Table of Contents

• What Direct Authorisation Means and Why It Matters
• Eligibility Requirements for Direct Authorisation
• FCA Regulatory Business Plan Requirements
• Preparing Your Application Documentation
• FCA Authorisation Application Timeline
• Appointed Representative to Directly Authorised Transition
• After Authorisation: Ongoing Compliance and Responsibilities
• Frequently Asked Questions

Last Updated: 4 October 2026

What Direct Authorisation Means and Why It Matters

Direct authorisation from the Financial Conduct Authority (FCA) is the regulatory status that allows a financial services firm to operate independently without relying on an Appointed Representative (AR) structure. Understanding the steps to become directly authorised is essential for any firm seeking this regulatory milestone. When you become directly authorised, you take full responsibility for your compliance obligations and regulatory reporting, but you also gain complete control over your business operations and the ability to offer services under your own brand.

The distinction matters because an AR operates under another firm’s regulatory umbrella. You’re constrained by their permissions, their compliance framework, and their risk appetite. Direct authorisation removes those constraints. At FCA Authorisation, we understand that the shift from AR to directly authorised status is one of the most significant regulatory milestones a financial services business can reach.

Why pursue it? Control, independence, and market credibility. Directly authorised firms can set their own permissions, expand service offerings without seeking parent-firm approval, and build trust with clients who prefer to work with regulated entities rather than representatives. The process is complex, it requires demonstrating financial resilience, competent senior management, and strong governance, but the payoff justifies the effort for firms ready to scale.

Eligibility Requirements for Direct Authorisation

Before you invest time and resources into an application, the FCA requires you to meet fundamental eligibility criteria. These are non-negotiable.

First, you must be a legal entity registered in the UK or a branch of an EEA or non-EEA firm meeting specific conditions. The FCA will not authorise sole traders or unincorporated partnerships. Your business structure must be capable of holding regulatory permissions and bearing liability.

Second, you need adequate financial resources. The FCA sets minimum capital requirements based on your proposed business model and the services you’ll offer. Firms handling client money face higher thresholds than those providing advisory-only services. You’ll need to demonstrate that your capital buffer can absorb potential losses without jeopardising client protection.

Third, you must appoint individuals to Senior Management Function (SMF) roles. The FCA requires named, qualified individuals responsible for areas like compliance, risk, and financial management (Senior Managers Regime). These people are personally accountable to the regulator. They need relevant experience, no disqualifying conduct history, and the FCA’s approval before you can operate.

Fourth, your business plan must be credible and realistic. The FCA will scrutinise your revenue projections, cost assumptions, and growth timelines. Overly optimistic forecasts or vague operational plans are red flags that trigger requests for further information or outright rejection.

Finally, you must demonstrate that you have no disqualifying connections. The FCA checks whether you, your directors, controllers, or key staff have been subject to regulatory sanctions, criminal convictions, or disciplinary action that would make you unsuitable to hold permissions.

FCA Regulatory Business Plan Requirements

Your regulatory business plan is the cornerstone of your application. It’s not a standard business plan; it’s a detailed submission that addresses the FCA’s specific concerns about your governance, risk management, and operational capability.

The plan must cover your governance structure, explaining how decisions are made, who holds accountability for what, and how you’ll manage conflicts of interest. The FCA wants to see clear lines of authority and evidence that senior management understands their obligations.

You’ll need to describe your financial projections in detail: revenue forecasts by service line, cost assumptions, and a three-year profit-and-loss projection. Be conservative. Inflated projections undermine credibility and invite deeper scrutiny.

Compliance and risk management sections are critical. Outline how you’ll identify, assess, and mitigate regulatory risks. Describe your systems for monitoring client suitability, managing conflicts, handling complaints, and safeguarding client assets. The FCA wants assurance that you have controls in place before you open your doors, not plans to build them later.

Your operational plan should detail how you’ll deliver services, whether you’re building in-house, outsourcing to third parties, or using cloud infrastructure. If you outsource, you remain accountable to the FCA, so you’ll need to explain how you’ll monitor and manage those third parties.

Include a staffing plan showing key roles, responsibilities, and the experience of the individuals filling them. The FCA reviews this carefully because staff competence directly affects regulatory compliance.

Finally, address your anti-money laundering and counter-terrorism financing (AML/CTF) framework. Describe how you’ll perform customer due diligence, monitor for suspicious activity, and report to the National Crime Agency when required.

Preparing Your Application Documentation

Assembling a complete application requires meticulous attention to detail. Missing or inadequate documents trigger delays and requests for further information that can extend your timeline by months.

Start with your constitutional documents: articles of association, memorandum of association, or equivalent. The FCA needs to confirm your legal structure and governance arrangements are sound.

Next, prepare detailed CVs for all individuals in SMF roles. These should highlight relevant experience, qualifications, and any regulatory training.

Your financial statements and projections are essential. Provide audited accounts for the past three years if available, or detailed management accounts if you’re a startup.

Prepare a detailed organisational chart showing reporting lines, decision-making authority, and the allocation of responsibilities. Ambiguity here invites questions.

Document your policies and procedures: complaints handling, conflicts of interest, market conduct, AML/CTF, data protection, and business continuity.

If you’re outsourcing functions, provide contracts or service-level agreements with your third-party providers. The FCA will review these to ensure you retain adequate oversight and control.

Prepare evidence of your IT infrastructure and security measures. Describe your systems, data backup procedures, and cybersecurity controls.

Finally, compile your compliance and risk management documentation. Include your risk register, your compliance monitoring framework, and evidence of staff training in relevant areas.

Many firms find this stage overwhelming, which is why understanding the steps to become directly authorised from the outset helps simplify the process.

FCA Authorisation Application Timeline

Understanding the timeline helps you plan resource allocation and manage stakeholder expectations. The process varies based on complexity and how quickly you respond to FCA queries.

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Initial assessment phase (weeks 1-2): The FCA conducts a completeness check. If your application is missing key documents or information, they’ll issue a deficiency notice. You’ll have 28 days to respond. This stage is where many applications stall because firms haven’t prepared documentation thoroughly.

Substantive review phase (weeks 3-16): The FCA’s assessment team examines your business plan, financial projections, governance structure, and compliance framework. They’re assessing whether you meet the authorisation criteria. If anything is unclear or raises concerns, they’ll issue a Requirement for Further Information (RFI).

Senior management assessment (weeks 8-20): Parallel to the substantive review, the FCA assesses your SMF individuals. They’ll conduct interviews, verify qualifications, and check for any disqualifying conduct.

Final decision phase (weeks 20-36): Once the FCA is satisfied with all aspects of your application, they prepare a decision. They may issue a provisional approval letter outlining any conditions you must meet before formal authorisation, or they may request final clarifications.

Authorisation (week 36+): You receive your formal authorisation letter and your FCA registration number. You can then begin operating under your permissions.

Complex applications, particularly those involving novel business models, significant AML/CTF risks, or concerns about senior management suitability, can take longer.

The FCA does not have statutory timescales for authorisation decisions, so delays aren’t uncommon. Responsiveness to FCA queries is critical. Firms that respond quickly and completely to RFIs typically progress faster than those that submit vague or incomplete answers.

Appointed Representative to Directly Authorised Transition

If you’re currently operating as an Appointed Representative, the transition to direct authorisation requires careful planning. You can’t simply apply for authorisation and continue as an AR in parallel; the FCA expects a clean transition once you’re directly authorised.

The process begins with submitting your application while you’re still an AR. During the assessment phase, you continue operating under your sponsor’s permissions. This provides continuity and reduces operational risk.

Once the FCA grants authorisation, you’ll receive a notice period, typically 28 days, before your AR status ends and your direct permissions take effect. During this window, you must:

• Notify all clients of the change in your regulatory status and what it means for them
• Ensure your compliance framework is fully operational
• Confirm that all SMF individuals are in place and ready
• Complete any outstanding transition activities (moving client assets to your own safeguarding arrangements, for example)

One critical consideration: if you’re currently handling client money through your sponsor’s safeguarding arrangements, you’ll need to transition to your own safeguarding account. This is a complex operational change that requires careful coordination with your sponsor and your bank. Plan this well in advance.

The FCA also requires you to notify your sponsor of the transition timeline. Your sponsor may have obligations to assist with the handover, particularly if clients are involved.

Many firms underestimate the operational complexity of this transition. It’s not just a regulatory status change; it’s a shift in how you operate day-to-day. FCA Authorisation understands the specific challenges that arise when moving from AR to directly authorised status, particularly around client communication, operational readiness, and compliance system implementation.

After Authorisation: Ongoing Compliance and Responsibilities

Authorisation is a beginning, not an ending. Directly authorised firms face continuous regulatory obligations that go well beyond the initial application.

You must file annual returns with the FCA detailing your financial position, compliance status, and any significant changes to your business. You’ll also submit to periodic supervisory reviews where the FCA assesses your ongoing compliance and fitness to hold permissions.

Your Senior Management Function individuals are personally accountable to the FCA. They must ensure your firm complies with all applicable regulations and report any breaches or significant issues promptly.

You must maintain your capital at or above the FCA’s minimum requirements at all times. If your capital falls below the threshold, you must notify the FCA immediately and submit a remediation plan.

Regulatory change is constant. New rules, guidance, and expectations emerge regularly. You’ll need to monitor FCA communications, industry guidance, and legal developments to ensure your policies and procedures stay current. Failure to adapt to new requirements is a common compliance failure.

Client complaints are inevitable. You must have a strong complaints-handling process, investigate complaints thoroughly, and respond within the FCA’s timescales. Unresolved complaints can trigger enforcement action.

Outsourcing doesn’t absolve you of responsibility. If you outsource compliance, operations, or client-facing functions, you remain accountable to the FCA. You must monitor your service providers, ensure they meet your standards, and be prepared to demonstrate this to the regulator.

Finally, you must be transparent with the FCA. If your business changes materially, you launch a new service line, acquire another firm, or experience significant financial losses, you must notify the FCA and seek approval if required.

Becoming directly authorised by the FCA is a significant undertaking, but it’s achievable with proper preparation and expert guidance. The regulatory landscape is complex, and the stakes are high; a poorly prepared application can result in rejection, delay, or conditions that constrain your business. FCA Authorisation has established expertise in guiding firms through this process.