service operates, the Navigator helps identify the regulatory path that may apply and the next steps you should consider.

Instead of starting with a complex regulatory application, start by understanding where your business sits within the regulatory framework.

Start the Authorisation Navigator →

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This article is provided for general information only and does not constitute legal or regulatory advice. Regulatory requirements depend on the specific facts and circumstances of each business.

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