HM Treasury has published a policy update on its plan to create a “provisional licences” authorisation regime for early-stage financial services firms seeking authorisation from the Financial Conduct Authority (FCA). The regime would allow the FCA to grant time-limited permissions so firms can undertake limited regulated activity under close oversight while working towards full authorisation. The proposed regime is intended for firms that are not already FCA-authorised and are seeking Part 4A permission under the Financial Services and Markets Act 2000 for activities already within the FCA perimeter. It would not apply to variations of permission, activities being brought into regulation for the first time, or firms subject to dual regulation by the Prudential Regulation Authority and the FCA. Provisional licences would run for up to 18 months, with extensions available only in limited circumstances, and the FCA would apply modified and proportionate expectations when assessing whether firms can meet the Threshold Conditions for the duration of the provisional period. Firms would face restrictions on the amount and type of business they can undertake, must comply with relevant rules and continue to meet Threshold Conditions, and would be expected to demonstrate an orderly wind-down if full authorisation is not achieved. Permissions would expire at the end of the period if full authorisation is not granted, requiring firms to cease regulated activities and wind down live products, with a limited extension available where a full authorisation application has been submitted in good time but the FCA has not reached a decision. HM Treasury notes that the regime will require primary legislation, which it will bring forward when parliamentary time allows. The FCA will engage with industry on operational design and consult as necessary.
HM Treasury 2025-12-01
HM Treasury outlines a provisional licences regime enabling the Financial Conduct Authority to grant up to 18 months time-limited permissions for early-stage firms
HM Treasury plans a "provisional licences" regime for early-stage financial services firms to conduct limited regulated activities under FCA oversight while seeking full authorisation. It targets firms not yet FCA-authorised, excluding those under dual regulation or seeking new activities. Licences last up to 18 months, with limited extensions, requiring compliance and an orderly wind-down if full authorisation isn't achieved.