Following on from my recent reflection on my ‘Greatest Hits’, I’ve been asked to revisit another of my key topics: FCA authorisations, with particular focus on the payments sector. Having spent many years managing authorisations teams at the Financial Conduct Authority (FCA), most notably the Payments team, I have a particular insight into where the FCA’s approach originated and how it has evolved over time.
Since the introduction of financial services regulation in 1986, firms have been required to submit applications to the relevant regulator to perform certain financial activities. In the early days of Self-Regulatory Organisations (SROs) and, later, the Personal Investment Authority (where I first cut my regulatory teeth), the volume of authorisation applications was manageable.
Fast forward to 2000 and the creation of the Financial Services Authority (FSA), later superseded by the FCA, and the size and scope of the authorisations function increased significantly. Additional responsibilities were conferred upon the FSA, including oversight of mortgage and insurance intermediaries, payment institutions, consumer credit firms and claims management companies. This trend of expanding the regulated population has continued, with the FCA now supervising over 42,000 firms, all of which have passed through the authorisation ‘gateway’.
A Shift in Regulatory Approach
The growing volume of applications required a proportionate, risk-based approach. Historically, the FCA focused on whether the applicant broadly met the relevant Threshold Conditions (as outlined in COND), and did not necessarily scrutinise every minor detail. This pragmatic approach allowed the regulator to manage thousands of applications each year based on available resources.
The Gloster Report and the Rise of Intensive Assessments
The publication of the Gloster Report (2020), following the collapse of London Capital & Finance (LCF), recommended that the FCA enhance its internal authorisations and supervisory processes. In response, the FCA’s 2021 Business Plan outlined a shift toward a more intensive assessment approach, including deeper scrutiny of financial information and business models.
Unfortunately, this change coincided with significant resourcing challenges within FCA Authorisations. Between 2021 and 2023, many applications sat dormant for up to six months before a case officer was assigned. With only half of the statutory 12-month decision period remaining, there was often a rush to conclude cases, sometimes resulting in rejections or an invitation to withdraw.
Fortunately, these operational challenges have now been addressed. Payments applications, including those for Payment Institutions (PIs) and Electronic Money Institutions (EMIs), are currently allocated within three weeks of receipt.
From Proportionality to Rigour
The FCA’s updated stance followed not only the Gloster recommendations but also the high-profile failures of firms such as Ipagoo, Supercapital and Premier FX. These incidents exposed weaknesses in the previous authorisations regime, prompting the FCA to demand greater evidence that firms are ‘ready, willing and organised’ at the point of application.
While this principle is sound, it places new start-ups at a disadvantage. Many cannot begin generating revenue until they are authorised and must now face the prospect of a 12-month wait while also meeting higher evidential thresholds upfront.
So, in seeking to flex its muscles more, the FCA said:
“Our standards will be higher [implicitly accepting that they had been lower] with more intensive assessment and greater scrutiny of firms’ financials and business models”.
Unsurprisingly, this led to an increase in applications being refused or withdrawn. The FCA anticipated this, noting:
“We will expect [refusal/withdrawal/rejection rates] to increase initially as we make the gateway more robust.”
While it is appropriate for the FCA to reject applications from firms that fail to meet the Threshold Conditions, an approval rate of just 8% suggested the pendulum had swung too far. Many firms accepted the regulator’s ‘invitation’ to withdraw rather than risk a formal Warning Notice proposing refusal of the application.
Signs of Stabilisation?
So, certainly, it’s been a tough time for payments firms seeking authorisation over the past couple of years, but we do get the sense now that things have settled down somewhat. Whilst the approval rates still aren’t great, hovering around 20%, according to the latest intelligence, the FCA is, at least, conscious that it cannot simply apply raised expectations in a vacuum.
The FCA has made genuine efforts to provide more comprehensive guidance to firms approaching the authorisation process. One particularly welcome development is the offer of pre-application meetings, which give firms the opportunity to discuss their plans and ask questions before submitting an application or notification. These meetings can be invaluable in identifying gaps early and avoiding costly delays or rejections.
However, approval rates remain relatively low. While updated figures for 2025 are not yet available, the most recent data suggests only modest improvements:
(Source: FCA website https://www.fca.org.uk/firms/apply-emoney-payment-institution)
This ongoing trend highlights an apparent disconnect between the UK government’s policy objectives to promote growth, attract fintech firms, and stimulate innovation, and the experience of firms navigating the FCA’s gateway. We have seen real examples of firms withdrawing from the UK market or relocating to more accessible jurisdictions. Others are pursuing acquisition as a potentially simpler route to authorisation.
While the FCA is technically accountable to HM Treasury (HMT), it has historically defended its operational independence. However, a recent exchange of letters between HMT and the FCA has resulted in a Policy Update proposing a Provisional Licences Authorisation Regime. This regime could represent a welcome ‘halfway house’ for new firms, allowing the FCA to exercise flexibility around initial conditions of authorisation. If implemented, this model could enable more firms to begin trading under a provisional licence while working towards full authorisation.
In the meantime, firms must continue to meet the FCA’s high expectations and provide robust evidence that they are ready, willing and organised to comply with the Threshold Conditions.
How Complyport Can Help
Managing the FCA authorisation process , especially for payments and e-money firms, is increasingly complex and resource-intensive. Complyport’s expert team of regulatory consultants includes former FCA staff with direct experience of the authorisations process.
We offer end-to-end support, including:
- Readiness assessments and regulatory gap analysis
- Guidance on Threshold Conditions and evidential requirements
- Assistance with business plans, financial forecasts, and risk frameworks
- Preparation for pre-application meetings
- Managing correspondence with the FCA
We work closely with firms to maximise the likelihood of a successful outcome.
Need support with your FCA authorisation?
Contact Complyport today to arrange a consultation with one of our Subject Matter Experts.
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Payment Services
