In order to become authorized, an applicant must satisfy the relevant regulator that it meets the Threshold Conditions set out in Schedule 6 of FSMA. The requirements set out in Schedule 6 are supplemented by the Threshold Conditions (COND) part of the FCA Handbook.

The Threshold Conditions can vary depending on the particular regulated activities that the applicant intends to carry on and, in particular, whether the applicant will be PRA- or FCA-authorized. Broadly, however, the following conditions need to be satisfied:

• Location of offices - For UK-incorporated companies, both the head and registered office must be located in the UK. This can have implications for the composition of the board of directors, so that a majority of the board will need to be resident in the UK and the central administrative functions will also need to be located in the UK.
• Effective Supervision - Applicants must be capable of being effectively supervised. This emphasizes the need for firms to have a substantive presence in the UK that is accessible to UK regulators and enables the regulator to supervise the firm. The regulator will also consider whether there are any impediments to supervision of the applicant, including the group structure and any relevant laws restricting access to information.
• Appropriate resources - Applicants must satisfy the regulator that they have adequate resources to carry on the relevant regulated activities. Resources include financial resources as well as human resources (including management with the required skills) and infrastructure.
• Suitability - Applicants must be fit and proper to be authorized, having regard to all the circumstances.
• Business model - The regulator will examine the applicant’s business model. In addition to understanding the economic aspects of the business, matters such as the impact of the model on consumers and the impact on the UK financial system will also be considered.