If you are starting a small business, and you are looking to deal in financial products, nine times out of ten you will have to become authorised by the Financial Conduct Authority (FCA) to trade legally in the UK. Helping you here, Turner Little explains how to become an FCA-authorised small business.
Intro to authorisation
The FCA is the UK’s financial regulatory body, responsible for protecting consumers’ best interests. You are often required to become FCA-authorised if you want to enter this industry, so the body can vet your business and ensure you conform to their strict trading standards. If you are not FCA-authorised in some cases you may be breaking the law, and face financial consequences as a result.
Types of services
You will be required to attain FCA-authorisation in most cases. The list of products this remit covers is extensive, including insurance products, consumer credit (for both lenders and brokers), payment services and electronic money services. There are some exceptions, however, where you do not have to become FCA-Authorised. If you operate as a bank, building society, credit union, non-profit organisation, or supply professional services e.g. as an accountant, you may not have to be authorised.
Cost and time-scale
Attaining FCA-authorisation can be costly and time-consuming, so take this into consideration to avoid a cash flow crisis. The cost is based on various factors – primarily your company’s ‘complexity’ – i.e. how complex the service you provide is, and your projected annual turnover. For firms which are set to be very profitable, this can run into the tens of thousands. As for the time scale, the minimum is six months, but it can go as high as a year or more, depending on the type of service you will provide.
Application process
There are four stages that you are required to complete to apply for FCA-authorisation. First, create a robust business plan, which shows which permissions and controlled functions you will need for your business, who will hold the FCA license, your financial activities, risks, budgets etc. Second, gather the necessary documents i.e. your accounts and the FCA form, and then complete your application.
Next you will need to complete ‘controller’ forms on behalf of your business. These are papers which are specific to your type of company and financial activity, and there are different forms for individuals, trusts, partnerships and corporate operations. Finally, submit all of these forms to the FCA, along with payment, and the body should take six months to process and approve your application.
Find alternatives
If you want to avoid FCA-authorisation, there are some ways to do so. You can make your business a financial ‘introducer,’ ‘appointed representative’ or ‘trading style,’ but in these cases, you will still need to conform to all the relevant FCA regulation, as you would if you were authorised. This route can be more cost-effective, but it often pays to be authorised, as it promotes vital consumer trust.
Seek out advice
You should keep in mind that the process of determining whether your firm requires FCA-authorisation and making an application, can be complex. It is wise to enlist experts in the area of business formation and establishment, to ensure you comply with all the legal requirements. We are experienced in this field, and as part of our corporate services, Turner Little can provide you with the comprehensive business and legal advice retainer that you need to apply for FCA-authorisation.
