By Amelia Morrissey, Compliance Consultant Analyst, UK
For firms wishing to enter the UK and establish a permanent presence (rather than relying on the various marketing only regimes which are available to investment funds such as the National Private Placement Regime (NPPR) or Overseas Funds Regime (OFR)), it isn’t just about getting permission – it’s about proving you can be supervised, trusted, and deliver good outcomes from day one. The Financial Conduct Authority (FCA) sets a high bar for overseas firms, but with the right structure and preparation, the path to authorisation is clear. Here’s what international firms need to know – and how to get it right.
What do international firms need to get authorised?
To operate in the UK, overseas firms must meet the FCA’s threshold conditions under the Financial Services and Markets Act (FSMA). In simple terms, the FCA is asking five questions:
- Is your business model credible?
- Do you have enough financial and operational resources?
- Are key decisions being made in the UK (“hearts and minds)
- Can the FCA effectively supervise you?
- Are your people fit and proper?
- What does being supervised really mean?
This is where many firms fall down. At a minimum, you need:
- A real UK presence (brand or incorporated identity)
- Registration with Companies House
- Clear governance and reporting lines
- The ability to provide accurate, timely information to the FCA
In practice, the FCA is looking for more than a legal footprint. Your governance framework, corporate plans, risk management, compliance framework and systems and controls must all work in a UK regulatory contest – not just at a group level.
Where should your people be based?
You can use group resources outside the UK – but with limits.
You must:
- Retain oversight and control of outsourced functions
- Avoid over-reliance on offshore teams that weakens governance
- Ensure key roles are properly anchored in the UK
The FCA also requires that individuals conducting controlled functions (those conducting regulated activities, such as making investment decisions or dealing with clients) operate in their jurisdiction. For international firms to comply, certified staff must be UK-based and UK-certified.
Exception: individuals spending fewer than 30 days during a twelve-month period in the UK may not need certification so long as there is proper supervision from a regulated person at the firm.
What does “hearts and minds” mean in practise?
The FCA expects decision-making to happen the UK. Typically, that means:
- A majority of senior management or board members are based in the UK
- UK leadership has real authority not just oversight
- Key decisions affecting the UK business are made locally
Branch vs subsidiary: which structure works best?
Choosing the right structure is critical.
Branch
- Faster and more flexible to establish
- Harder for the FCA to supervise
- FCA approval effectively applies to the entire group
Typical subject to closer regulatory scrutiny given jurisdictional differences and the potentially complex insolvency procedures
Subsidiary
- Separate UK legal entity
- Preferred by the FCA
- Easier to supervise and demonstrate control
- Simplifies meeting hearts and minds requirement given most senior managers already operate from within the UK
The Appointed Representative (AR) route
Not ready for full authorisation? The AR model offers an alternative.
- Operate under another firm’s (the principal firm) regulatory licence
- Faster route to market
- Lower upfront regulatory burden
However:
- You must follow the principal’s policies and oversight
- You have less operational flexibility
Many firms use this as a stepping stone before applying for direct authorisation.
FCA priorities for 2026: what changing?
The FCA is becoming more targeted and proactive, with sector-specific priorities, more consistent regulatory expectations. International firms operating in the UK should be aware of and prepared for these key priorities.
For wholesale buy-side firms
- Consumer Duty – The FCA will take a proactive focus on product suitability, consumer understanding, clear communications and demonstrable good customer outcomes
- Proactive risk management – Firms should strengthen operational resilience, maintain robust incident and recovery plans, and conduct thorough due diligence and monitoring to ensure controls effectively prevent market abuse
- Private markets – tighter governance, valuation and conflict management
For wholesale markets
- Financial crime and market abuse – Stronger financial crime controls, enhanced surveillance, and active collaboration with the FCA and law enforcement to detect and deter market abuse
- Conflicts of interest – Detailed mapping and oversight with controls that effectively prevent and manage conflict and conduct issues, especially non-financial misconduct
- Operational resilience – Third‑party and technology risk oversight, and robust incident response and liquidity frameworks that can withstand market stress
What this means for clients
If you’re planning to enter the UK market, the message is clear:
- Substance matters: a token UK presence is no longer enough
- Governance is under the microscope: weak structures will delay approval
- Location of decision-making is critical
- Regulatory expectations are becoming more proactive and data-driven
- The right entry strategy (subsidiary vs branch vs AR) can significantly reduce risk, cost and timelines
Firms that succeed are those that:
- Plan their target operating model early
- Align people, governance and structure with FCA expectations
- Build compliance into the business – not bolt it on later
How we support international firms
Our UK compliance consulting team help firms move from planning to approval with confidence.
Our support includes:
- Designing the optimal market entry strategy
- Preparing and submitting FCA authorisation applications
- Advising on governance, structure and staffing
- Ongoing compliance and regulatory support
We also act as a principal firm for clients using the appointed representative route.
If you’re considering entering the UK market, we can help you get there faster – and with fewer surprises. Get in touch with the team today to learn more.
