Financial services: FCA authorisation required
If your business conducts regulated activities involving investments, credit, mortgages, or insurance, you must be authorised by the Financial Conduct Authority (FCA) before operating. Conducting regulated activities without authorisation is a criminal offence carrying unlimited fines and up to 2 years imprisonment.
Applies to: All businesses conducting regulated financial activities in the UK
Official guidance (opens in a new tab)
If your firm carries on a regulated activity in the UK by way of business, it must have FCA permission before it starts, unless an exemption applies; doing so without permission is a criminal offence.
FCA-regulated firms are almost always limited companies. Sole traders can only be authorised for limited activities.
Business structure for financial services
Limited companies are standard for FCA-regulated firms. The FCA requires appropriate legal form as one of its Threshold Conditions. Head office and registered office must be in the UK.
Sole trader
Simplest to set up. You keep all profits but are personally liable for debts.
Partnership
Share responsibilities and profits. Partners share liability for business debts.
Limited company
Separate legal entity. Personal liability limited to investment, but more admin.
LLP
Partnership with limited liability. Must file accounts at Companies House.
Business structure affects tax liability, personal liability, and required paperwork. Professional advice is recommended when choosing the right structure.
FCA authorisation timeline: 6-12 months
FCA authorisation takes 6-12 months for standard applications, longer for banks and insurers (12-18+ months). Submit a complete application to avoid delays. Check the FCA's current application fee for your firm type before you apply.
Applies to: All firms seeking FCA authorisation
Official guidance (opens in a new tab)
Register your company with Companies House first. You'll need this before applying for FCA authorisation.
Senior Managers and Certification Regime (SM&CR)
FCA-regulated firms must comply with SM&CR. Senior Managers need FCA approval (Form A). You must maintain Statements of Responsibilities and certify relevant staff annually. The Conduct Rules apply to all employees.
Applies to: All FCA-regulated firms
Official guidance (opens in a new tab)
Understand SM&CR requirements for individual accountability in your firm.
Anti-Money Laundering (AML) compliance mandatory
All FCA-regulated firms must comply with the Money Laundering Regulations 2017. This requires appointing an MLRO, conducting customer due diligence (CDD), filing Suspicious Activity Reports (SARs), and maintaining AML policies. Breach of relevant requirements under the Regulations carries criminal penalties including up to 2 years' imprisonment.
Applies to: All FCA-regulated financial services firms
Official guidance (opens in a new tab)
Essential guide to AML compliance for UK businesses in regulated sectors.
Regulatory capital requirements
FCA-regulated firms must maintain minimum regulatory capital. Requirements vary by firm type and permissions. You must demonstrate adequate capital as part of authorisation.
Applies to: All FCA-regulated firms
Official guidance (opens in a new tab)
Professional Indemnity Insurance
Most FCA-regulated firms need Professional Indemnity Insurance (PII). Requirements vary by firm type. Verify FCA requirements for your specific permissions.
Applies to: Investment advisers, mortgage brokers, insurance intermediaries
Official guidance (opens in a new tab)
Start with the insurance the law requires: if you employ anyone, you must have employers' liability insurance with at least £5 million cover, and business vehicles need motor insurance.
FCA Register: Build client trust
Once authorised, you appear on the FCA Financial Services Register. This public database lets clients verify your authorisation status and permissions. It's a powerful trust signal for client acquisition.
Official guidance (opens in a new tab)
Separate client money from business funds. FCA rules on client money are strict - get this right from day one.
Client money rules (CASS)
If you hold or control client money or assets, you must comply with CASS (Client Assets Sourcebook). This requires segregated client accounts, daily reconciliations, and external audits. CASS breaches are a serious regulatory matter.
Applies to: Firms holding client money or custody assets
Official guidance (opens in a new tab)
Required before hiring your first employee. Set up payroll and register as an employer with HMRC.
Annual FCA fees
FCA-authorised firms pay annual periodic fees based on permissions and income/assets. Budget for ongoing regulatory costs including compliance monitoring, training, and external audit requirements.
Applies to: All FCA-authorised firms
Official guidance (opens in a new tab)
Financial services firms process sensitive financial data and must have robust GDPR compliance.