How to Cancel Your FCA Permission: A Step by Step Guide for Firms

Voluntary cancellation and the FCA's own power

There are two routes by which a Part 4A permission comes to an end. The first is voluntary: you apply to cancel because your firm has stopped, or is about to stop, carrying on regulated activities. Under section 55H of the Financial Services and Markets Act 2000, the FCA may cancel the permission of an authorised person who applies for it, and where a variation leaves no regulated activities in place the FCA must cancel the permission once it is satisfied it is no longer necessary to keep it in force.

Once a firm no longer has any Part 4A permission and no other regulated activity permission, section 33 of the Act requires the regulator to give a direction withdrawing that firm's status as an authorised person. In other words, cancelling your permission is what ultimately removes you from the Financial Services Register.

The second route is the FCA acting on its own initiative. The FCA has long been able to cancel or vary a firm's permissions where they are not being used, so it can keep the Register accurate and reduce the risk that consumers are misled about the protection a firm offers. The message to firms is straightforward: use it or lose it. If your regulated activities have come to an end, apply to cancel rather than waiting for the FCA to act.

What you must complete before you apply

The FCA will not grant cancellation until you can demonstrate that you have ceased carrying on all regulated activities and dealt with the obligations that flow from your former business. The application is not a checklist of everything a firm must do, but a well prepared firm will have worked through the areas below before it submits.

The single biggest cause of delay is an incomplete application. Every unresolved complaint, every open client money account, and every unpaid fee is something a case officer will ask about, so it pays to close these out first. The table sets out the main areas to address.

Dealing with client money and client assets

If your firm has held client money or custody assets, the FCA needs assurance that you no longer hold them before it will cancel the relevant permission. The evidence it asks for depends on the account type and the amounts involved.

For client money held for insurance mediation purposes, a statutory trust account that has never exceeded £30,000 at any time since authorisation can be evidenced with an accountant's letter confirming the account has closed. Where money was held in a non-statutory trust account, or where a statutory trust account exceeded £30,000 at any time, the FCA requires an auditor's report confirming that nothing came to the auditor's attention to suggest the firm still held client money at period end.

For firms with permission to safeguard and administer assets or to hold client money for designated investment business, you must have ceased the activity and disseminated all client money and custody assets, and provide an auditor's report to the same effect. If a clean recent report is not available, the firm must instruct its CASS auditor to commission a new assurance report covering a 52 week period up to the point the firm claimed it no longer held client money or assets. Any auditor's report must follow the format set out in SUP 3 Annex 1R.

Complaints, redress and run-off

Leaving the regulated sector does not extinguish your responsibility for past business. Before you apply, check your internal complaints records and make sure there are no outstanding complaints. Any complaints already recorded should be disclosed in the application, and any that have been escalated to the Financial Ombudsman Service should have been settled or reached a final determination, with any awards paid.

Where the Financial Ombudsman Service is still assessing complaints at the time you apply, the FCA expects you to have liaised with the Ombudsman and to provide details of the cases, their status, and the provision your firm has made to settle any awards that might be made against it.

For liabilities that have not yet crystallised, the FCA wants to see a plan. Run-off professional indemnity insurance is not compulsory, but it may be a sensible way to deal with complaints that surface after you have wound down. If you have taken out cover, the FCA asks for details of the insurer and policy, how long the cover lasts, any exclusions, and any excesses along with the capital you intend to retain to meet them. If you have not taken out run-off cover, you are still expected to put suitable arrangements in place to deal with any complaints and liabilities that might arise.

Applying through Connect: the process

You submit the cancellation application through Connect, the FCA's online system for applications and notifications. The form asks you to confirm the areas covered above, to name an associated individual the FCA can contact if it needs more information, and to explain your reasons for cancelling, whether that is a business transfer, administration or liquidation, becoming an appointed representative, or another reason.

In some cases the FCA may ask a director holding the SMF3 senior management function to sign documents, such as an attestation or a deed poll, where it needs further assurance that the firm has appropriately dealt with any potential harm to consumers. If your firm has not yet ceased its regulated activities, the form will not accept a cessation date more than six months after the date of the application.

If you submit a complete application, a case officer will make a decision within six months. If your application is incomplete, the decision can take up to twelve months, which is a strong reason to prepare thoroughly before you apply.

Fees and the timing of your application

There is no charge for the cancellation application itself, but cancelling does not wipe out your fee obligations. You will pay the full annual fee for the financial year in which you apply, and any outstanding fees must still be settled. Approval of cancellation does not absolve your firm of fees that remain due.

Timing matters for the following year. If you submit your cancellation application before 31 March, or before the last day of February if you are also regulated by the PRA, you will not have to pay the annual fee for the following financial year. However, if your business continues to operate for three months beyond that deadline, that is past 30 June, you will have to pay the annual fee for that financial year.

Because the annual fee for the year of application is unavoidable, and the following year's fee turns on the 31 March deadline, firms planning an exit often aim to have ceased activity and submitted a complete application well before the financial year end.

The FCA's streamlined power to remove unused permissions

If a firm stops using its permissions but does not apply to cancel them, the FCA can now act far more quickly than before. A power set out in Schedule 6A to the Financial Services and Markets Act 2000, introduced by the Financial Services Act 2021 and covered in the FCA's policy statement PS22/5, gives the FCA a streamlined procedure to cancel or vary permissions that are not being used.

Under this procedure the FCA can start the process as soon as it considers that permissions are not being used, by serving fourteen days' notice on the firm, and can then vary or cancel the permissions after one month. This replaces an earlier position under which the FCA had to wait twelve months in some situations. Schedule 6A also allows the FCA to reverse or annul its decision if circumstances change.

The streamlined power applies to firms authorised by the FCA under Part 4A of the Act. It does not apply to payment services and electronic money firms, or to firms authorised by the PRA. The practical takeaway is simple: an unused permission is a liability, because it can mislead consumers about the protection a firm offers, so if you no longer carry on the activity, cancel it before the FCA does.

Conclusion

Cancelling an FCA permission is a wind-down, not a resignation. The FCA will only agree to cancel once you have stopped your regulated activities, returned client money and assets, closed out complaints and Financial Ombudsman Service cases, made arrangements for future liabilities, and settled your fees. Prepare all of this before you touch the Connect form, because a complete application is decided within six months while an incomplete one can take twice as long.

Remember too that the decision is no longer entirely in your hands. If you leave a permission unused, the FCA can now serve fourteen days' notice and cancel it a month later under its streamlined Schedule 6A power. The cleaner path is to plan your exit, evidence each obligation, and apply on your own terms. If you want help mapping the wind-down or preparing the application, our authorisation support and pricing pages set out how Nasara Connect can help.

Frequently asked questions