Who must notify
Section 178 of the Act requires a person who decides to acquire or increase control over a UK authorised person to give the appropriate regulator notice in writing before making the acquisition. For firms regulated only by the FCA, the appropriate regulator is the FCA; for banks, insurers and other firms that the Prudential Regulation Authority also regulates, it is the PRA. The FCA applies the same regime to authorised payment institutions and electronic money institutions. The notice is known as a section 178 notice, and the person who gives it as the section 178 notice-giver.
A person acquires control by holding 10 per cent or more of the shares or voting power in the firm or in its parent undertaking, or by holding shares or voting power that enable it to exercise significant influence over the firm's management. A person increases control when its holding of shares or voting power reaches 20, 30 or 50 per cent from below that level, or when it becomes the firm's parent undertaking, and each step requires a new notice and a new approval. Holdings of persons acting in concert are aggregated, and the FCA treats the parent undertakings of a corporate controller as controllers in their own right, so every person in the chain of ownership up to the ultimate beneficial owner may need to notify. For certain firms outside the scope of the EU-derived directives, and for firms with only a limited permission for consumer credit, an exemption order raises the first threshold at which notification is required to 20 and 33 per cent respectively.
A controller who decides to reduce or give up control must also notify the FCA before doing so, under section 191D, although no approval is needed.
The notice
For firms regulated only by the FCA, notices are submitted through the FCA's Connect system, with a notification form for each proposed controller. The FCA asks for detailed ownership charts showing close links and regulated entities, evidence of the funding the acquirer has secured, and criminal record checks for individual controllers and beneficial owners carried out no earlier than six months before the notice. Where the acquirer will hold more than 50 per cent, it must provide a business plan covering the business to be undertaken, governance, staffing and the background of those in significant functions, outsourcing, systems and controls and, where relevant, the Consumer Duty. The FCA treats a notice as incomplete until the business plan is received, and also while any proposed corporate controller has yet to be incorporated.
The FCA's published guidance on the prudential assessment of acquisitions, FG24/5, sets out what it expects in the assessment of an acquirer's financial soundness and the funding of the acquisition. The FCA also offers pre-application support for proposed acquirers.
The assessment period
Section 189 gives the FCA an assessment period of 60 working days, beginning with the day on which it acknowledges receipt of the notice, and the FCA must tell the notice-giver the length of the assessment period and its expiry date. In practice the period starts when the FCA confirms that the notice is complete, so the quality of the submission determines when the clock begins. No later than the 50th working day, the FCA may ask in writing for further information necessary to complete its assessment. The first such request interrupts the assessment period until the information is received, for no more than 20 working days, or 30 where the notice-giver is situated or regulated outside the UK or is not subject to the relevant UK supervisory regimes. Later requests are permitted but do not interrupt the period again.
Within two working days of reaching its decision, and in any event by the end of the assessment period, the FCA must either notify the notice-giver that it approves the acquisition unconditionally, or give a warning notice that it proposes to approve it subject to conditions or to object. Conditions proposed in a warning notice take effect as interim conditions. If the FCA does neither by the end of the assessment period, and has not told the notice-giver that the notice is incomplete, it is treated as having approved the acquisition. The FCA has said that some notices take longer to assess because the business plan is not sufficiently detailed, and that slow responses to its information requests cause delay.
What the FCA assesses
Section 185 requires the FCA to consider the suitability of the notice-giver and the financial soundness of the acquisition in order to ensure the sound and prudent management of the firm, to have regard to the likely influence the notice-giver will have on it, and to disregard the economic needs of the market. It may object only on reasonable grounds based on the criteria in section 186, or if the information provided is incomplete. Those criteria are the reputation of the notice-giver; the reputation, knowledge, skills and experience of any person who will direct the firm's business as a result of the acquisition; the financial soundness of the notice-giver, in particular in relation to the type of business the firm pursues or plans to pursue; whether the firm will be able to comply with its prudential requirements, including the threshold conditions for all of its regulated activities; whether any group the firm will join has a structure that allows effective supervision and the exchange of information between regulators; and whether there are reasonable grounds to suspect money laundering or terrorist financing in connection with the acquisition.
Conditions may be imposed where the FCA would otherwise propose to object, or where it considers them desirable to advance its objectives, but they may not require a particular level of holding to be acquired. Proposed senior managers of the firm require approval in their own right, and their applications are usually prepared alongside the notice so that the board as it will be constituted after completion can be assessed at the same time.
Completing without approval
Section 191F makes it an offence to fail to give a section 178 notice, to complete the acquisition before the end of the assessment period without the FCA's approval, to breach an interim or final condition, or to complete an acquisition to which the FCA has objected; the last of these carries a sentence of up to two years' imprisonment. Providing information that is false in a material particular is also an offence. Where the FCA has given a warning or decision notice about a controller's holding, it may give a restriction notice directing that the shares or voting power concerned may not be transferred, that no voting rights may be exercised, that no further shares may be issued in respect of them, or that no payments may be made on them. A person who has acquired control without notice should notify the FCA as soon as possible after becoming aware of it.
The FCA may also object to an existing controller at any time if it is not suitable, or if its influence would affect the firm's ability to meet the conditions for its authorisation. The suitability of controllers is therefore assessed on a continuing basis, after completion as well as before it.
Planning the timetable
Because completion cannot take place until the FCA has approved the acquisition, the notice and the business plan should be prepared alongside the commercial negotiations, and the long-stop date in the sale and purchase agreement should allow for the full assessment period and an interruption. The ownership structure, the funding and the incoming management should be settled before the notice is given, since a change to any of them during the assessment is likely to require further information and to delay the FCA's decision.
How we can help
We prepare change in control notifications for each person in the chain of control, the business plan and the evidence of funding, and the applications for incoming senior managers, and we manage the FCA's questions through to its decision. See change of control, or speak to us. Our note on buying an authorised firm or applying from scratch compares the acquisition route with a new application.
Sources
- Financial Services and Markets Act 2000, Part 12, sections 178, 181, 182, 185, 186, 187, 189, 190, 191B, 191D and 191F
- FCA Handbook, SUP 11.3: Requirements on controllers or proposed controllers
- Financial Conduct Authority, Change in control and Submit a change in control notification
Checked 17 October 2026.