On 4 December 2025, HM Treasury (HMT) published a policy paper setting out the government’s intention to create a provisional licences authorisation regime for early-stage financial services firms seeking Financial Conduct Authority (FCA) authorisation.

Background

HMT explains in this paper that as part of the Regulation Action Plan published in March 2025, the government committed to working with the FCA to establish a provisional licence regime and that the aim of this would be reduce the barriers firms face when seeking authorisation.

Summary

HMT makes clear that the purpose of introducing this regime would be to enable such firms to undertake limited regulated business under close supervision for a defined, time limited period, with the aim that by the end of that period the firm be able to be granted full authorisation.

HMT also sets out certain key points in relation to the design of the regime:

  • Scope and eligibility: The regime is intended for firms which are not already authorised by the FCA and are seeking permission under Part 4A of the Financial Services and Markets Act 2000 for activities that are already within the FCA’s perimeter.
  • Application: Relevant firms will be able to apply for a provisional licence through a new process that the FCA will establish.
  • Assessment conditions: Firms will need to demonstrate that they can meet the threshold conditions, for the period of the provisional licence, but that the FCA’s assessment of applications for provisional licences against the threshold conditions will be proportionate.
  • Duration and other restrictions: The provisional licences regime will apply a fixed duration of up to 18 months and the FCA will impose restrictions on the amount and type of business a firm can undertake during this period.
  • Requirements: Firms will be required to comply with relevant rules and continue to meet the threshold conditions during the provisional licence period, and the FCA will have its full suite of supervisory and enforcement powers in relation to these firms.
  • Full authorisation: The FCA will develop a bespoke application and assessment process for firms with a provisional licence, which will consider the information provided during the provisional licence application and will involve ongoing dialogue with the firm and the FCA providing detailed feedback.
  • End of permissions: If firms have not achieved full authorisation by the end of the provisional licence period, their permissions will expire, and the firms will have to cease undertaking regulated activities.

Next steps

HMT also make clear that introducing a provisional licence regime will require primary legislation, which will be taken forward when parliamentary time allows, and that the FCA will engage with industry on the design of the regime, as necessary.