On the 9th April 2026, the FCA issued useful guidance (LINK) to firms looking to apply for authorisation to operate in the UK asset management sector, providing potential applicants with examples of what the FCA considers as good practice as well as highlighting areas for improvement. The FCA’s key findings are summarised below.
1. Office location: location of mind and management
The FCA expects decisions on the management of the firm’s business, portfolios, distribution and the effective overseeing of outsourced activities, to be taken in the UK on a day-to-day basis.
2. Outsourcing: underestimating accountability
Firms that outsource activities to third parties should show they understand that they’ll remain accountable for compliance with the relevant rules, and that they have the right policies and procedures to avoid harm. Effective service level agreements (SLAs) that allow a firm to properly oversee and monitor the activities of their outsourced service providers would be seen as good practice.
3. Business models: exposing clients to risk
Firms need to fully consider the risks their activities could pose to clients, the integrity of the UK financial system and the firm itself. The firm should have plans to mitigate and manage those risks appropriately.
Firms that intend to deal with retail clients, should consider how the Consumer Duty applies to their business.
4. Conflicts of interest: failing to identify concerns
Before applying for authorisation, an asset manager should consider the rules that will apply to its business for conflicts of interests, and have a plan for identifying, preventing and managing them.
5. Understanding the regulatory status of clients
Firms should be able to show they understand who their clients are and the relevant rules that apply when engaging with them. A firm should be able to articulate how it will categorise its proposed clients, and a firm’s intended client base should be consistent across all application documents.
7. Changes to the scope of permissions
If an asset manager is applying for a variation of permission (VOP) to add new specified activities or investments or client types, the firm should be able to clearly articulate:
How these new permissions will be used.
What impact they will have on the business.
How the firm has put the necessary staff, policies, procedures, systems, and controls in place to support the new activities.
To avoid delays, and reduce the risk of an unsuccessful application, an asset manager seeking to increase the scope of its permissions should explain the above matters fully in its application, and submit financial projections for the firm including the new business, if appropriate.
Firms who are reducing their scope can show how this will impact their business and what their proposed business model will be. This is particularly relevant where a firm is looking to remove a part of business that would have constituted a significant part or generator of revenue.
8. Fund particulars and mandates
The firm’s fund documentation should include sufficient information on the fund that it intends to manage, including the proposed fees, the structure of the fund and the proposed assets the fund will invest in.
If a firm proposes to manage an alternative investment fund (AIF), it must provide various supporting documents. This includes a copy of any draft fund prospectus, draft offering memorandum or similar marketing material, terms of business or investment management agreement (IMA). Full scope AIFMs must also provide various additional documents with their applications, this includes the fund or instruments of incorporation of, and the draft prospectus for, each AIF they intend to manage.
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