Find out how to prepare and register, including how to submit a good quality application.
We've increased the scrutiny we apply to Annex 1 lending firms
We recently highlighted the risks[2] related to unregulated lenders known as Annex 1 lending firms.
To take account of and mitigate these risks, we've increased the scrutiny we apply to unregulated Annex 1 lending firms seeking registration.
As a result, Annex 1 lending firms should expect it to take longer than usual for us to determine their applications.
Firms can help us determine their applications sooner by ensuring their applications demonstrate how they will meet the requirements of an Annex 1 firm. The rest of this page explains how you can do this.
Who needs to register
If you offer any of the following services as a business in the UK, you must register with us as an Annex 1 financial institution:
- Lending including, consumer credit, credit agreements for immoveable property, factoring (with or without recourse), and financing commercial transactions (including forfeiting)
- If you are a consumer credit lender, and already authorised by us, you do not need to register separately. Find out more in the guidance notes[3].
- Financial leasing
- Providing payment services
- Issuing and managing other payment methods
- Offering guarantees and commitments
- Trading for own account or for account customers in:
- Money market instruments
- Foreign exchange
- Financial futures and options
- Exchange and interest-rate instruments or
- Transferable securities
- Safe custody services
- Money broking
- Portfolio management advice
- Safekeeping and administration of securities
- Taking part in securities issues and providing related services (including registrars)
- Advice to undertakings on capital structure, industrial strategy and related questions, and advice and services for mergers and the purchase of undertakings
- Issuing electronic money
You can check the guidance notes[3] for more details on whether you are providing any of the services listed above. If you are authorised under the Financial Services and Markets Act 2000[4], you do not need to register with us as an Annex 1 financial institution.
Is the activity carried out as a business?
When deciding if the activity is being carried out as a business, we will consider several factors:
- Commercial element: We look at whether the individual or organisation advertises, acts or presents themselves as providing Annex 1 services as a business.
- Commercial benefit: We consider whether the individual or organisation receives any direct or indirect benefit from providing the Annex 1 service.
- Relevance to other business activities: Annex 1 services may only be part of the overall business. We consider how significant the Annex 1 service is compared to other services.
- Regularity/frequency: We also consider whether the Annex 1 service is provided often enough to suggest it is being carried out as a business.
Is the activity carried on in the UK?
When deciding if the activity is being carried out as a business in the UK, we will consider several factors:
- UK office or head office: If the business has an office or head office in the UK, this may indicate that the service is being provided in the UK. If the UK office is not the registered office or head office, we will look at what services are provided there and whether the presence of that office means that the business is operating in the UK.
- No UK office: If the business has no UK office or other activity in the UK, apart from having a UK client, we are likely to consider that the business is not operating in the UK. For example, if a money broking provider is based outside of the UK, has no offices or agents here, but arranges transactions for UK customers, we would not automatically consider this as business being carried out in the UK.
Special purpose vehicles
If your firm is a special purpose vehicle involved in lending, you only need to register with us as an Annex 1 financial institution if you are the original lender.
If only the legal or beneficial interest in loans is transferred to your firm, you do not need to register with us.
You must register under the MLRs if you fall into one of the categories listed above.
Rejection criteria
Incorrect application form submitted: Applicants must complete and submit the correct version of the Annex 1 registration form on Connect. Paper versions completed and emailed to the FCA will be rejected.
Correct Annex 1 applicant form submitted but with no or little information filled in: A fully completed application form is essential for the efficient assessment and determination for Annex 1 registration. Missing or incomplete information will result in rejection of the application.
Missing MLR Individual forms: An MLR Individual form for each senior person responsible for conducting Annex 1 activities is critically important to our assessment of the fitness and propriety of the MLR individual.
Disclosure & Barring Service (DBS) check has not been completed before submission: For a beneficial owner who is not currently approved as a SMF manager a basic Disclosure and Barring Service (DBS) check must be carried out. If the individual is based in Scotland, Northern Ireland or outside of the United Kingdom, they’ll need to request an equivalent criminal record check. Evidence of the check should be readily available upon request.
Paper/ Electronic submissions without the associated fee included: Applicants must have paid the correct fee to the FCA at submission of an application for Annex 1 registration.
Re-submission of application for Annex 1 registration where FCA feedback has not been taken onboard: If an applicant reapplies after a previous rejection or withdrawal and submits the same information or documents without addressing our concerns and feedback, their application will be rejected. Each case will be considered individually.