On 9 April 2026 the Financial Conduct Authority (FCA) published a webpage, entitled "Asset management: improving applications for authorisation". This sets out examples of good practice and areas for improvement in asset management authorisation applications, so firms can improve their prospects of a successful application and minimise the risk of unnecessary delays.
Overall key takeaways
Applications should be coherent and internally consistent, with the business model, permissions sought, client base, fund terms, financial projections and supporting documentation all aligned.
Protection of clients is central to the FCA's approach, including appropriate client categorisation, application of the Consumer Duty where relevant, effective management of conflicts of interest and access to suitable redress schemes.
Generic or boilerplate materials are unlikely to be sufficient; the FCA expects tailored, well-reasoned explanations and documentation that reflect the firm's actual operations, risks and controls.
In addition, the FCA's guidance focuses on the following eight areas:
Key points made in respect of each topic include
1. Office location
The firm's "mind and management" should genuinely be in the UK, with day‑to‑day decisions on the business, portfolios, distribution and oversight of outsourcing taken in the UK.
Key takeaways for firms
Senior decision‑makers should spend a proportionate amount of time in the UK and be able to work here.
UK based staff must be sufficiently senior to challenge non-UK owners.
Where appropriate, UK based Senior Management Function (SMF) holders should oversee activities undertaken in other jurisdictions.
Firms should avoid brass plate models (including requiring UK staff to seek routine approval from overseas for day-to-day decisions).
2. Outsourcing
Firms that outsource activities remain fully responsible for compliance and must have appropriate policies and oversight to prevent harm.
Key takeaways for firms
Firms should identify all outsourcing arrangements and clearly explain how they will oversee them in practice.
Firms should use service level agreements (SLAs) to monitor outsourced providers, identifying failings at an early stage and implementing remedial action before harm occurs.
Firms should consider the relevant rules, their ongoing responsibilities and the impact on their business when outsourcing
3. Business models
Firms should fully consider the risks their activities pose to clients, the integrity of the UK financial system and the firm itself and have appropriate plans in place to mitigate and manage those risks.
Key takeaways for firms
Firms should put in place clear, documented risk mitigation and management plans.
Firms should not structure their business models to avoid rules designed to provide clients with appropriate levels of protection.
4. Conflicts of interest
Before applying for authorisation, asset managers should consider the conflicts of interest rules that will apply to their business and have a clear plan for identifying, preventing and managing such conflicts.
Key takeaways for firms:
Firms should maintain a "Conflicts of interest" register specific to their business, which sets out how conflicts will be identified, prevented where possible and managed where they cannot be prevented.
Firms should document how frequently conflicts are reviewed and how staff are required to disclose potential conflicts.
5. Regulatory status of clients
Firms should understand
who their clients are
how they will be categorised and
which rules apply when engaging with them.
A firm's intended client base should be clearly articulated and consistent across all application documents.
Key takeaways for firms:
Firms should have clear policies and procedures that comply with the rules applicable to their client types.
Business plans and financial projections should align with the proposed client base.
Firms should be able to describe the proposed investors in their funds, how clients will be categorised and how products will be marketed in line with PRIN, COBS, PROD and FSMA.
Where dealing with retail clients or elective professional clients, firms should provide detailed client categorisation policies and procedures (including any appropriateness/suitability tests and scoring methodologies).
6. Consumer redress schemes
Firms should ensure that clients have access to appropriate redress schemes and consider how the Handbook rules in DISP and COMP will apply to their business.
Key takeaways for firms
Firms should be able to explain clearly whether, and how, the Financial Ombudsman Service (FOS) and Financial Services Compensation Scheme (FSCS) apply to them.
Communications with consumers should clearly set out which schemes do or do not apply.
Firms should not seek exemption from the FOS or FSCS where this is not appropriate.
Firms should not assume that the absence of retail clients automatically places them outside the scope of the FOS or FSCS.
7. Changes to the scope of permissions
Firms applying for a variation of permission (VOP) should clearly explain how any new activities, investments or client types will be used, the impact on the business and how the firm has put in place the necessary staff, policies, procedures, systems and controls.
Where the firm's scope of permission is to be reduced, the firm should explain how this will affect their business model, particularly where they are removing activities that generate significant revenue.
Key takeaways for firms
Firms should provide a clear rationale for adding or removing activities, investments or client types and explain how these changes fit with the existing business model.
Applications should include sufficient detail on expected changes to financial performance and staffing.
Firms should avoid asserting that changes will have "no material impact" where this is unlikely to be the case.
8. Fund particulars and mandates
A firm's fund documentation should contain sufficient detail on the funds it intends to manage, including proposed fees, fund structure and the assets in which the fund will invest.
Firms proposing to manage an AIF must provide supporting documents such as draft fund prospectus, offering memorandum, terms of business and Investment Management Agreement.
Key takeaways for firms
Firms should submit draft fund documents that are representative of the final expected versions.
Fee disclosures in fund documentation should be consistent with financial projections, with clear explanations where fees or projections differ from market norms.
Firms should avoid generic or incomplete fund documentation and ensure that key terms, including fees, structure and investment strategy, are tailored to, and aligned with, the proposed business model.
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