FCA Change of Control Application 2026: Complete Guide to Buying or Selling an FCA-Regulated Firm

FCA Change of Control Application 2026: Complete Guide to Buying or Selling an FCA-Regulated Firm

Buying an FCA-regulated business involves more than agreeing a price and transferring the shares.

Where a transaction results in a person acquiring or increasing control over an FCA-authorised firm, prior regulatory approval is generally required before the acquisition can complete. This process is commonly known as a Change in Control application or Section 178 notification.

The FCA assesses the proposed buyer, the wider ownership structure, the source of funds, financial soundness, reputation, business plan and the effect the acquisition will have on the regulated firm. For Payment Institutions and Electronic Money Institutions, the same core change of control principles apply through the Payment Services Regulations 2017 and Electronic Money Regulations 2011.

A well-prepared application should therefore do more than identify the new shareholders. It should demonstrate that the acquisition is credible, properly funded and capable of preserving the sound and compliant operation of the regulated business after completion.

What is an FCA Change of Control application?

A Change in Control application is the regulatory process through which a proposed buyer seeks FCA approval to acquire or increase a qualifying level of control in an FCA-regulated firm.

The formal notification is often referred to as a Section 178 notice because the core requirement comes from section 178 of the Financial Services and Markets Act 2000. Modified versions of the regime apply to Authorised Payment Institutions and Electronic Money Institutions.

The process can apply where a person acquires shares or voting rights directly in the regulated firm, indirectly through a parent company or through another ownership arrangement that gives the person significant influence.

The FCA assesses every proposed controller that falls within the relevant regime. Complex acquisitions can therefore require several controller notifications where the buyer sits within a wider group structure.

When is FCA approval required?

A proposed controller must notify the FCA and obtain approval before acquiring or increasing control where the transaction crosses an applicable control threshold.

For Payment Institutions and Electronic Money Institutions, the principal control bands are:

Control level	Regulatory position
10% or more but less than 20%	Change of control approval required when entering this band
20% or more but less than 30%	Approval required when crossing into this band
30% or more but less than 50%	Approval required when crossing into this band
50% or more	Approval required when crossing this threshold
Significant influence	Can trigger control even below or outside a simple percentage analysis

Control can arise through shares, voting power, parent undertakings or the ability to exercise significant influence over the management of the regulated firm.

The percentage calculation is not always straightforward. Indirect ownership through holding companies, shareholder agreements, voting arrangements and group structures can create controllers at several levels.

A transaction should therefore include a controller analysis before any regulatory forms are prepared.

The FCA’s current change of control guidance explains the general framework.

Do the rules apply to Payment Institutions and EMIs?

Yes.

The FCA’s change of control regime applies to Authorised Payment Institutions and Electronic Money Institutions through modified provisions of FSMA. A person proposing to acquire or increase control must notify the FCA and obtain approval before the relevant change takes place.

For PIs and EMIs, the 10%, 20%, 30% and 50% thresholds are particularly important. Notification can also be required where the proposed owner will be able to exercise significant influence over the management of the institution.

The FCA applies broadly the same prudential approach as it does when assessing changes of control in other authorised firms. It will consider whether the proposed controller is suitable and financially sound and whether the acquisition allows the PI or EMI to continue being managed in a sound and prudent manner.

For buyers of payment or e-money firms, regulatory approval should therefore be treated as a core condition of the transaction rather than a post-completion administrative step.

Is FCA approval required before completing the acquisition?

Yes, where the transaction falls within the prior approval regime.

A person who decides to acquire or increase control must obtain the FCA’s approval before completing the relevant acquisition. Completing without approval can constitute a criminal offence.

This is why share purchase agreements for regulated firms commonly make completion conditional on regulatory approval. The buyer and seller can agree the commercial transaction, but legal completion does not take place until the necessary regulatory conditions have been satisfied.

The structure is particularly important where the seller wants certainty of execution and the buyer needs time to complete the FCA process. The regulatory timetable should be built into the transaction documentation from the outset.

The parties should also avoid implementing control informally before approval through management rights, voting arrangements or other mechanisms that could amount to de facto control.

How long does an FCA Change of Control application take?

Once the FCA considers a notification complete, it has an assessment period of up to 60 working days to determine the application.

The FCA can interrupt the assessment period to request additional information. For payment and e-money institutions, the assessment can generally be interrupted for up to a further 30 working days in the circumstances permitted by the legislation.

The practical timetable can therefore be longer than 60 working days because time can pass before the FCA considers the submission complete, and information requests can extend the process.

A realistic transaction plan should allow for regulatory preparation before filing and sufficient time after submission for FCA questions. Poorly prepared applications usually take longer because the regulator must request information that should have been included from the beginning.

The FCA can approve the transaction, approve it subject to conditions or object where the statutory criteria are not satisfied.

What does the FCA assess?

The FCA does not assess a Change in Control application solely on whether the buyer has enough money to purchase the business.

Its assessment focuses on whether the proposed ownership is compatible with the continued sound and prudent management of the regulated firm.

Key areas include the reputation and suitability of the proposed controller, financial soundness, the competence and experience of individuals who will direct the business, the firm’s ability to continue meeting regulatory requirements and whether the ownership structure creates concerns around supervision or financial crime.

The FCA will also examine the source of the acquisition funds and the wider ownership chain. Where funding comes through several entities, loans, investors or offshore structures, the source and movement of the funds should be transparent and fully evidenced.

Complex ownership is not prohibited, but unexplained complexity can create regulatory concerns.

What documents are required for a Change of Control application?

The exact documents depend on the type of buyer, the target firm and the structure of the transaction. However, a strong submission normally includes considerably more than the controller form itself.

The FCA can expect detailed ownership charts showing all direct and indirect controllers, close links and regulated entities. It may also require evidence of the acquisition funding, criminal background checks for relevant individuals, financial information and a detailed explanation of the buyer’s plans for the regulated business.

Where the buyer intends to make material changes after completion, the business plan becomes particularly important. It should explain how the firm will operate, what products and regulated activities it will provide, how governance will work, which senior individuals will remain or be replaced and how regulatory capital will be maintained.

Financial forecasts should reflect the post-acquisition strategy rather than simply reproduce the target’s historic numbers.

The submission should allow the FCA to understand the transaction without having to reconstruct the ownership structure or guess what the buyer intends to do after completion.

The business plan is often the most important part of the application

Many Change in Control applications become difficult because the regulatory forms are completed correctly but the post-acquisition plan is weak.

The FCA wants to understand what the buyer is actually acquiring and what will happen next. If the buyer intends to change the target’s products, expand into new markets, replace management, outsource key functions or materially increase transaction volumes, these changes can affect the FCA’s assessment of the transaction.

The business plan should therefore explain the proposed strategy, target market, products, regulated activities, governance, staffing, outsourcing, systems, financial crime controls and financial projections.

For PIs and EMIs, it should also address safeguarding, regulatory capital and how the firm will continue meeting its obligations under the Payment Services Regulations or Electronic Money Regulations. A strong business plan gives the FCA confidence that the buyer understands the regulated business it is acquiring.

Source of funds and source of wealth

The FCA will want clear evidence showing how the acquisition is being funded.

This includes the immediate source of the purchase funds and, where relevant, the wider source of wealth of the proposed controllers or beneficial owners. The evidence may include bank statements, audited accounts, investment agreements, loan documentation, sale proceeds, dividend records or other documents demonstrating how the funds were generated and how they will move into the transaction.

Where acquisition funding comes from third parties, private investors or group companies, the FCA may want to understand the relationship between those parties and whether they themselves become controllers.

Opaque funding structures create avoidable delay. The ownership and funding structure should be settled and documented before the application is submitted.

Criminal background checks

The FCA requires relevant individual controllers and beneficial owners to obtain criminal background checks as part of the Change in Control process.

The FCA states that these checks should generally be no more than six months old when the notification is made. UK applicants normally use the appropriate DBS process, while individuals based outside the UK should obtain the equivalent criminal record documentation from their jurisdiction.

These checks should be arranged early because international certificates can take time to obtain. Where documents are issued in another language, appropriate English translations may also be required.

Background checks are only one part of the FCA’s suitability assessment. The regulator can also consider regulatory history, directorships, business conduct, financial standing and other matters relevant to whether the controller is fit to own a regulated financial business.

Ownership charts and indirect controllers

One of the most common areas of complexity is identifying every person or entity that will become a controller after the acquisition.

A buyer may acquire the target through a new holding company, which is itself owned by another company, investment vehicle or group of individuals. Each layer must be assessed to determine whether it creates a direct or indirect controller. Parent companies of shareholders can themselves become controllers because voting power and ownership may be aggregated through the group.

Shareholder agreements can also be relevant. A person with a relatively modest percentage holding may still exercise significant influence where they have board appointment rights, veto powers or other contractual rights over the regulated firm.

A complete ownership chart should therefore show the full chain to the ultimate beneficial owners, including share percentages, voting rights, regulated entities and relevant close links. The ownership analysis should be completed before the forms are prepared, not discovered during the FCA review.

What is significant influence?

Control is not determined only by percentage ownership. A person can potentially become a controller where they acquire the ability to exercise significant influence over the management of the regulated firm, even where their shareholding does not obviously cross a headline threshold.

The FCA may consider governance rights, shareholder agreements, veto rights, board representation and the practical ability to influence key decisions. This is particularly relevant to minority investments.

An investor acquiring less than 10% or 20% should not automatically assume that no regulatory analysis is required if the accompanying rights give it significant influence over strategy, management or regulated activities.

Transaction documents should therefore be reviewed from a regulatory control perspective as well as a corporate-law perspective.

Change in control for FCA cryptoasset firms

The UK regime for changes in control of FCA-registered cryptoasset businesses changed on 30 June 2026.

Where there is a beneficial owner within the meaning of the Money Laundering Regulations, the relevant beneficial-owner control thresholds and cryptoasset forms apply. Where there is no beneficial owner in the controller chain, the FCA applies the Directive-firm control thresholds and FSMA controller forms. This reflects the transition towards the broader FSMA cryptoasset regime expected to take effect from 25 October 2027.

Buyers considering an existing FCA cryptoasset business therefore need to assess both the current control regime and the firm’s future position under the new regulatory framework.

An acquisition of an MLR-registered crypto firm does not guarantee that the business will obtain the permissions it needs under the future FSMA regime. Regulatory due diligence should therefore include the target’s readiness for future authorisation.

What happens if the buyer plans to change the business after acquisition?

FCA Change of Control approval does not automatically approve every post-acquisition change.

A buyer may intend to replace directors, appoint a new MLRO or compliance officer, introduce new products, change safeguarding arrangements, expand into new regulated activities or outsource significant functions.

These changes can trigger separate regulatory requirements.

A new director or key individual may require notification or approval. A new regulated activity may require a Variation of Permission. Changes to safeguarding banks, agents, business lines or outsourcing arrangements may require additional notifications or updates to the FCA.

The acquisition plan should therefore identify every material regulatory change expected after completion.

Where possible, the Change in Control business plan should explain the future operating model clearly so that the FCA understands the direction of the business when assessing the new owners.

Regulatory due diligence should come before the application

The buyer should understand the target before asking the FCA to approve the acquisition.

Due diligence should confirm the target’s permissions, restrictions, regulatory capital, safeguarding arrangements, financial crime framework, regulatory reporting, complaints, audits and regulatory correspondence.

For PIs and EMIs, particular attention should be given to CASS 15 compliance, safeguarding audits, REP027 reporting and any historic customer-fund shortfalls. The buyer should also assess whether the target’s existing infrastructure will survive the transaction. Banks, safeguarding institutions, card schemes, payment processors and technology providers may have change-of-control clauses that require notification, consent or re-onboarding.

A regulatory licence with no viable banking or operational infrastructure can be far less valuable than it appears.

Due diligence allows the buyer to price these risks before committing to the acquisition.

What should sellers do before a Change of Control transaction?

The seller should prepare the regulated business for buyer and regulator scrutiny before the transaction reaches an advanced stage.

Regulatory returns should be current, ownership records accurate and outstanding compliance issues understood. Any safeguarding, capital, financial crime or audit weaknesses should have clear remediation plans.

The seller should also identify contracts that require consent or notification if control changes, including banking, safeguarding, card programme and technology agreements.

Good preparation reduces the risk of material issues emerging after the buyer has submitted the Change in Control application. The seller also remains responsible for ensuring the regulated firm continues to comply throughout the transaction period. A pending sale does not reduce the firm’s ongoing regulatory obligations.

Can the buyer operate the firm before FCA approval?

A buyer should not take control of the regulated firm before the required approval has been obtained. The parties can undertake due diligence, negotiate documents and plan the post-acquisition business while the FCA application is being assessed, but the transaction should not be implemented in a way that gives the buyer control prematurely.

This includes considering whether management rights, voting arrangements, board control or other contractual provisions could effectively transfer control before formal completion. Completion is normally structured as conditional upon FCA approval. Where the transaction is commercially urgent, the solution is to prepare the regulatory application efficiently rather than attempting to implement control informally before approval.

What happens if control changes without FCA approval?

Acquiring or increasing control without the required prior approval can constitute a criminal offence.

The FCA has powers to investigate the acquisition and can impose restrictions on shares or voting rights. For PIs and EMIs, the consequences can include restrictions on voting power and other regulatory action. Where a person becomes a controller unexpectedly or without realising that the transaction triggered the regime, the FCA expects to be notified as soon as the position becomes known.

The safer approach is to conduct a controller analysis before the transaction is signed or implemented.

Regulatory approval should never be treated as an administrative formality that can be dealt with after completion.

Common reasons Change of Control applications are delayed

Applications are often delayed because the FCA does not have enough information to assess the transaction confidently. Incomplete ownership structures are a common problem. The FCA should not have to request repeated clarification about who ultimately owns the buyer or which entities become controllers.

Weak business plans also cause delay, particularly where the buyer intends to make significant changes but provides only a short description of the future business. Source-of-funds evidence can become another issue where acquisition funding passes through several entities or relies on undocumented arrangements.

Delays also arise when key individuals are not identified early, criminal background checks are missing or financial forecasts do not demonstrate that the regulated firm will continue to meet its capital requirements.

A complete application is therefore not simply one in which every form field has been populated. It is one where the FCA has sufficient evidence to understand and assess the proposed acquisition.

How Buckingham Capital Consulting manages Change of Control applications

Buckingham Capital Consulting supports buyers, sellers and investors through the complete regulatory workstream of acquiring FCA-regulated firms.

We begin by reviewing the transaction structure and identifying all proposed controllers, including indirect controllers and any persons who may exercise significant influence. We then assess the target’s permissions and the buyer’s post-acquisition plans so the regulatory application reflects the business that will exist after completion.

Our work can include preparation of controller notifications, ownership charts, regulatory business plans, financial forecasts, source-of-funds evidence, governance structures and supporting regulatory documentation. We manage FCA questions and information requests through the assessment process and coordinate the regulatory workstream through to approval.

Where the buyer intends to change the business after acquisition, we can also support Variation of Permission applications, changes to key individuals, safeguarding and compliance reviews and wider post-acquisition regulatory remediation.

BCC also works with buyers and sellers of regulated payment, e-money and related fintech businesses. We can assist with identifying suitable acquisition opportunities or potential buyers and then manage the regulatory change of control process once a transaction is agreed.

For support with an acquisition, disposal or FCA Change of Control application, contact Buckingham Capital Consulting.

Frequently asked questions

How long does an FCA Change of Control application take?

The FCA has up to 60 working days to assess a complete notification, although the assessment period can be interrupted where further information is required. The overall process can take longer because the FCA must first receive a sufficiently complete submission and may ask questions during its review. A detailed initial application generally reduces avoidable delay.

What percentage ownership triggers FCA Change of Control approval?

For Payment Institutions and Electronic Money Institutions, the principal control bands are 10%, 20%, 30% and 50%. Approval can also be required where a person will exercise significant influence over the firm. Other types of FCA-regulated businesses can have different thresholds, so the applicable regime should be confirmed before the transaction proceeds.

Can I buy an FCA-authorised firm before Change of Control approval?

The commercial transaction can be agreed subject to regulatory approval, but control should not pass before the FCA has granted the required approval. Transactions are commonly structured so that completion occurs only after the regulatory condition has been satisfied.

What documents are needed for an FCA Change of Control application?

The FCA commonly requires controller forms, ownership charts, information about beneficial owners and close links, criminal background checks, source-of-funds evidence, financial information and a detailed post-acquisition business plan. Additional information may be required depending on the structure of the buyer, the target and the changes planned after completion.

Can Buckingham Capital Consulting manage the entire Change of Control process?

Yes. We can assess the ownership structure, identify proposed controllers, prepare the regulatory application and supporting documentation, develop the post-acquisition business plan and financial forecasts, manage FCA questions and support the wider regulatory changes required around the transaction. We can also assist buyers and sellers with regulated acquisition opportunities and post-completion regulatory work.