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FCA Authorisation: Do I need to be FCA-regulated?

Who is required to be authorised by the FCA?

Financial services regulation in the United Kingdom (UK) has a broad scope. While it obviously covers the activities of banks, insurers and financial advisers, it can also cover a wide range of other businesses.

Depending on the circumstances, businesses that carry out activities such as the following could potentially be subject to regulation by the Financial Conduct Authority (FCA):

  • allowing their customers to purchase goods/services on deferred payment terms; and
  • introducing their customers to insurance firms.

It should also be noted that the question of whether or not a business needs FCA authorisation can depend on seemingly small points of detail. As such, it is possible that Firm A will need to be FCA-authorised while Firm B (which is carrying out a very similar business model but in a slightly different way) does not need to be FCA-authorised. Given this, the question of whether a business is subject to FCA regulation is often of particular interest to FinTech founders who want to ensure that their businesses fall on the right side of the line from the outset.

Current legislation

The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO) sets out the principal list of activities (Regulated Activities) which are regulated for financial services purposes in the UK. The RAO also sets out various exclusions from the scope of the different Regulated Activities. The Payment Services Regulations 2017 set out the list of regulated payment services (Regulated Payment Services), together with exclusions. The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 set out the list of cryptoasset activities (Cryptoasset Registration Activities) that are subject to anti-money laundering registration requirements.

It is a criminal offence to carry out a Regulated Activity by way of business in the UK without the correct regulatory status. It is also a criminal offence to provide a Regulated Payment Service in the UK without the correct regulatory status. Depending on the circumstances, it may also be a criminal offence to carry out Cryptoasset Registration Activities in the UK without the correct regulatory status.

FCA authorisation legal advice

If you have any concerns about whether or not your business is subject to FCA regulation you should seek legal advice. Such advice may be able to provide you with peace of mind that your business does not need FCA authorisation. Alternatively, it may be possible to find ways in which the business model can be amended to take it outside the scope of FCA regulation. In the event that the business can only be carried out by a person with a particular regulatory status, seeking legal advice at an early stage can make the process of acquiring this status easier. This may involve applying for FCA authorisation/registration or (depending on the circumstances) operating under the regulatory permissions (sometimes known as the “umbrella”) of an FCA-authorised person by becoming an appointed representative.

Please contact Richard Ellis or William Garner if you would like to discuss the extent to which FCA regulation may be relevant to your business.


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