Relief for fintech startups as government plans new short-term FCA licences
Fintech startups could be about to start trading much sooner after the government signalled plans to issue temporary licences in advance of getting full accreditation.
Startups often suffer delays of months or even over a year as they wait for regulators at the Financial Conduct Authority (FCA) to grant them authorisation, during which they burn through cash and find it difficult to raise fresh funds from investors.
But under plans for a new regime, firms that meet entry criteria will be able to undertake some regulated activities on a provisional basis, subject to safeguards, while they wait to complete the full FCA authorisation process over an 18-month period.
The Treasury said the flexible approach will remove a major barrier to growth for smaller firms and start‑ups, help innovative companies hire and invest sooner and will “show that the UK is serious about regulating for growth as well as risk.”
Seb Wallace, co-founder at investment firm Triple Point Ventures, told Morning Wire: “This is a welcome step in the right direction.
“The FCA is slower to approve new applications than the innovation economy needs – with a 6-12 month approval timeline target being too long for almost all credible startups.
“Alongside this change, the registration regime for open banking data users (known as RAISPs) should be abolished (remaining only for payment providers), or a similar fast track registration created for these firms as well.”
But Wallace cautioned that the “robust entry criteria” suggested by the government “needs to be realistic – not so restrictive as to undermine this promising initiative.”
Treasury secretary Lucy Rigby said: “Too many promising firms have told us their growth is being hampered by the time it takes to secure full authorisation.
“This new provisional licences regime will help high‑potential start‑ups and scale‑ups trade and grow sooner. It backs innovative firms to start, stay and expand in the UK, supporting economic growth.”
Startup challenges
The move follows findings from Morning Wire that as few as six e-money licence applications were granted by the UK’s financial regulator in the 9 months to the end of June.
Data obtained by Morning Wire via Freedom of Information request showed that not a single authorised electronic money institution (AEMI) licence was granted by the Financial Conduct Authority (FCA) in the fourth quarter of 2024, despite at least 10 applications being under consideration at the time.
The figure nudged up slightly to two applications granted in the first quarter of 2025, followed by another four applications in the second quarter. 35 applications were closed over the nine-month period, meaning just 16 per cent of total applications were approved.
The drop in the number of approvals represents a 45 per cent fall on the previous year.