On 4 December 2025, HM Treasury published a policy update setting out the UK government's plans to establish a provisional licence authorisation regime for early-stage firms and financial services start-ups seeking FCA authorisation.
The provisional licence regime aims to enable such firms to undertake limited regulated business for a defined period, with the goal of achieving full authorisation by the end of that timeframe. The initiative forms part of the government's broader Regulation Action Plan to reduce barriers faced by innovative start-ups in meeting all threshold conditions for authorisation immediately.
Scope and Eligibility
The regime is designed for firms not already authorised by the FCA and seeking permission for activities already within the FCA's perimeter. It will not extend to authorised firms seeking variations of their permissions, firms seeking permissions for activities being brought into regulation for the first time, or firms subject to dual regulation by the PRA and FCA.
Application Process and Assessment
Eligible firms will apply through a new FCA process featuring modified and proportionate expectations compared to those for full authorisation. The FCA will assess whether firms can meet threshold conditions for the provisional licence period only, rather than on an ongoing basis as required for full authorisation.
Duration and Restrictions
The regime establishes a fixed duration of up to 18 months, with provision for extensions in limited circumstances. The FCA will impose restrictions on the amount and type of business firms can undertake during this period, potentially including volume or value limits and restrictions on long-term business extending beyond the licence period.
Path to Full Authorisation
The regime's ultimate purpose is supporting firms to achieve full authorisation during or at the end of the provisional licence period. If firms fail to achieve full authorisation by the end of the provisional licence period, their permissions will expire and they must cease regulated activities.
Next Steps
The provisional licence regime will require primary legislation, which the government will advance when parliamentary time permits. The FCA will engage with industry on the regime's design and consult as necessary.
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