What is required for an investment firm to be authorised by the FCA?

Requirements typically include a business plan, financial resources / capital adequacy, governance structure, risk management and compliance policies, fitness & propriety of senior management, and adherence to regulatory permissions under MiFID / FCA rules.

What are ‘permissions’ in the FCA authorisation context for investment firms?

‘Permissions’ refer to the specific regulatory activities that an investment firm is authorised to carry on (e.g. dealing in investments, advising on investments, managing investments). The required permissions depend on the firm’s business model and determine obligations to the FCA.

What governance and internal controls must an investment firm have?

You usually need a clear governance structure (board/senior management), internal controls for risk and compliance, oversight and reporting lines, documented procedures, conflict of interest policies, and adequate resources (staff, systems) to carry out regulated activities safely.

How long does the FCA authorisation process for investment firms take?

It depends on how complete and compliant the application is, your responsiveness to regulator queries, the complexity of your business, and whether you meet all regulatory requirements. It can take several months.

What obligations must investment firms meet after authorisation?

Post-authorisation obligations often include submitting periodic regulatory reports, maintaining capital adequacy, conducting business with due diligence, following conduct and client protection rules, adapting to regulatory changes, and ensuring ongoing compliance across operations.

Investment Firm FCA Authorization

Overview

Investment firms are authorised under the UK’s Financial Services and Markets Act 2000 (FSMA) and regulated under the Markets in Financial Instruments Directive II (MiFID II) or its UK equivalent post-Brexit.

Authorisation Process:

Determine Regulatory Status: Define whether the firm is a MIFID Prudential (MIFIDPRU) investment firm (Small Non-Interconnected (SNI), non-SNI, etc.).
Business Plan Preparation: Clear description of services offered (e.g., portfolio management, investment advisory, dealing in investments).
Capital Adequacy: Assess prudential requirements under MIFIDPRU; calculate capital and liquidity thresholds.
Governance Framework: Appoint directors, compliance officers, Money Laundering Reporting Officer (MLRO), and demonstrate proper control functions.
Internal Systems & Controls: Establish risk management, compliance, information technology (IT) security, and conflict of interest frameworks.
Application Submission: Use the FCA Connect platform with all required forms (Form A/B, regulatory business plan, financial projections, etc.).
FCA Assessment: Review period ranges from 3-6 months; FCA may request interviews or additional information.
Post-Authorisation Setup: Compliance calendar, reporting schedule, and regulatory filings begin.

Investment Firms

Overview

Authorisation Process:

We cover the following areas under Investment Firms: