Hiring Finance for a Newly Authorised Firm

Authorisation is granted on a date, and the obligations start immediately. That is the difficulty most newly authorised firms discover in their first quarter: the finance function was built for a business that was not regulated, and it is now expected to produce returns, reconcile client money or safeguarded funds daily, calculate capital against a rule, and evidence all of it to a supervisor. The application process demanded a plan; operating under the permission demands a function. This guide covers what finance has to produce before authorisation, what changes on day one, when to make the first regulated finance hire, how to bring client money capability in-house, how to choose between interim, permanent and fractional, and what the first twelve months should establish.

Before authorisation: what finance has to produce

Finance work starts well before the permission arrives. The FCA assesses an application against the threshold conditions, including whether the firm has appropriate financial and non-financial resources, and much of that evidence is financial. The FCA’s guidance on applying for authorisation sets out the process; the finance components usually include the following.

Regulatory business plan financials

The business plan has to be supported by projections that hang together: profit and loss, balance sheet and cash flow, with the assumptions written down. Payment institution applications require a forecast budget for the first three financial years, and the FCA expects comparable projections from most applicants. A stressed scenario — what happens if revenue arrives later or costs run higher — is what turns a forecast into evidence that the firm can survive its plan. Our guide to building an investor-ready reporting pack covers many of the same disciplines.

Capital and liquidity planning

The applicant has to show that it will meet its capital requirement on day one and keep meeting it through the plan. For a MiFID investment firm under MIFIDPRU, the own funds requirement is the highest of the permanent minimum requirement (£75,000, £150,000 or £750,000 depending on permissions), the fixed overheads requirement (a quarter of relevant annual fixed expenditure, taken from projections where the firm has no trading history) and, for firms that are not small and non-interconnected, the K-factor requirement. Investment firms must also hold liquid assets, with a basic requirement of a third of the fixed overheads requirement. Payment institutions and e-money institutions work from the Payment Services Regulations 2017 and Electronic Money Regulations 2011, with initial capital set by the services provided (for e-money institutions, €350,000). Our guides to regulatory capital, the ICARA and IFPR and finance in an investment firm cover the calculation in detail.

The wind-down plan

The FCA expects a firm to be able to show how it would close in an orderly way without causing harm to customers or markets. That means estimating the cost and time of an orderly wind-down, identifying the triggers that would start it, and holding resources against it. The FCA’s Wind-down Planning Guide sets out the approach; for investment firms the analysis forms part of the ICARA (Internal Capital Adequacy and Risk Assessment), and payment and e-money firms are expected to have wind-down plans that cover the return of safeguarded funds. It is a finance document as much as a legal one, because the numbers determine whether the plan is credible.

Designing the reporting and reconciliation processes

The application also has to describe how the firm will run its regulatory reporting, client money or safeguarding arrangements and controls. Firms that write that section with someone who has run those processes before find the post-authorisation build much shorter, because the description and the reality start out aligned.

What changes the day the permission is granted

Four things, and none of them waits for the firm to be ready.

Reporting obligations begin. Returns on the FCA’s RegData calendar in the FCA’s format, with the first submission frequently falling before the finance team has built a process. RegData replaced the old GABRIEL system, and which returns apply depends on the permissions granted. Our guide to RegData and regulatory reporting covers the mechanics.

Capital becomes a calculated number. Own funds, the applicable requirement, and the obligation to hold enough — monitored continuously rather than reviewed annually. What the calculation looks like depends on the permission: MIFIDPRU for investment firms, a different basis for payment institutions and EMIs.

Client money or safeguarding obligations attach where the firm holds relevant funds. This is the biggest operational change and it is daily — see CASS and client money or safeguarding for payments firms depending on which applies. Investment firms holding client money work under CASS 7; payment and e-money institutions have safeguarded under the FCA’s CASS 15 rules since 7 May 2026, alongside the Payment Services and Electronic Money Regulations.

And responsibilities become personal. Under the Senior Managers and Certification Regime, prescribed responsibilities are allocated to named individuals, several of which touch finance.

The gap most firms discover

The application was prepared with advisers and described a target operating model. The business then spent the authorisation period building product and raising money, and finance remained what it was — frequently a management accountant, a bookkeeper and an outsourced accountant.

That arrangement can produce accurate management accounts and cannot produce a regulatory return, a capital calculation or a daily client money reconciliation. The gap is not competence; it is that nobody in the building has done this before, and the obligations do not have a learning period.

The practical consequence: firms that plan the finance hire during authorisation rather than after it start considerably better. The permission arrives with a date attached, and a search that starts on that date is already a quarter behind once notice periods are taken into account.

When to make the first regulated hire

Three triggers, and the first is the one to act on.

You will hold client money or safeguard funds. This is the clearest case for hiring ahead of authorisation rather than after. The daily reconciliation, the calculation and the acknowledgement arrangements need to work from day one, and building them retrospectively while operating is considerably harder than building them first.

The first return falls within two quarters. Preparing a submission for the first time takes longer than anyone expects, and the data usually does not exist in the form the return requires.

Or the adviser cost is becoming a salary. Firms typically buy the first return and the first capital calculation from a consultancy, which is sensible — and by the third or fourth cycle the arithmetic has usually changed.

Qualification — ICAEW, ACCA or CIMA — is the baseline; regime experience is the differentiator. What the first hire should be depends on scale. As a rough rule of thumb, below around £5m of revenue a Financial Controller with regulated experience covering everything is the realistic answer. Above it, an FC plus a dedicated regulatory reporting or client money role. Our guide to the first qualified accountant at a regulated firm covers the wider sequencing.

Senior manager approvals and Form A

Some people need FCA approval before they can perform their role. Senior manager functions are applied for on Form A, submitted through FCA Connect; the FCA’s SMCR forms page lists the current versions. For a new firm, the senior managers are usually proposed as part of the authorisation application itself. For a later appointment, the FCA has up to three months to decide a complete application, so a replacement or additional senior manager needs to be identified well before they are needed.

For finance, the relevant point is whether the role carries a senior manager function. A Financial Controller at a smaller firm usually does not, although they will often support the senior manager who holds responsibility for the firm’s financial affairs. A Chief Finance Officer (SMF2) appointment is handled by our sister firm FD Capital; compliance oversight (SMF16) and money laundering reporting (SMF17) appointments by SMF Capital. Our guide to SMCR for finance teams explains where finance roles sit.

Bringing client money capability in-house

The hardest single element, and worth treating as its own decision.

The trigger is simple: if the firm holds client money or safeguards funds, it needs someone who has done the reconciliation and the calculation before. There is no version of this that can be learned safely on the job as the sole resource, because the obligation is daily and the consequence of getting it wrong is a shortfall.

What to look for is regime-specific ownership rather than general awareness: which regime, what the calculation involved, what the recurring differences were, what the audit raised. Our guides to CASS 7 versus CASS 15 and the CASS interview questions cover the assessment, and the CASS accountant job description the specification.

What to avoid is the configuration where one capable person prepares the reconciliation, reviews it, maintains the breach register and holds the oversight responsibility. It accumulates rather than being designed, and it is the arrangement most likely to be exposed at audit — our guide to CASS oversight versus operations sets out the proportionate answer for firms that cannot staff both sides.

And the pragmatic middle option: an interim with regime experience to build the process and document it, with a permanent hire running it thereafter. That buys the expertise where it matters most — the design — without carrying the cost indefinitely.

Interim, permanent or fractional

Newly authorised firms rarely need the same arrangement in year one as in year three, and the choice is easier if each option is matched to the job it does best.

A common sequence is an interim or fractional specialist during the application and first two quarters, followed by a permanent Financial Controller who inherits a documented process. Interim and fractional candidates can usually be presented within days; permanent searches typically produce a shortlist within one to two weeks. Our guides to fractional Financial Controllers for FCA-regulated firms and interim versus fractional finance cover the trade-offs.

What it costs

Regulated-firm finance roles typically carry a premium of around 15–25% over commercial equivalents, because of the regime knowledge and accountability involved. In London, a Financial Controller at an investment firm typically earns £75k–£110k, and at a fintech or payments institution £65k–£95k. Employer National Insurance at 15% since April 2025, pension and any bonus sit on top. Interim and fractional costs depend on the scope and the number of days; our interim finance day rate card and the regulated-firm finance salary guide give current benchmarks.

The comparison that matters is not salary against nothing, but salary against the alternative: consultancy fees for each return and capital calculation, plus the cost of a breach or a late submission. For most firms holding client money or safeguarding funds, the in-house hire pays for itself early.

What the first twelve months should establish

The row that matters most is month nine. Newly authorised firms concentrate knowledge in one person faster than established ones, because that person built everything. Documentation is what converts it from a dependency into a process, and it is invariably the thing that slips. Where a return falls due earlier than month four, or client money is held from the first day, the order changes accordingly — the regulatory calendar sets the timetable, not the table.

What to tell candidates

Newly authorised firms are a genuinely attractive proposition to the right person, and firms under-sell it. The role involves building rather than maintaining, the finance person is visible to the board and to the regulator, and the experience acquired — standing up a regulated finance function from scratch — is scarce and portable.

Be honest about the other half: the process does not exist, the data is not where it needs to be, and the first year is demanding. Candidates who find that interesting are exactly the ones you want, and the specification that describes it plainly filters out those who do not. Our guide to building a finance function at a regulated firm covers what the build involves.

Cryptoasset firms are a current example. The FCA’s application gateway for the new cryptoasset regime opened on 30 September 2026 and closes on 28 February 2027, ahead of the regime taking effect on 25 October 2027, so applicant firms are building finance functions now — see finance in a cryptoasset firm.

Frequently asked questions

Should we hire before or after authorisation?

Before, if you will hold client money or safeguard funds, or if the first return falls within two quarters of authorisation. The obligations start on the day the permission is granted.

Which returns will we have to submit?

It depends on the permissions granted. Returns are submitted through RegData, and the schedule is visible there once the firm is authorised.

Does our Financial Controller need FCA approval?

Usually not, unless the role carries a senior manager function. A CFO performing SMF2 needs approval through Form A, as do compliance oversight (SMF16) and MLRO (SMF17) appointments.

Can a fractional Financial Controller cover a newly authorised firm?

Often, for a smaller firm, provided someone carries out daily reconciliation tasks. A fractional FC can own the capital calculation, returns and controls while a bookkeeper or accountant runs the daily process.