What are the threshold conditions?

The Threshold Conditions represent the minimum conditions which a firm is required to satisfy, and continue to satisfy, in order to be given and to retain authorisation:

Location of offices: the authorised firm’s head office must be in the UK. This is regarded by the FCA as where the directors and other senior management (ie those who make decisions relating to the UK firm’s central direction and the material management decisions of the firm on a day to day basis) and where the central administrative functions of the firm (for example, central compliance, internal audit) are located. This is a condition that subsidiaries of non-UK based managers can sometimes find difficult to meet if there is no person of sufficient seniority in London

Effective supervision: the UK firm must be capable of being effectively supervised by the FCA having regard to the nature and complexity of its business and must not have any close links (ie controllers or other affiliates) which would prevent the FCA’s effective supervision

Appropriate resources: the resources of the firm (including non-financial resources such as personnel) must, in the opinion of the FCA, be appropriate in relation to the regulated activities that it seeks to carry on, or carries on. This is more general and is separate to the strict capital requirements described further below

Suitability: the firm must satisfy the FCA that it is a fit and proper person having regard to all the circumstances including nature of the business and experience of the personnel running the business

Business model: the strategy of the firm for doing business must be suitable for the regulated activities that it seeks to carry on, and in this context the FCA will look at whether the business model is consistent with the business being conducted in a sound and prudent manner, the interests of consumers and the integrity of the UK financial system.