Pre-application stages

To prepare your application you should:

• decide your business model including:
  
  • your scope of permission
  • whether you fall under any UK legislation
• create a Connect account
• fill out your application pack
• organise resources to demonstrate compliance with threshold conditions
• submit your authorisation application on Connect

Read more about the main things you need to do before applying to us for authorisation

We provide different support tools to firms to help you through your regulatory journey. These include:

• pre-application meetings
• an Innovation Hub for innovative firms
• contact centre

Products, services, customers and geography

There are 2 primary products to provide asset management service – segregated and pooled.

A segregated portfolio involves one investor while a collective portfolio involves more than one investor, whose assets are being managed as if these were one investor. An asset manager could manage both segregated mandates and collective mandates.

Providers of core asset management services include:

• mainstream asset managers
• hedge fund managers
• private equity managers
• discretionary private client managers
• other asset managers

Determining your customer or investor type and the geography of your customers/investors will further decide how you should set up your business. See our Handbook COBS 2.3 – Clients to help you determine the client types you intend to serve or promote investment products.

The geography of your clients/investors is your commercial decision as you may want to serve clients in one or more of the following – UK, EEA (excluding UK), and rest of the world. The rules apply differently depending on the different jurisdictions. FCA authorisation can only provide access to UK markets, while any access to EEA markets and the rest of the world would depend on rules of such local jurisdictions.

View our diagram providing a high-level illustration of the different European legislation and regulatory regimes that can be relevant when a firm undertakes individual portfolio management on the one hand, and collective portfolio management on the other (PDF)

Firms should satisfy themselves, taking independent advice as necessary, on which permissions they need to conduct their business.

UK legislation and your business model

Your product type – segregated vs pooled – will dictate whether you are an investment firm subject to the UK implementation of MiFID

Please note that Article 2(i) of UK MiFID exempts collective investment undertakings and pension funds. It also exempts the depositaries and managers of such undertakings, exempting all CIU managers from UK MiFID for their CIU business.

*Only certain investors are able to invest in an ACS – these are professional investors as defined in Appendix 3 of UK MiFID; a large ACS investor – this is an investor who has £1 million to invest in cash or contributes property of not less than £1 million or is an investor who is already invested in an ACS.

AIFM approval

The UK implementation of AIFMD provides flexibility to smaller AIFMs that do not need to comply with the entire UK AIFMD.

See an overview of the different authorisation options under AIFMD (PDF).

Other approvals needed

Approval for funds

The funds you plan to manage might need separate approval from us or another regulator where the fund has been incorporated. Investment funds that are structured as collective investment schemes (CIS) must be authorised or recognised by us to be promoted to retail investors in the UK. Examples of UK authorised funds include UCITS, NURS, ELTIF, or QIS. Unauthorised funds might still need a notification of management, i.e. a simple approval with a relevant reference number.

See an illustration and explanation of 3 fund structures that can be used for investment funds (PDF).

Find out more about authorised funds and unauthorised funds.

Sensitive business name approval

You need to get a view from the FCA and consent from the Secretary of State to use a business name containing certain sensitive words relating to financial services.

Find out more about these words and how to apply for permission to use them.

CET1 approval 

If you are a MIFIDPRU investment firm or a collective portfolio manager that applies the UK CRR concept of 'own funds', you will need approval from us to raise common equity to meet regulatory capital requirements. 

Controllers

A ‘controller’ is defined within section 422 FSMA and includes any person who holds a certain level of influence over a UK authorised firm, whether directly or indirectly, such as shareholdings, voting and non-voting rights, partnership interests, significant influence and the rights to share in profits or giving rise to contribute to debts.

Find the right controller forms to be submitted along with your authorisation application.

Approved person’s applications

An 'approved person' is an individual who we approve to do one or more activities - what we call 'controlled functions' - for an authorised firm.

Find out more about approved persons.

Client money and assets

You might be covered under our client asset (CASS) rules for client money and/or client assets. 

Read about client money and assets.

Your prudential category

Your prudential category depends on your scope of permission and the risks to your business model. Asset managers are usually covered under the  IPRU-INV and/or MIFIDPRU prudential sourcebooks. 

Use our tool to help you identify the key regulatory requirements that determine your prudential category.

Your marketing/promotion plans

As a fund manager, you need to know what marketing or promotion you are allowed to conduct for your funds. Please review our marketing rules under COBS 4 and under PERG 8.