DIRECT AUTHORISATION FOR ARTICLE 3 FIRMS: WHAT YOU NEED TO KNOW

Are you thinking about launching your own directly authorised Financial Advisory firm (Article 3 firm) in the UK?

Before you can get started, you’ll need to secure authorisation from the FCA. Although the process is less intensive than for full-scope MiFID firms, it still requires careful planning, clear documentation, and an understanding of what the regulator expects.

In this blog, we break down what an Article 3 firm is, how the FCA application process works, and why having the right support can make all the difference

 What is an Article 3 firm?

Article 3 firms are exempt investment firms under MiFID II, retained in UK law after Brexit. They carry out limited investment services and don’t hold client money or assets – so they benefit from a less complex application process.

Typical Article 3 activities include:

• Giving investment advice
• Arranging or transmitting orders
• Dealing on behalf of clients in a narrow capacity

You’ll find this category includes firms like independent financial advisers, introducers and corporate finance boutiques. While they may not be full-scope firms, Article 3 firms still need FCA authorisation – unless they’re eligible for a specific exemption.

The application process: step by step

 1. Define your scope

Before you dive into forms and policies, take time to clarify:

• What investment activities your firm will undertake
• Whether those fall within the Article 3 exemption
• If becoming an Appointed Representative might be a better short-term route

Have a look at PERG 13 in the FCA Handbook – it’s packed with practical guidance on how different permissions apply under MiFID.

2. Pull together your application pack

You’ll submit your application through the FCA’s Connect platform. Article 3 firms usually need to include:

• Core details and investment firm supplement
• Controller and SMF forms (e.g. Form A)
• A well-structured business plan
• Three-year financial forecasts (cash flow, profit and loss, balance sheet)
• Compliance documentation (AML policies, risk assessment, monitoring plan)
• Details of IT systems and any outsourcing arrangements

3. Submit via Connect

Once your documents are ready:

• Register for an account on FCA Connect
• Upload your forms and supporting evidence
• Pay the application fee (as set out in FCA FEES 3)

Before clicking submit, cross-check everything using the FCA’s own readiness checklist. Incomplete or inconsistent information is the most common reason for delays and will cost you time when the case officer reviews your application.

Do it right, do it once.

4. Review and assessment

Here’s what to expect once your application is in:

• Acknowledgement within seven working days
• Allocation of a case officer (usually within two to four weeks)
• Review against the Threshold Conditions, including:
  • Location of your offices
  • Financial and operational resources
  • Suitability of your senior team
  • A credible and compliant business model

You will receive questions or information requests. Make sure you respond to them clearly and quickly to keep things moving.

5. Authorisation outcome

If your application is approved, you’ll receive:

• A Decision Notice
• Your Firm Reference Number (FRN)
• Confirmation of your permissions and FCA categorisation

The FCA has six months to process a complete application, but in practise, well-prepared firms can often be authorised more quickly.

Why work with a trusted adviser?

Applying for FCA authorisation can be time-consuming and, if mishandled, costly. That’s why many firms choose to work with a specialist compliance partner. And here’s why it pays off:

• Expert insight – advisers understand what the FCA is really looking for and how to avoid common red flags.
• Fewer delays – we will help you avoid errors and omissions that could stall your application.
• Strategic clarity – we can help structure your business model, compliance framework, and governance.
• Peace of mind – with the right support, you’ll approach the process with confidence and clarity.

Whether you’re new to regulation or looking to switch from the AR model, a trusted adviser can add real value.

 After you’re authorised

Getting authorised is only the beginning. Article 3 firms must continue to meet ongoing regulatory obligations, including:

• Submitting regular returns via RegData
• Complying with the Senior Managers & Certification Regime (SMCR)
• Adhering to COBS rules and AML obligations
• Maintaining capital adequacy (typically £20,000 minimum)
• Holding sufficient professional indemnity insurance

Regulatory compliance doesn’t stop at the gateway, it is an ongoing process.

Ready to apply?

We help firms across the UK navigate the FCA authorisation process with clarity and confidence.

Whether you need help defining your permissions, building your business plan, or preparing compliance documents, we’re here to support you from start to finish.

• Regulatory scoping and permissions advice
• Application drafting and documentation
• Ongoing compliance support after authorisation

If you would like to speak to one of our consultants and explore how ready you are, don’t hesitate to contact us on (0161) 521 8641 or email: info@b-compliant.co.uk