An accountant needs FCA authorisation when they carry on a regulated financial services activity by way of business and no exclusion or exemption applies. Most accountancy firms never need it, because their work either falls outside the Regulated Activities Order, is covered by the exclusion for activities that are a necessary part of professional services, or fits within a designated professional body licence. Full authorisation becomes necessary when financial services stop being incidental, for example recommending specific pension or investment products, discretionary fund management or standalone debt advice.

What does the law actually prohibit?

Section 19 of the Financial Services and Markets Act 2000 (FSMA) sets the general prohibition: no person may carry on a regulated activity in the UK, or purport to do so, unless they are an authorised person or an exempt person. The consequences of getting it wrong are serious:

  • Section 23 makes breach a criminal offence, punishable on indictment by up to two years’ imprisonment, a fine or both. It is a defence to show all reasonable precautions and due diligence were taken.
  • Section 26 makes an agreement made in breach unenforceable against the client, who can recover money paid and compensation for loss.
  • Section 21 separately restricts financial promotions. A person must not, in the course of business, communicate an invitation or inducement to engage in investment activity unless they are authorised or the content is approved by an authorised person, subject to exemptions.

Which accountancy activities can be regulated?

Regulated activities are listed in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (the RAO). The articles accountants most often come close to are:

  • Article 53, advising on investments: advice on the merits of buying, selling or holding a particular security or relevant investment. Generic advice is not caught; advice about a specific product is.
  • Article 25, arranging deals in investments: making arrangements for someone to buy or sell a particular investment, or arrangements with a view to transactions.
  • Article 21, dealing in investments as agent.
  • Articles 39D and 39E, debt adjusting and debt counselling: negotiating with a lender on a borrower’s behalf, or advising a borrower about the liquidation of a debt under a credit agreement.
  • Insurance distribution activities, such as advising on and arranging insurance contracts, including tax fee protection.

Which exclusions help professional firms?

Two exclusions in the RAO do much of the work for accountants.

Article 67: necessary part of professional services

Article 67 excludes from several activities, including dealing as agent, arranging and advising, any activity carried on in the course of a profession that does not otherwise consist of regulated activities, where the activity may reasonably be regarded as a necessary part of the other services. The exclusion is lost if the activity is remunerated separately. So an accountant who, as a necessary part of a tax engagement, comments on the shares a client holds may be excluded, but billing a separate “investment advice” fee is likely to take the work outside article 67.

Article 33: introducing

Article 33 excludes from the “arrangements with a view to” limb of arranging (article 25(2)) arrangements under which clients are introduced to an authorised person or certain exempt persons. ICAEW’s Traffic Light Guide treats simply giving a client the name and contact details of an authorised adviser as not regulated, while passing the client’s details to the adviser for them to make contact falls in the licensed category.

What are the alternatives to full authorisation?

A firm that does carry on regulated activities has three main options short of applying to the FCA itself.

  1. Designated professional body licence. Under Part 20 FSMA, firms regulated by ICAEW, ICAS, the Institute of Chartered Accountants in Ireland or ACCA can carry on exempt regulated activities that are incidental to their professional services. See DPB licences for investment business.
  2. Appointed representative. Under section 39 FSMA, a person who contracts with an authorised principal, and for whom the principal accepts responsibility in writing, is exempt for the business covered. The FCA’s PROF 2 guidance confirms an exempt professional firm can also act as an appointed representative.
  3. Referral only. Restrict the role to referring clients to an authorised adviser in a way that stays outside regulation, and document why the adviser was chosen.

A firm cannot mix full authorisation with the DPB route. PROF 2 explains that an exempt professional firm cannot be an authorised person, and ACCA’s guidance gives the example that a firm authorised by the FCA for mortgage work could not then rely on ACCA’s DPB regulations for consumer credit or any other activity.

When is FCA authorisation unavoidable?

ICAEW’s Traffic Light Guide marks as requiring direct FCA authorisation, among other things:

  • recommending that a client buys a specific personal pension contract, or advising on transferring pension rights to another scheme;
  • discretionary management of investments;
  • recommending that a client takes out a specific regulated home finance plan, acting as intermediary to put one in place, or recommending an equity release scheme or a consumer buy to let mortgage; and
  • advising on or arranging insurance relating to large risks, or insurance unrelated to the firm’s professional services.

Consumer credit is another trigger. ACCA notes that the FCA took over consumer credit regulation on 1 April 2014, when group licences that professional bodies had held were withdrawn. A practice that provides debt counselling or debt adjusting as its main business, or on a standalone walk in basis rather than as part of accountancy services to the client, is unlikely to meet the Part 20 conditions and will need its own authorisation.

How does a firm apply for authorisation?

Applications are made through the FCA’s Connect system after registering on it. The FCA says it will usually assess a complete application from an FSMA firm within six months, and an incomplete one could take up to 12 months. The firm must show it meets the threshold conditions, the minimum standards for authorisation, and pay an application fee. Once authorised, the firm is subject to the FCA Handbook in full for its regulated business, which is a much heavier regime than a DPB licence.

How might this work in practice?

Illustration only. A practice offers three new services to its business clients.

  • Explaining the tax relief on pension contributions to directors and suggesting they speak to an adviser, giving the adviser’s phone number: not regulated.
  • Recommending a particular tax fee protection policy to accounts clients: regulated insurance distribution, but within a DPB licence if complementary to the accountancy work. Our guide on tax fee protection insurance explains the product.
  • Advertising a standalone “debt help” service to the public, negotiating with lenders for a fee: debt adjusting carried on as a business in its own right, which needs FCA authorisation.

The practice obtains a DPB licence for the second service and drops the third rather than seek authorisation.

What mistakes come up most often?

  • Charging a separate fee for financial advice and assuming article 67 still applies.
  • Promoting investments in newsletters or on social media without checking the financial promotion rules in section 21; see marketing rules for accountants.
  • Referring clients to an adviser in return for a commission without accounting to the client, which breaks the Part 20 conditions.
  • Assuming that professional body membership alone permits investment business.
  • Ignoring the professional indemnity implications; see fee protection and professional indemnity.

Solar Protect runs fee protection schemes for accountancy and bookkeeping practices. See how our accountant schemes work or read fee protection schemes for accountants.

Related Accountapedia entries

Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.