FCA Authorisation: 5 Common Mistakes to Avoid

Applying for FCA authorisation is a significant milestone for any financial services business. It’s also a process where small missteps can lead to long delays, costly rework, or outright rejection.

At RB Compliance, we regularly support firms through the authorisation process and see the same issues arise time and again. Below are five of the most common mistakes firms make when applying for FCA authorisation — and how to avoid them.

1.      Underestimating the FCA’s Expectations

One of the biggest mistakes firms make is assuming FCA authorisation is a “form-filling exercise”. It really isn’t.

The Financial Conduct Authority expects firms to demonstrate that they understand their regulatory obligations – this should be demonstrated in three key areas:

1. The regulatory business plan which details the purpose and strategy of the business together with all products and services, including those which the firm is aiming to be regulated. The business plan then explains the marketing strategy, financial controls and governance framework, it when describing these areas the firm must display an understanding of regulatory requirements

2. Policies and procedures should not only comply with the regulatory requirements but expressly reference them, this is often an item the FCA push back on during the process, resulting in delays

3. Copies of financial promotions which must demonstrate compliance with the relevant advertising rules for that particular firm

As part of this the firm must demonstrate they have a viable, well-thought-through business model, and can operate compliantly from day one – this ‘ready and willing’ posture is what the regulator looks for.

Applications that lack depth, clarity, or evidence often trigger lengthy follow-up questions or are paused altogether. A strong application doesn’t just state what you intend to do — it explains how you will do it in practice.

2.      Generic or Inconsistent Business Plans

Your regulatory business plan should be tailored to your specific activities, permissions, and target market. Too often, we see plans that are overly generic, copied from templates without proper adaptation or inconsistent with other parts of the application.

The FCA will cross-check your business plan against your financial forecasts, compliance policies, and governance arrangements. Any inconsistencies are likely to raise red flags and undermine confidence in your firm’s readiness.

3.      Weak Governance and SM&CR Arrangements

Governance is a core focus for the FCA — particularly under the Senior Managers & Certification Regime (SM&CR). The FCA needs to see clear accountability, appropriate oversight, and individuals who genuinely understand the risks of the business. Weak governance structures are one of the fastest ways to stall an application.

Common issues include:

• Unclear allocation of Senior Management Functions

• Vague or incomplete Statements of Responsibilities

• Senior managers lacking relevant experience for their role

4.      Poorly Designed Compliance Policies

Submitting off-the-shelf compliance policies without tailoring them to your firm is another frequent mistake, as is having policies which don’t call out the relevant regulatory requirements.

Policies should reflect your actual business activities and be bespoke to your firm. Not all firm’s require the same level of robustness, instead your policies can be proportionate to your size and risk profile – remember to make sure you don’t promise anything you don’t, or wont actually deliver.

5.      Unrealistic Financial Projections

Financial forecasts that are overly optimistic — or don’t align with the proposed business model — are a common stumbling block.

The FCA will assess whether your firm:

• Has sufficient financial resources

• Can remain viable under stress

• Has properly considered costs such as compliance, staff, and systems

Forecasts should be credible, conservative, and supported by clear assumptions. Inflated revenue projections with minimal explanation are unlikely to inspire confidence.

FCA authorisation is not about ticking boxes — it’s about demonstrating that your firm is ready to operate in a regulated environment.

Avoiding these common mistakes can significantly improve your chances of a smoother, faster authorisation process. Early preparation, realistic planning, and a well-structured application make all the difference.

If you’re considering FCA authorisation and want expert support, RB Compliance can help you navigate the process with confidence. Contact us for support: robert.bell@rbcompliance.co.uk