Getting Your FCA Permissions Right: Why It Matters More Than You Think

Securing the right regulatory permissions is crucial for your business's credibility and future growth.

Applying for permissions you don't need or failing to explain how the permissions align with your business model, will immediately raise red flags.

It's one of the most common stumbling blocks in the authorisation process, and one of the most avoidable. The regulator wants to see that you understand not just what you're applying for, but why, and that you've thought through how you'll deliver compliantly.

Why Permissions Alignment Is Non-Negotiable

Your regulatory permissions aren't a checklist to complete; they're the foundation of your relationship with the FCA. Get them wrong and you risk:

• Delayed authorisation while the FCA seeks clarification

  
  

• Increased scrutiny of your application and business model

  
  

• Rejection if the FCA concludes you don't understand your own regulatory obligations

Key Points to Consider:

- Alignment is Essential: Your permissions must map directly to your proposed regulated activities. A mismatch suggests you either don’t understand what you’re doing, or you’re not being transparent about your plans.

- Quality Over Quantity: Don’t apply for every available permission "just in case." The FCA prefers a targeted approach that reflects a clear understanding of your business model.

- Plan for the Future but be Realisic: Consider your roadmap for the next 3-5 years. If you have concrete, well-developed plans for additional activities, it makes sense to incorporate those permissions now. But vague ambitions aren’t enough – you need evidence of planning, resources, and capability.

Three Critical Steps to Get It Right

Step 1: Map Your Business Model to Your Permissions

Start by defining exactly what services you’ll provide, to whom, and how. Ask yourself:

• What is the market opportunity. Who are you targeting?

  
  

• Who are your competitors, and what’s your Unique Selling Point (USP)?

  
  

• What sytsems, third parties, and resources will you need to deliver your business plan?

This isn't just about ticking regulatory boxes - it's about demonstrating to the FCA that you've thought through your business in detail and understand how it fits within the regulatory permimeter.

Action:

• Draft a clear service description that links each proposed activity to the specific permission(s) required.

• Identify any grey areas where permissions might overlap or where clarification is needed.

• Be prepared to explain your rationale for each permission you're requesting.

Step 2: Build Compliance Into Your Systems from Day One

The FCA expects you to have effective systems and controls in place before you're authorised. That means designing compliance into your operations from the start, not bolting it on later. Focus on:

• How will you monitor and ensure adherence to regulatory requirements? This includes processes for regular audits, reporting, and oversight.

  
  

• Not just designing systems but testing them. Are they preventing compliance breaches? Are they fit for purpose as your business scales?

  
  

• Identifying potential conflicts early. Where might commercial pressures clash with regulatory obligations? How will you manage these tensions in practice?

  
  

• Operational resilience: What happens if a key system fails or a third-party provider lets you down? The FCA increasingly expects firms to demonstrate they've thought through operational risks.

Action:

• Document your compliance systems clearly and explain how they'll work in practice

• Map out potential conflicts of interest and show how you'll manage them

• Prepare evidence that your systems have been tested (even at a small scale)

Step 3: Identify and Empower Your Key Stakeholders

Compliance isn't something you can outsource entirely. The FCA wants to see that the right people; senior management, compliance officers, legal advisors, operational leads are involved, accountable, and empowered.

Key considerations:

• Recognise the key stakeholders in your business who play a vital role in compliance and governance.

  This may include senior management, compliance officers, legal advisors, and operational teams.

  
  

• Foster collaboration among these stakeholders to ensure that your business is effectively managed and compliant. Their insights and expertise are invaluable in navigating regulatory landscapes and enhancing overall governance.

  
  

• The firms that succeed are those where compliance is embedded into decision-making, not treated as a separate function that reviews decisions after the fact.

Action:

• Identify the accountable stakeholders responsible for ensuring effective governance

• Ensure your compliance function has visibility and input into business planning

• Document how key stakeholders will work together to maintain ongoing alignment

What Should You Do Now?

If you're preparing for FCA authorisation:

1. Start with your business model and work backwards to permissions - don't start with permissions and try to fit your business into them

2. Audit your current thinking: Are there permissions you've included "just in case"? Can you defend each one with a clear rationale?

3. Test your understanding: Could you explain to the FCA why each permission is necessary and how you'll comply with the obligations attached to it?

4. Engage early: If you're unsure whether a particular permission applies, seek regulatory advice before submitting your application.

5. Document everything: The FCA will want evidence of your thinking, planning, and testing, so keep records as you go.

6. Effective Governance: Identify the key stakeholders with cross-functional collaboration to show the regulator that your business is effectively managed.

Getting your permissions right isn't just about regulatory compliance, t's about setting your business up for sustainable growth. Firms that take the time to map permissions properly, build robust systems, and engage the right stakeholders are far more likely to secure authorisation smoothly and operate confidently post-approval.

Need help mapping your permissions to your business plan? Adempi works with firms preparing for authorisation to translate regulatory expectations into practical, proportionate strategies. Get in touch to discuss how we can support your application

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You can reach us at contact@adempi.co.uk or on 0203 925 4761 

Or to prepare your business for whats next or find out more about our services from the website: Adempi - FCA Compliance Consultants.