Regulations for financial, professional and business services
You will need to be aware of UK regulations and legislation in the financial, professional and business services sector.
The UK’s regulatory framework
If you’re thinking of setting up as a financial services provider, insurance, consumer credit firm, or asset management, you will need to be aware of the UK’s regulatory framework.
The UK financial services industry is regulated by two bodies, the Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA).
Financial Conduct Authority (FCA)
The Financial Conduct Authority (FCA) is an independent public body funded entirely by the firms they regulate. They ensure financial markets (including insurance) work well so that consumers get a fair deal. The FCA is accountable to the UK Treasury, and Parliament.
Banks, credit unions and insurance companies are regulated by the FCA and the PRA.
Read more about the FCA and the financial activities they regulate on their website.
Apply for Financial Conduct Authority (FCA) authorisation
To apply for authorisation, you need to know more about the process and what documentation is needed before starting the registration process. This will help make the process quicker.
You will be assigned a case worker who will be able to advise and support you in the application process. They will advise you of any timescales in which to submit your documents.
Find out how to apply and get authorised on the FCA website.
Time it takes
Complete applications can take up to six months to process and authorise. You may have your application delayed by up to twelve months if you submit an incorrect application.
Exemptions and exclusions
Exemptions
Some organisations, depending on the circumstances, do not need to be authorised by the FCA. These can include:
- professional firms, such as solicitors, accountants, or actuaries
- firms offering payment by instalments
- appointed representatives working on behalf of companies that are already authorised
Exclusions
There are some circumstances where activities that would normally be regulated are unregulated. These can include certain overseas activities and those where potential customers are introduced to firms.
Read the list of exceptions and exclusions from authorisation on the FCA website.
It is important to check this before making your application.
Regulatory Hosting Platform (Umbrella model)
Regulatory hosting allows a financial services business to carry out regulated activities without being directly FCA approved. Appointed representatives must still comply with FCA rules even if they are not being directly regulated.
It’s an alternative that lets a business act as an appointed representative under the hosting umbrella of another FCA approved firm and can be useful for a business whilst they wait to gain their own FCA approval.
Prudential Regulatory Authority (PRA)
The Prudential Regulatory Authority (PRA) is part of the Bank of England, and promotes the safety of insurers, and the protection of policyholders. It ensures that financial businesses have adequate risk controls in place and insurance firms need to provide regular regulatory returns to the PRA.
If your company, whether a business, a not-for-profit or a sole trader, carries out a regulated activity, you must be authorised or registered by the FCA unless you are exempt.
Banks, credit unions and insurance companies are regulated by the FCA and the PRA.
Find out more on the Prudential Regulatory Authority (PRA) website.
Apply for Prudential Regulation Authority (PRA) authorisation
If you are a new business wishing to become a bank, credit union, building society, insurer, major investment firm or managing agent of a Lloyd’s syndicate, you will need to apply to the Prudential Regulation Authority (PRA) for permission for authorisation to carry out any of the activities that they regulate.
You will need to apply for this at the same you are applying for FCA registration.
Time it takes
Complete applications can take up to six months to process and authorise. You may have your application delayed by up to twelve months if you submit an incorrect application.
Professional services regulatory bodies
Some professional firms, such as solicitors, accountants or actuaries are not regulated by the FCA or PRA. They have their own regulatory bodies.
The Financial Reporting Council (FRC) promotes transparency and integrity in business. It regulates auditors, accountants and actuaries, and sets the UK’s Corporate Governance and Stewardship Codes.
Payment Systems Regulator (PSR)
The PSR is an independent (non-governmental), regulatory framework for payment systems in the UK operating since 2015.
It works with other regulators and competition authorities to make sure the UK has a coordinated approach to regulation payments.
Find out how the PSR operate on their website.
Legal regulatory bodies
Solicitors Regulation Authority
The Solicitors Regulation Authority (SRA) is the independent regulatory body for solicitors in England and Wales. Law firms need to be registered with the SRA in England and Wales and with the respective law societies in Scotland and Northern Ireland.
Find out more about the Solicitors Regulation Authority (SRA) on their website.
UK Law Commission
The UK Law Commission is an independent body that conducts regular research to ensure that English law is up to date. Find out about their work on the Law Commission website.
Establishing a law firm in the UK
In the UK, law firms can be organised as sole practitioners, limited companies, partnerships or limited liability partnerships. Setting up an office or merging with a local firm are the most common forms of entry for overseas firms.
To set up a law firm in the UK, you will need to register with the Solicitors Regulation Authority in England and Wales (SRA) and with the respective Law Societies in Scotland and Northern Ireland.
You will need a UK based address in order to register.
In order to practice, individual solicitors will need to be qualified. In England and Wales this is via the Solicitors Qualifying Examination (SQE). For Scotland and Northern Ireland, details can be found via their respective law societies.
Separate arrangements are in place for barristers (or advocates in Scotland).
Appropriate professional indemnity insurance will also need to be in place in order to practice.
Find out how to register with national law societies on the following websites:
Register with the Solicitors Regulation Authority in England and Wales
Lawyers from outside the UK
The UK consists of four countries that form three distinctive nations, each with its own court system and legal profession. These three jurisdictions are England and Wales, Scotland, and Northern Ireland.
For ease, the legal system administered by the courts of England and Wales is more commonly referred to as English law.
Lawyers from abroad who wish to re-qualify in England and Wales can sit the Solicitors Qualifying Examination (SQE), which is the same exam taken by solicitors who qualify domestically. Find out more about the SQE exam on the Law Society website.
The exam is governed by the Solicitors Regulation Authority (SRA).
Legal services innovation
The UK Solicitors Regulation Authority (SRA) allows businesses and start-ups to test innovative products and services in a controlled environment, which might conflict with certain regulations or rules. This also applies to legal accountancy.
Find out more about the SRA's innovation projects on their website.
Lawtech
Where most jurisdictions continue to bar non-lawyers from involvement in legal services firms, the UK’s Legal Services Act 2007 permitted Alternative Business Structures (ABS). These are business models that allow investment, ownership and management by non-lawyers.
Find out more about Alternative Business Structures (ABS) on the Law Society website.
Next steps
For advice on your business and to find out more about UK regulations, the UK Investment Support Directory has a list of experienced specialists to help you set up or expand your business in the UK.