On 9 April 2026, the Financial Conduct Authority (FCA) published a list common issue with applications which have reduced asset management firms’ chances of success or caused delays in authorisation.

The FCA set out the following key findings:

  • Office location – location of mind and management: Good practice includes where firms have individuals based in the UK for a proportionate amount of time for the business model they are undertaking and the risk the business poses; ensure that, even where the business is ultimately owned by non-UK based individuals, UK based staff are sufficiently senior to challenge the firm’s owners and, where appropriate, have UK-based senior management function holders at the firm who sufficiently oversee the other aspects of the firm’s business undertaken in other jurisdictions. Areas for improvement included individuals undertaking roles where they are not able to make decisions on the day-to-day running of the firm without seeking approval from overseas individuals or run by offshore senior managers who do not have the right to work in the UK, or whose tax status limits materially the time they can spend in the UK.
  • Outsourcing – underestimating accountability: Good practice includes where firms have identified outsourcing arrangements and how they will oversee them or use service level agreements (SLAs) to properly oversee and monitor the activities of their outsourced service providers. Areas for improvement included where firms haven’t considered the relevant rules, the applicant’s responsibilities, and the impact on their business when outsourcing and failing to appreciate that responsibility and oversight will sit with the individual.
  • Business models – exposing clients to risk: Good practice includes clearly articulating what impact any risk occurring would have on its clients, the business – including whether the risk would impact the viability of the business – and the integrity of the UK financial system. Areas for improvement included not identifying the risks their business model poses to clients and the integrity of the UK financial system and / or adequately consider and evidence how they might remove or mitigate those risks, where firms approach the FCA with business models that pose an unacceptably high level of risk to the firm’s clients, firms who engage with retail clients unable to adequately show how they apply the Consumer Duty and firms who appear to have structured their business model to avoid rules that would give clients the expected level of protection.
  • Conflicts of interest – failing to identify concerns: Good practice includes firms having a conflicts register specific to their business and details how the firm will identify conflicts of interest and the steps it will take to prevent conflicts arising and how it will manage these should it not be possible to prevent them arising, and are able to document how often conflicts are reviewed and how staff are asked to disclose potential conflicts. Areas for improvement include failing to identify and consider how to prevent and manage potential conflicts of interest adequately or at all.
  • Understanding the regulatory status of clients: Good practice includes where firms have clear policies and procedures that comply with the relevant rules for those clients; for example, with retail clients intending to provide investment advice or sell investments, firms can show how they comply with the applicable appropriateness/suitability rules. Areas for improvement included firms being unable to show how they will engage or categorise their proposed clients, which could indicate a risk of client harm.
  • Redress – ensuring clients have access to appropriate schemes that protect consumers: Good practice included firms being able to explain how the Financial Ombudsman and Financial Services Compensation Scheme (FSCS) do, or do not, apply to them including the rationale they used when arriving at their decision. Areas for improvement included firms seeking exemption from the Financial Ombudsman and the FSCS when this is not appropriate.
  • Changes to the scope of permissions: Good practice includes firms explaining in sufficient detail how their business model may change, including financial forecasts and staffing. Areas for improvement included firms claiming that the addition or removal of activities will have ‘no material impact on a business,’ where this seems unlikely.
  • Fund particulars and mandates: Good practice includes firms providing draft documents as part of their application, that are representative of the final expected version. Areas for improvement include not providing fund documentation of sufficient quality or detail; for example, the documentation has not included the proposed fees or is generic and not tailored to the firm’s proposed business model.