Early and High Growth Oversight | FCA

Following a successful pilot, find out how we’re expanding Early and High Growth Oversight to support more newly authorised firms.

Firms can face challenges in meeting their regulatory obligations in the first few years after authorisation.

In response, we have initiated a new approach called Early and High Growth Oversight. This provides enhanced supervision for firms as they get used to their regulatory status and supports them to understand their obligations so they can meet the standards we expect as they grow. It will also ensure that we can identify and address harm developing in newly authorised firms quicker.

The objectives of Early and High Growth Oversight are to:

Spot harm or misconduct

identify harm or misconduct more swiftly
address misconduct within firms
remove problem firms
results in increased market confidence and competition

Raise the standards

newly authorised firms meeting high standards from the start
fast growing firms have better systems and controls as their business grows, making them more resilient in the longer term

Promote competition

innovative firms may not have the same resources as more traditional financial services firms to engage with and understand regulation
our work will enable these firms to better navigate the regulatory landscape and submit accurate data

Better firm experiences

firms have direct and immediate access to the regulator as they start out
through regulatory engagement, firms better anticipate risks and act on them
firms understand and implement the culture we expect as they start up and grow

identify harm or misconduct more swiftly
address misconduct within firms
remove problem firms
results in increased market confidence and competition

newly authorised firms meeting high standards from the start
fast growing firms have better systems and controls as their business grows, making them more resilient in the longer term

innovative firms may not have the same resources as more traditional financial services firms to engage with and understand regulation
our work will enable these firms to better navigate the regulatory landscape and submit accurate data

firms have direct and immediate access to the regulator as they start out
through regulatory engagement, firms better anticipate risks and act on them
firms understand and implement the culture we expect as they start up and grow

What this means for firms

Over 2022 to 2023, Early and High Growth Oversight will take in up to 300 newly authorised firms. You don't need to apply to be part of Early and High Growth Oversight, we will contact you directly if you're included.

Early Oversight pilot findings

We piloted Early Oversight with 32 newly authorised firms across a range of sectors from October 2021 to March 2022. We worked with the firms to help them improve their understanding of our regulatory requirements and make changes where this was needed.

We saw a number of common themes among the newly authorised firms:

Financial promotions

We worked with firms in our pilot to help them better understand our requirements on marketing and financial promotions and to adapt their promotions where they weren’t meeting them. Since then we have also provided webinar training to around 500 attendees.

Regulatory submissions

Firms new to financial regulation are required to complete and submit regulatory data in a timely way. Where these are incorrect, firms must make re-submissions, taking up additional time and resource. We worked with firms to answer their questions and support them, which led to timely and better quality regulatory submissions during the pilot.

Regulatory permissions

We found that some firms hold permissions that they do not use, or that they may have applied for incorrectly. Our work with firms throughout the pilot ensured that they held and fully used the correct regulatory permissions. Two firms cancelled their permissions following our challenge and upon fully understanding their regulatory obligations. We closed down a firm that was part of a wider organisation carrying out regulated activity without authorisation and worked with the firm to ensure that funds were returned to all customers.

Financial projections

Firms submit business plans to us before they receive their permissions. As they start to trade, they may find that their actual revenues do not reasonably track against their projections. We worked with firms to understand how their businesses were performing and to make sure they had appropriate plans.

Business model changes

Firms often change or adapt their business models in the first years of their life. This can affect the permissions they should hold and the regulatory requirements they must comply with. We worked with firms to have a better understanding of what regulatory requirements apply to their business and which permissions they should apply for.

Innovative firms

When starting out, innovative firms may not have the same resources as more traditional financial services firms to engage with and understand regulation. Early Oversight can help these firms to understand which regulatory requirements and guidance applies to their business.

Firms rated the experience highly

Of the 29 firms that responded to our survey, 87% said they were 'satisfied' or 'very satisfied' with their overall experience in Early Oversight.

We also received feedback on the frequency of data requests we make of firms. We have considered the feedback and have made appropriate adjustments to the frequency of data we will collect of firms in Early and High Growth Oversight.

Considerations for firms seeking authorisation

Based on our discussions with firms in the pilot, the following insights may be helpful for other firms going through the authorisation process.

Before and during the authorisation process, make sure you read all the relevant information and guidance we provide, for example our portfolio letters or guidance relevant to your sector or business.
You should register for access to our systems early on. This will ensure you are ready to comply with and submit your regulatory reporting on time. You should also familiarise yourself with your reporting schedule once it’s available.
Once your firm is authorised, you will be subject to our rules and principles. In Early and High Growth Oversight, we expect you to engage with us openly and transparently. We also expect you to notify us if it’s likely that you won’t be able to fulfil your regulatory obligations.

Find out more about our authorisation process and how to apply. Firms with innovative business models can also get support through our Innovation services.

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Page updates

30/09/2022 : Link added Information for newly authorised firms

26/04/2022 : Information changed 'by the end of 2023' changed to 'by the end of 2022/23'

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