Change of Control for FCA-Regulated Firms: Process, Requirements & Timelines

What Is a Change of Control?

An FCA change in control approval is needed before anyone buys or increases a holding in a regulated firm past a control threshold, usually 10% or 20% of the shares or votes depending on the firm type. The buyer files a section 178 notice through FCA Connect, the FCA has 60 working days from acknowledging a complete notice to decide, and completing before approval is a criminal offence. A well-prepared notice is the main factor in keeping a deal on its planned timetable.

A change of control occurs when a person or entity acquires, increases, reduces or ceases to have control over an FCA-authorised firm. Under Part XII of the Financial Services and Markets Act 2000 (FSMA), any person proposing to acquire or increase control over a UK-authorised firm must notify the FCA in advance and receive approval before the transaction completes.

The regime exists to ensure that persons who control regulated firms are suitable: that they have appropriate financial standing, competence and integrity, and that the proposed acquisition will not pose risks to the firm's customers, the financial system or the FCA's statutory objectives.

When Does the Obligation Arise?

The notification obligation is triggered when a person proposes to:

• Acquire control: Crossing the first control threshold for the firm's type, or acquiring the ability to exercise significant influence over the management of the firm, for example through shareholder agreements or board appointment rights.
• Increase control: For firms with control bands, moving from one band to the next.

Thresholds apply to shares or voting power held directly or through a parent company. A controller of a firm with a single 20% band does not need fresh approval for later increases, including becoming the parent. Firms authorised as UK electronic money institutions, authorised payment institutions or consumer credit firms should check which row applies before signing heads of terms.

The obligation also applies to reductions in control (crossing down through the same thresholds) and the complete disposal of control, although these require notification rather than approval.

The Assessment Process

Step 1: Pre-notification. For complex transactions, the FCA recommends pre-notification engagement. This allows the FCA case team to understand the transaction structure, identify potential issues early and advise on the information required. Pre-notification is not mandatory but is strongly recommended for transactions involving overseas acquirers, complex group structures, private equity investors or acquisitions of firms with significant customer bases.

Step 2: Formal notification. The proposed controller submits a section 178 notice to the FCA through Connect, using a separate form for each controller. The notification must include comprehensive information about the proposed controller, including:

• Identity and background of the acquirer (individual or corporate)
• Financial standing, including audited accounts, bank references and evidence of the source of funds
• Business plan for the regulated firm post-acquisition
• Details of other regulatory authorisations held by the acquirer
• Corporate structure charts showing the pre- and post-acquisition ownership
• Details of any previous regulatory applications, refusals or enforcement actions
• Fitness and propriety information for key individuals associated with the acquirer
• A business plan where the acquirer will hold more than 50%. The FCA treats the notice as incomplete until it receives an adequate plan.

Step 3: FCA assessment. The FCA has 60 working days to assess the notice. Under section 189 FSMA the period starts when the FCA acknowledges receipt of a complete notice. Under section 190 the FCA may ask for further information up to the 50th working day. Only the first request pauses the clock, for up to 20 working days, or up to 30 working days where the acquirer is based or regulated outside the UK.

The FCA assesses the proposed acquisition against five criteria:

• Reputation of the proposed acquirer: Including financial soundness, honesty, integrity and absence of criminal convictions or regulatory sanctions.
• Reputation, knowledge, skills and experience of any new senior management: If the acquisition will result in changes to the firm's board or senior management.
• Financial soundness of the proposed acquirer: Whether the acquirer has the financial resources to support the firm and will not place inappropriate financial strain on it.
• Impact on the firm's compliance: Whether the firm will continue to meet its regulatory requirements post-acquisition.
• Risk of financial crime: Whether there are reasonable grounds to suspect money laundering or terrorist financing in connection with the acquisition.

Step 4: Decision. The FCA will either approve the change of control (with or without conditions) or object to it. If the FCA objects, it must provide written reasons and the proposed controller has the right to refer the matter to the Upper Tribunal.

Documentation Requirements

The FCA requires extensive documentation to support a change of control notification. Key documents include:

• Completed Section 178 Notice form
• Certified copies of identification documents for individual acquirers
• Corporate documents for corporate acquirers (certificate of incorporation, articles of association, shareholder register)
• Audited financial statements for the previous three years
• Source of funds evidence (bank statements, loan agreements, investment documentation)
• Business plan for the regulated firm covering at least three years post-acquisition
• Corporate structure charts (pre- and post-acquisition)
• Shareholder agreements and any side arrangements
• Details of professional advisers involved in the transaction
• Completed fitness and propriety forms for new senior managers

Common Pitfalls

Failing to notify. Failing to notify, or completing before approval or before the assessment period ends, is a criminal offence under s191F FSMA. The FCA can also issue a restriction notice suspending the voting rights attached to the shares (s191B) and can ask the court to order the shares to be sold (s191C). Firms and their legal advisers must identify all transactions that trigger the notification obligation.

Incomplete applications. Notifications that lack required information will be returned or will result in the assessment clock being stopped while additional information is requested. This delays the transaction timeline.

Underestimating the timeline. The 60 working day assessment period (about 12 calendar weeks) does not include the time needed to prepare the notice or a pause for an information request. Build these into the deal timetable from the start.

Ignoring indirect control. The obligation applies to indirect control as well as direct control. If a person acquires control of a holding company that itself controls a regulated firm, the obligation is triggered even though the person is not acquiring shares in the regulated firm directly.

Source of funds issues. The FCA scrutinises the source of funds for the acquisition closely, particularly where the acquirer is a private individual, a private equity fund or an overseas entity. Inadequate evidence of the source and legitimacy of acquisition funds is a common cause of delay or objection.

Payment Institution and EMI Considerations

The FSMA controllers regime in Part 12 also applies, with modifications, to authorised payment institutions and authorised e-money institutions through the Payment Services Regulations 2017 and Electronic Money Regulations 2011. In practice:

• The control bands are 10%, 20%, 30% and 50%
• The FCA applies the same assessment criteria and the 60 working day period
• Safeguarding arrangements under CASS 15, in force since 7 May 2026, are a focus of the FCA's review
• Changes to directors and managers are notified to the FCA separately

For cryptoasset businesses registered under the Money Laundering Regulations, the 2026 amendments to those regulations align change in control thresholds with the FSMA framework. From 25 October 2027 authorised cryptoasset firms fall under the FSMA regime in full. See our guide to UK cryptoasset authorisation.

Practical Advice

• Engage with the FCA early, particularly for complex transactions
• Prepare a comprehensive documentation pack before submitting the formal notification
• Allow at least the 60 working day statutory period in the deal timetable, plus time to prepare the notice
• Ensure source of funds documentation is robust and independently verifiable
• Consider the impact on the firm's existing permissions and conditions
• Plan for potential conditions that the FCA may attach to the approval
• Brief incoming controllers on their ongoing regulatory obligations

Regulatory Outlook

The FCA's approach to change of control assessments has become increasingly rigorous, particularly regarding source of funds, beneficial ownership transparency and the suitability of overseas controllers. Firms involved in M&A transactions should address change of control early in the deal process so that completion is not delayed. For banks, the PRA leads the assessment; see our guide to the UK banking licence.

Regulatory Counsel prepares section 178 notices, controller forms and business plans and manages the FCA assessment through to approval. Contact us for a written proposal.