What Is a Part 4A Permission? Scope, Structure and How It Works

Permission and authorisation: two related but distinct ideas

It is common to hear firms say they are FCA authorised, and they usually mean they hold a Part 4A permission. The two are connected but not the same. Section 31 of FSMA states that a person is an authorised person if they have a Part 4A permission to carry on one or more regulated activities, or are otherwise authorised under the Act. Authorisation is therefore the legal status of being inside the regulatory perimeter. The Part 4A permission is the document that sets the exact boundaries of what that authorised firm may do.

The distinction matters in practice. Being authorised does not entitle a firm to carry on any regulated activity it likes. It may only carry on the specific activities written into its permission, in the way that permission describes. A firm authorised to advise on investments is not thereby authorised to hold client money or arrange mortgages unless those activities appear in its permission too.

The FCA describes registration as a separate, lighter form of permission used mainly for payments and e-money firms, where a firm can operate without a full Part 4A permission but must still meet specified requirements. For most FSMA firms, however, the Part 4A permission is the operative document, and this guide focuses on it. You can read more about the end-to-end route to authorisation in our FCA authorisation service overview.

The four building blocks of a permission

A Part 4A permission is not a single label. Section 55E of FSMA requires the FCA to specify the permitted regulated activity or activities, described in whatever manner the FCA considers appropriate, and to attach limitations if it chooses. In practice, the FCA builds each permission from four elements that together define the exact shape of what a firm may do.

The first is the regulated activity, such as advising on investments, arranging deals or dealing as principal. The second is the specified investment or product type the activity relates to, for example shares, pensions or contracts of insurance. The third is the customer or client type the firm may serve, such as retail clients, professional clients or eligible counterparties. The fourth is any limitation or requirement that narrows how, when or for whom the activity may be carried on.

Read together, these four elements answer a single question: exactly what may this firm do, with what products, for which customers, and subject to what constraints? When you apply, the FCA expects you to request a permission profile that accurately reflects your intended business and nothing wider.

The threshold conditions behind every permission

The FCA cannot grant a Part 4A permission simply because a firm asks for one. Section 55B of FSMA requires the regulator to ensure that the applicant will satisfy, and continue to satisfy, the threshold conditions in relation to all of the regulated activities for which it will have permission. These are the minimum standards a firm must meet before it can be authorised and for the whole time it stays authorised.

The threshold conditions are set out in Schedule 6 to FSMA. For a firm regulated only by the FCA, the conditions cover the location of its offices, whether it can be effectively supervised, whether it holds appropriate financial and non-financial resources, whether it is suitable (broadly, fit and proper), and whether its business model is suitable for the activities it wants to carry on.

These conditions are not a one-off entry test. The regulator can act if a firm is failing, or is likely to fail, to satisfy them at any point, so they define an ongoing standard rather than a hurdle cleared once at application.

How a Part 4A permission is granted

A firm obtains a Part 4A permission by applying to the appropriate regulator under section 55A of FSMA. An individual, a body corporate, a partnership or an unincorporated association may apply for permission to carry on one or more regulated activities. The FCA is the appropriate regulator for most firms; the Prudential Regulation Authority (PRA) takes the lead where PRA-regulated activities such as banking or insurance are involved.

Under section 55E, the FCA may give permission for the activities applied for, or for such of them as it specifies. It describes the permitted activities in the manner it considers appropriate, and it may impose limitations, grant a narrower or wider scope than requested, and add requirements. The FCA also expects applicants to be ready, willing and organised to comply with its rules from the day permission takes effect.

Section 55V sets the statutory timetable. The regulator must determine a complete application within six months of receiving it. If the application is incomplete, the regulator may still decide it, but must in any event determine it within twelve months of the date it was received. In practice the FCA guides firms to expect around six months for a complete FSMA application. You can review the cost of structured application support on our pricing page.

Varying a permission after authorisation

A permission is not fixed for life. As a firm grows, adds product lines or serves new customer types, its permission must keep pace. Section 55H of FSMA lets an authorised person ask the FCA to vary its Part 4A permission by adding a regulated activity, removing one, or varying the description of an activity already covered. This is commonly called a variation of permission, or VoP.

The FCA explains that a firm should apply for a VoP when it wants to start a new regulated activity, add a new product or customer type, or otherwise increase, reduce or restrict the scope of what it does. Applications are made through the Connect portal, and paper submissions are accepted only in rare circumstances. Importantly, the FCA warns that a firm cannot start a requested activity until the variation is approved; proceeding earlier breaches the rules and can lead to enforcement.

Where a variation would add activities or change a limitation in a way that causes a significant change to the firm's business or risk profile, the regulator may require the firm to complete the relevant parts of the full application pack. A VoP is determined under the same section 55V timetable as a fresh application: six months for a complete application, twelve months for an incomplete one.

Cancelling or restricting a permission

A Part 4A permission can also be reduced or removed. A firm that stops carrying on a regulated activity can request its removal, or ask to cancel its permission entirely so that it leaves the regulatory perimeter. This keeps the permission an accurate reflection of what the firm actually does, which the FCA expects at all times.

The regulator also holds its own-initiative power. Under section 55J of FSMA, the FCA may vary or cancel a Part 4A permission on its own initiative where it appears that the firm is failing, or is likely to fail, to satisfy the threshold conditions; where the firm has failed to carry on a regulated activity for at least twelve months; or where it is desirable to act in order to advance one or more of the FCA's operational objectives, which include protecting consumers.

This is why a permission should never be treated as a filing that is done and forgotten. It carries continuing obligations, and both the firm and the regulator can change it. Keeping the permission tightly matched to the business, and keeping the threshold conditions satisfied, is an ongoing governance task rather than a one-off event.

Conclusion

A Part 4A permission is the foundation of a regulated firm's licence to operate. It is far more than a badge of authorisation: it is a precise, four-part statement of the regulated activities a firm may carry on, the investments and products those activities relate to, the customers it may serve, and the limitations that apply. Section 31 of FSMA ties authorisation to the permission, and Part 4A of the Act governs how it is granted under section 55A and section 55E, tested against the Schedule 6 threshold conditions under section 55B, varied under section 55H, and cancelled or restricted under section 55J.

For any firm entering or expanding in UK financial services, the practical lesson is to treat the permission as a living instrument. Scope it accurately at application, keep it aligned with the business through variations, and maintain the threshold conditions continuously. Get that right and the permission does its job quietly in the background. Get it wrong, whether by drifting outside its scope or by letting the conditions slip, and it becomes the single point on which the whole business can be challenged.

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