Authorisations: FCA and PRA speed up timelines to support growth

The Leeds Reforms aim to streamline rules to improve business efficiency, reduce the cost of regulation and boost the economy, in line with the Government's Financial Services Growth and Competitiveness Strategy. The Financial Conduct Authority (FCA) and Prudential Regulation Authority’s (PRA) shorter authorisation times are an integral element of that approach, making it easier for firms to enter the market, innovate their business models and update their operations. Greater business agility will underpin a financial sector that can seize new opportunities and maximise potential for long-term growth.

The regulators’ proposals will take effect from January 2026 but are subject to HM Treasury’s (HMT) proposed statutory changes on authorisation. In the meantime, the chief executives of both the FCA and PRA have independently written to the Chancellor and committed to further voluntary reductions in timelines.

Leeds Reforms – what do they mean for the financial sector?

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Technology enabling growth

The FCA aims to achieve faster authorisations by leveraging technology (enabled by digitised application forms), supporting firms with their applications and improving communication. In a recent speech at the AI and Digital Innovation Summit, the FCA’s chief data, information and intelligence officer highlighted the role of technology, specifically large language models, to support efficient authorisations. This aligns with broader work to embrace and invest in new technology, including a live AI testing service due to launch in September, the FCA Innovation Hub and an AI Sprint event earlier this year.

Changes to key timelines are listed below.

Complete versus incomplete

Under the Financial Services and Markets Act 2000 (FSMA), the regulator distinguishes between complete and incomplete authorisation applications, based on whether all required information and documentation has been submitted.

The FCA and PRA consider that an application is complete when:

• it includes all the necessary information and supporting documents required by the regulator(s) to assess the application
• the application meets the minimum criteria for assessment, including business plans, compliance arrangements, financial projections, governance structures, and relevant personnel details
• he FCA (and PRA, where applicable) can begin formal assessment without needing to request further information or documentation.

In more complex scenarios, where the firm requires multiple related applications, such as during restructuring or acquisition, the completeness of one application can be dependent on the approval or progress on another.

The completeness of an application significantly affects how quickly it’s processed. Even with the reductions in timelines, the gap between processing times for complete and incomplete applications can make a material difference in being able to start regulated business activities.

To improve the likelihood of a shorter timeline, firms should ensure thorough preparation before submission and a thoughtful approach to the sequencing of multiple applications, where applicable.

Quality applications

The regulators have been clear in their messaging that faster authorisation processes don’t reflect relaxed scrutiny or a lowering of standards. Instead, it reflects a strategic enhancement of internal capabilities, including the integration of advanced technologies, such as artificial intelligence. This will mean that case assessors can dedicate greater attention to the more complex and nuanced aspects of applications. As a result, firms should expect a more agile but robust authorisation process, aligning with the regulators’ commitment to both innovation and consumer protection.

Shorter statutory timelines can be a double-edged sword for firms that have complex business models or have other reasons why the initial application is submitted incomplete. Once the application is submitted, the clock is ticking for the firm to provide any outstanding information to the regulator, answer any questions from the assessor, or resolve any other issues. Preparing for good quality engagement with the regulator is an important pre-application step for all firms.

What firms should do now

The reduced application timelines offer opportunities for firms to enter markets and start carrying out regulated activities sooner. However, it also means that firms have less time to prepare responses and answer any follow-up queries. As such, it’s important to prepare for the process in advance, including:

• making sure any regulatory applications are as complete as possible by using FCA and PRA guidance, and external assistance, where necessary
• for any applications that are knowingly submitted incomplete, firms should prepare and follow a roadmap to completeness, taking into account the revised application timelines
• sing opportunities for early regulatory engagement, where available, and have adequate resources ready to respond to queries during the application assessment process.

Recognising that the approval process will remain robust and maintain high-quality standards, effective preparation is key to achieving a smooth approval.

To find out more about the FCA and PRA’s authorisation process, contact David Morrey.