We get asked a lot about how easy or otherwise it is to go DA and what the process looks like. There’s also a lot of activity in the rumour mill about how hard the FCA make it and we think it’s important to understand the context around this.
Historically, it used to be sufficient to prove to the FCA that you were a really competent adviser and knew your onions when it came to all things advice. However, this all changed, gradually over the years anyway but more specifically after the introduction of the Senior Managers & Certification Regime (SM&CR).
The FCA now only authorises the Senior Managers in a firm, with those then able to authorise certified individuals. The purpose here was to make it so that the business ownership was the primary focus, with those in a senior position responsible not just for the running of the firm, but for the behaviour of the people they employ too.
Overall this marked a change away from an advice firm prioritising the advice part, and considering “running a business” and “compliance” on the side, to a structure which prioritises the proper, structured set up of a business first, which then just so happens to give financial advice.
Many advisers are applying for DA status without taking this into consideration, and so are focusing too heavily on their advice elements, rather than the business elements which is causing them to be rejected.
Being properly prepared and understanding what the regulator is looking for makes all the difference to an application and means that DA doesn’t have to just be a pipe dream!
📣 Remember, you are applying to be a Senior Manager, not a financial planner, and this is what the FCA will focus on. You will be applying for:
Having said all of that, if you can’t demonstrate your competency as an adviser too, then they’re not going to authorise you! If you are thinking of running your own business but don’t yet have demonstrable CAS experience, you would be best going via a network. A number of them (such as New Leaf) will support individual’s through their CAS status and can provide a good first step.
Assuming you hold / have held Competent Adviser Status, the next thing the FCA are going to be looking for is Senior Manager and / or compliance experience. It is not impossible to get directly authorised without these, however, they can go a long way to smoothing the application process and increasing your odds of getting approved.
The FCA’s guidance on it can be found here. If it’s not an option for you to hold an SM function in your current firm, consider how else you can demonstrate the relevant knowledge:
📣 Remember, this isn’t just about getting useless knowledge to pass the authorisation test. This is all stuff you’re actually going to have to do and be responsible for in your business, so you’ll need to know it all anyway. Immersing yourself in it will not only help with your application, but will help you prepare for the responsibility of managing your own firm.
Some of the other issues we’ve seen that have caused someone to have their application rejected are:
At a very high level, you’re looking at the following steps:
Our sister company Verve can, of course, help with all of the above, including coaching for your engagement meetings and competency assessments alongside a full business plan review prior to any submission.
Assuming you pass all of the above steps, you’ll get a Minded to Authorise email from the FCA… and then the real work begins!
This is exactly the kind of thing we cover on our Ready? Bootcamps, the day sessions for anyone weighing up starting their own advice business. You’ll get the business plan thinking, the compliance basics, and a space to ask the questions this blog can’t answer for you.
Book onto an upcoming bootcamp here.
