So you want to expand your business. What does a strong Variation of Permission (VoP) application look like?

You have operated a regulated business in the UK for some time. Things have been steady, with limited change to day-to-day operations since your business was established, perhaps aside from the odd IT upgrade. However, you may one day identify a new commercial opportunity and wish to roll out a new product or service. In a regulated business, diversifying into new activities often requires submitting a Variation of Permission application to the FCA and careful planning and execution to avoid regulatory issues emerging later. So, how do you turn a new business idea into reality?

 

Governance and Your Regulatory Business Plan

It all starts with good governance. An appropriate forum should ‘own’ the new business proposal process. In very small entities, this will usually be the board. In larger firms, new business proposals may instead be considered by a dedicated committee, or by the audit, compliance or risk committee. All key business functions should be represented in the relevant governance forum to reduce the likelihood of important matters being overlooked.

Ideally, the genesis of the new business idea should be captured in a structured new business proposal form. This should prompt structured consideration of (not exhaustive):

  • how the proposal aligns with the firm’s strategy;
  • the firm’s positioning in the market relative to its peers;
  • how the proposed activities would alter the firm’s risk profile, if at all;
  • whether the firm would act as manufacturer or distributor of any new product;
  • the target market for the proposed activities, and why those activities are appropriate for that market;
  • whether the firm has the correct regulatory permissions to undertake the proposed activities, or whether additional UK or overseas authorisations are required;
  • whether additional staff recruitment and/or training will be needed to support the new activities;
  • whether capital and liquidity levels would remain sufficient (investment firms would typically need to review their Internal Capital Adequacy and Risk Assessment (ICARA), and may need to submit updated MiF007 figures on an extraordinary basis); and
  • whether the firm’s IT systems require enhancement to support the proposed activities, including from a trade surveillance, client money monitoring and regulatory reporting perspective.

Once the relevant governance forum has considered the proposal, the outcomes should inform a robust regulatory business plan.

 

Using the FCA Business Plan Template

The UK Financial Conduct Authority (FCA) publishes a high-level business plan template to give prospective applicants an indication of its expectations. Notwithstanding this, firms should have a trusted third-party adviser review and critique any draft regulatory business plan. Our consultants, for example, have authored and reviewed a wide range of such plans throughout their careers, equipping them to test assumptions, identify gaps and help resolve issues at an early stage.

Where a firm requires additional permissions, the regulatory business plan will form the centrepiece of a VoP application. Even where a firm concludes that no new permissions are required, a notification to the FCA under Principle 11 may still be necessary. Reviewing the position in light of SUP 15.3.8 of the FCA’s Supervision Sourcebook is therefore critical.

 

PASS Meetings and Regulatory Engagement

Where a VoP is anticipated, firms should strongly consider requesting a pre-application support service (PASS) meeting with the FCA. PASS meetings are free and available to authorised or registered firms considering expanding their business model into new areas. In practice, FCA case officers will often request a copy of the firm’s regulatory business plan in advance of the meeting. This reinforces the importance of producing a high-quality plan and helps ensure that the FCA’s feedback is focused and constructive.

Informed by the outcome of the PASS meeting, the firm should ensure it is ‘ready, willing and organised’ to comply with the regulatory requirements for the proposed activities. In practical terms, this typically includes (not exhaustive):

  • ensuring the firm is capitalised and holds sufficient liquid assets;
  • implementing and testing any new or enhanced technological systems;
  • ensuring additional headcount is in place, or contractually secured, where competency gaps or increased volumes have been identified;
  • preparing any updated legal documentation, such as terms of business or client notices;
  • reviewing and, where necessary, updating policies and procedures; and
  • ensuring that the firm’s business-wide risk assessment is current, including specific assessments covering financial crime and market abuse risks.

 

Submitting Your Variation of Permission Application via Connect

Once the firm is confident that it is ‘submission ready’, it can begin completing the VoP application via the FCA’s Connect system. Specialist support can be valuable at this stage. C&G can assist firms with updating their documentation suite, preparing or reviewing Connect forms, and preparing staff for potential FCA interviews. Such interviews, often involving senior managers, including compliance officers, are more common when firms are proposing material changes to their business model or introducing higher-risk products, particularly for retail clients.

Interviews can be challenging without adequate preparation. This is not about coaching, but about self-assessment: if commercial plans are ambitious, has the firm been sufficiently candid with itself about the capacity and resilience of its middle and back-office functions, governance arrangements, and IT systems?

 

FCA Assessment Timeframes and What to Expect

Once an application is submitted, the FCA has six months to determine a complete application and up to twelve months to process an incomplete one (assuming the firm is authorised under section 31 of the Financial Services and Markets Act 2000). While strong applications are typically assessed within the six-month statutory timeframe, firms should expect follow-up questions. Building sufficient lead time into the project plan to allow for independent review and challenge can materially improve a firm’s ability to respond efficiently and reduce the risk of adverse outcomes, including receiving a warning notice.

 

Business Regulatory Solutions for VoP Applications

It pays to prepare.

A well-structured regulatory business plan, informed governance and early engagement with the FCA can materially improve the likelihood of a successful outcome.

Contact one of our consultants today for expert support with your VoP application.

 

Further reading

Variation of permission, Financial Conduct Authority, available at: https://www.fca.org.uk/firms/variation-permission#section-before-you-apply (last updated 4 September 2024).

Pre-application support service (PASS), Financial Conduct Authority, available at: https://www.fca.org.uk/firms/authorisation/pre-application-support-service (last updated 5 December 2025).