Structuring an FCA Authorisation Application for Payments and E-Money Firms

Minded-to-refuse letters rarely arrive because a firm is unsuitable. They arrive because the application does not evidence what the case officer needs to see, in the form they need to see it. Under PSRs 2017 and the EMRs 2011, the FCA has to be satisfied the firm will meet and continue to meet the conditions. An application that treats this as a form-filling exercise rather than a case for authorisation will struggle, regardless of the quality of the underlying business.

Start with the regulatory business plan as the spine

The regulatory business plan (RBP) is the document everything else must tie to. Weak RBPs describe the product; strong ones describe the regulated activity. Be explicit about which permissions you are seeking, why each is needed, and how the flow of funds maps to each permission. If you are applying for agent or distributor permissions, name them or explain the onboarding criteria and controls.

The RBP should contain a transaction flow diagram that shows every point at which customer funds enter, move through, and exit the firm. Case officers use this diagram to test safeguarding, financial crime, and operational resilience claims made elsewhere. If the flow diagram contradicts the safeguarding model or the AML risk assessment, the application unravels.

Make safeguarding concrete, not conceptual

Safeguarding failures are the single most common trigger for minded-to-refuse letters. The FCA expects to see the designated credit institution or custodian named, the account structure confirmed, the reconciliation frequency and methodology set out, and the acknowledgement letter either in place or in draft. Describe how safeguarded funds are identified from the moment of receipt, how commingling is prevented, and what happens on insolvency.

If you intend to use the insurance or guarantee method, show the policy terms and the rationale. Vague statements about intention to safeguard will be rejected. The safeguarding audit requirement under the Dear CEO letter expectations should also be addressed: who will perform it, on what frequency, against what standard.

Financials that reconcile

The three-year financial projections must tie to the business plan volumes, the ICAAP-equivalent capital assessment, and the own funds calculation under Method B or D as applicable. Case officers routinely test whether projected transaction volumes justify the capital held, whether staff costs support the governance model described, and whether the wind-down cost estimate is credible.

Include a stressed scenario and a wind-down trigger framework. A wind-down plan that assumes an orderly 90-day exit funded from projected revenue is not credible. Show the liquid resources that fund the wind-down on day one.

Governance substance over structure charts

Name the individuals, confirm their time commitment, and evidence their relevant experience. A board with three non-executives who each commit two days a month to a complex cross-border payments firm will attract challenge. For each SMF or director role, the application should show how the individual's background maps to the specific risks of this business.

The compliance monitoring plan, financial crime framework, and operational resilience self-assessment should be drafted documents, not promises. Case officers ask for them.

Engage the case officer as a professional counterpart

Respond to information requests in full, on time, and in the format requested. If a question cannot be answered immediately, say so and give a date. Partial answers invite follow-up cycles that consume the statutory determination period and erode confidence.

The decision point

Before submission, ask whether an independent reader could, from the pack alone, understand the business, trace the funds, test the controls, and conclude the firm meets the conditions. If not, the application is not ready. Submitting early to start the clock is the most expensive mistake firms make.

Frequently Asked Questions

How long should we expect the process to take in practice?

The statutory period is three months for a complete application and up to twelve months overall. For payments and e-money firms, six to twelve months from submission to determination is realistic, longer if the application generates substantive case officer queries.

Should we use a pre-application meeting?

Yes, for anything other than a straightforward small payments institution. A pre-application meeting lets you test the perimeter analysis and governance model before committing to a submission.

What triggers a minded-to-refuse letter most often?

Safeguarding arrangements that are not operationally ready, financial projections that do not reconcile to the business model, and governance arrangements where the named individuals lack demonstrable relevant experience or sufficient time commitment.

Can we rely on outsourced compliance to meet the governance bar?

Only to a limited extent. The FCA expects accountable individuals within the firm. Outsourced MLRO or compliance arrangements must be supported by an internal owner with authority and capability to challenge the provider.