Unsuccessful FCA authorisation application- Your trouble-shooting guide in Cardiff

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.

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, FCA authorisation applications are often unsuccessful. The FCA has adopted a policy of more rigorous scrutiny for new firms applying to enter the authorisation ‘gateway’ to UK-regulated financial services. 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 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;
• Indications that the technology or systems you’ll be using to carry out the applied-for regulated activities aren’t ready.

If the FCA informs you that your application is incomplete but you’re unsure why, request feedback and review the guidance on 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 seeking legal or other professional advice as needed. 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.

Even if your initial application contains all the required information and you have paid the fee, the FCA often won’t approve applications immediately. They may need to clarify details or ask follow-up questions. An FCA case officer will be assigned to assess your application further. You should not submit a weak initial application and then attempt to improve it later based on the FCA’s feedback. This may result in your application being rejected as incomplete and negatively impact the FCA’s view of your business’s preparedness.

If the FCA is considering refusing your application due to unresolved concerns, they will typically suggest that you withdraw and reassess your submission. Your fee will not be refunded. To be authorised, your business must meet ‘threshold conditions’ which include having adequate financial and non-financial resources, a viable business model, meeting the ‘location of offices requirement’, being ‘capable of being effectively supervised’ and suitability for regulation.

If you choose not to withdraw an unsatisfactory application, the FCA can formally decline it, and your fee will not be refunded. To ensure fairness, the FCA will issue a warning notice, allowing you to present your case. If you disagree with the refusal, you have the right to appeal to the Upper Tribunal. To successfully appeal, you will need to show that the FCA failed to follow its procedures properly, failed to take account of all the circumstances or made a mistake in interpreting the law.

Discovering that your FCA authorisation application has been unsuccessful need not signal the end of your regulatory ambitions. By working closely with our financial services solicitors, you’ll benefit from tailored advice on remedying application deficiencies, responding effectively to FCA feedback and, where necessary, representing you through the appeals process.