Does My Business Need To Be FCA Authorised?

The simplest way to determine if you need to seek authorisation from the Financial Conduct Authority is to look at the list of regulated activities. If you are engaging in any of the “by way of business” then you likely need to seek authorization. As detailed under the Regulated Activities Order (FAO) 2001 of the Financial Services and Markets Act (FSMA), the following are regulated:

A great guide to work out if you need FCA Authorisation, from Pragmatic Compliance.

  • Accepting deposits
  • Dealing as principal or agent in investments; arranging deals in investments; managing investments; administering and safeguarding investments; advising on investments
  • Carrying out or effecting as a principal of insurance contracts; assisting in the performance and administration of an insurance contract
  • Issuing e-money
  • Sending dematerialized directions
  • Establishing stakeholder pension or collective investment schemes
  • Running a multilateral trading facility
  • Entering into, administering or providing advice on home finance activities
  • Entering into funeral plan contracts
  • Agreeing to undertake most of the activities enumerated above

Specified investments as defined in RAO Part III:

  • Deposits
  • Shares, options, futures, government and public securities, and other related financial instruments or certificates representing particular securities
  • Electronic money
  • Shariah-compliant debt instruments (sukuk)
  • Rights under a personal or stakeholder pension scheme, regulated mortgage or funeral contract, home purchase or home reversion plan
  • Instruments acknowledging or creating or giving entitlement to indebtedness
  • Lloyd’s syndicate membership and capacity
  • Interests in or rights to any listed specified investment but excluding rights under regulated home purchase or home reversion plans or regulated mortgage contracts

However, there are exclusions under whose provisions regulated activities become unregulated ones. Examples of these exclusions are introducer and overseas persons exclusions. If the business activity you wish to undertake falls under one of these exclusions, FCA authorization is not required.

The only exemption allowed for exemption to FCA authorisation is to become the appointed representative (AR) of a firm that is FSA-authorised. The responsibilities of an AR include:

  • Understanding and being compliant with the regulatory conditions that is relevant to the business they take care of for their Principal;
  • Providing the Principal with the requirements they need to carry out its supervisory responsibilities such as premises, records, and staff;
  • Ensuring that the appointed representative, where required, has the relevant approved person or persons.

You become an AR based on the regulated activities you undertake for the Principal, which include advising, arranging deals, concluding contracts, and otherwise acting as agent and assisting in the performance and administration of a contract for pure protection and general insurance contracts as well as a home finance and investment business (excluding acting as agent and assisting with contracts).