Turn FCA Rejection into Clear Path to Approval

Article

6 mins read

Updated on 17 September 2024

An unsuccessful FCA authorisation application can derail your business plans, but with expert legal support, you can turn a disappointing outcome into a successful authorisation.

Applying for authorisation from the Financial Conduct Authority (FCA) is a crucial step if your business model involves regulated activities, and understanding the common pitfalls will help you compile a robust submission. You can explore further whether your firm requires FCA authorisation and what is involved. At the same time, our financial services solicitors can guide you through each stage, from preparing a comprehensive application to addressing any queries raised by the FCA, to give your firm the best chance of approval.

Your business is prohibited from undertaking certain financial services in the UK unless it has authorisation to do so from the FCA (or can rely on an exclusion or is exempt). Activities which are restricted in this way are referred to as ‘regulated activities ’. Carrying out regulated activities without authorisation where required is a criminal offence and could have serious consequences for you and your business.

Unfortunately, yes. The FCA has adopted a policy of more rigorous scrutiny for new firms applying to enter the authorisation ‘gateway’ to UK-regulated financial services. The FCA is also less open to ‘holding the hands’ of businesses to help them improve deficient applications.

If your initial application is unsuccessful, don’t be discouraged. While it’s frustrating to experience delays in your business plans, there are specific steps you can take to improve the chances of a revised application being approved.

Key reasons why your application to the FCA for authorisation might not have succeeded include:

• Incomplete application
  :
  Your initial application did not contain all the required information, or you failed to pay the application fee.
• Failure to appropriately respond to FCA follow-up information requests
  :
  Following your initial application, you did not provide supplementary information requested by the FCA promptly or in full.
• Failure to meet FCA expectations
  :
  You have not demonstrated to the FCA (through your application and any further information provided) that you have a suitable business model and that your business is ready from day one for the responsibilities which come with being regulated.

If the FCA reviews your application and finds it to be incomplete, it will reject the application without further assessment, and your application fee will be refunded.

Common omissions from incomplete applications include:

• Incomplete, missing or unsigned forms;
• Passwords not being provided for protected document files.
• Key internal positions are still unfilled (such as your compliance officer).
• Submission of incomplete or insufficiently granular financial information;
• Generic, off-the-shelf business plans which do not reflect your business’s specific circumstances; and
• Indications that the technology or systems you’ll be using to carry out the applied-for regulated activities aren’t ready.

If the FCA info rms you that your application is incomplete but you’re unsure why, requestfeedbackand review theguidanceon the FCA website . You can find detailed information specific to your type of firm on the FCA’s authorisation home page or contact their
call centre
for specific queries.

An essential requirement for authorisation is thorough
preparation
. This means carefully reading their guidance and see king legal or other professionaladviceas needed. Our financial services team at Harper James has extensive experience with FCA applications and can assist you in preparing a comprehensive submission.

Be aware that the FCA’s review period for new applications only begins once it receives a complete application. Submitting an incomplete application can significantly delay the process, as it will require resubmission.