Don’t risk it! Why FCA authorisation is non-negotiable

November 28, 2025
Why FCA Authorisation Is Critical for Businesses

Recent enforcement action by the Financial Conduct Authority (“FCA”) has highlighted a critical issue that many businesses overlook, namely, the risk of conducting regulated activities without authorisation. The FCA announced[1] on the 19/11/2025 that three individuals were arrested as part of an investigation into suspected unauthorised debt activities. This case clearly shows how easily well-intentioned businesses can end up breaching the regulations without realising it.

What the Law Says: FSMA and Regulated Activities

Under the Financial Services and Markets Act 2000 (“FSMA”) and the associated regulated activities order, firms carrying out regulated activities such as debt management or claims management must be authorised by the FCA unless an exemption can be relied on. Breaching this requirement is not a minor compliance slip – it is a criminal offence which can lead to substantial fines and even imprisonment. What makes this particularly concerning is that many businesses act innocently or unknowingly assume their services do not require authorisation, only to discover too late that they actually do require FCA authorisation.

What are the Risks of Operating Without FCA Authorisation?

The FCA takes these breaches seriously because unauthorised activity exposes consumers to significant risk. In this case, the FCA’s decision to execute search warrants with police support highlights that conducting activities which should be regulated are regarded as criminal conduct, not mere compliance failures. Ignorance is not a defence, and the consequences can be severe as your business will not only be exposed to legal penalties but could also suffer reputational damage and loss of consumer trust and the individuals involved could face personal enforcement action.

What activities require FCA Authorisation?

Activities such as credit arrangements (e.g. instalment plans or short-term loans) claims handling can trigger FCA authorisation requirements. Similarly, businesses involved in investment related services may also fall within the FCA requirements for authorisation without even realising it. For example, providing investment advice, arranging deals in investments, managing client portfolios, introducing clients to investment opportunities, passing on client instructions or handling client money, can all constitute regulated activities.

How we can help

As specialist regulatory solicitors, we, at Herrington Carmichael understand how easy it is for businesses to cross into regulated territory without realising it.

Our regulatory team can conduct a comprehensive regulated activity analysis to review your current operations and processes to determine whether you are carrying out activities that require FCA permissions. If authorisation is needed, we provide clear recommendations on the permissions you would require and can assist you with the application process.

Taking proactive steps now is far less costly than facing enforcement action later. Please stop and think and if you are unsure, seek expert advice. Compliance is not optional, it is essential for protecting you, your business and your customers.

If you would like to speak to someone in our regulatory team, please contact us.

[1] Three arrested in investigation into suspected unauthorised debt activities | FCA

Mark Chapman
Partner, Commercial
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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