What is the FCA perimeter?

What does the perimeter mean?

The perimeter is the edge of what the FCA regulates. Inside it are activities that a business needs authorisation, or an exemption, to carry on. Outside it are activities that do not need either, even when they involve money, credit or customers’ savings. Perimeter is not a defined term in the legislation. It is the shorthand the FCA and the industry use for where the line falls.

The core rule is the general prohibition in section 19 of the Financial Services and Markets Act 2000 (FSMA). No one may carry on a regulated activity in the United Kingdom, or claim to do so, unless they are an authorised person or an exempt person. Breaching it is a criminal offence under section 23. Agreements made in breach can be unenforceable under sections 26 and 27, although section 28 gives the court a discretion to allow them to be enforced.

Who draws the line?

The perimeter is drawn by legislation, not by the FCA on its own. Section 22 of FSMA says an activity is a regulated activity if it is of a specified kind, is carried on by way of business and, in most cases, relates to an investment of a specified kind. Which activities and which investments are specified is set out in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, usually called the RAO.

The RAO is made by HM Treasury. When the government decides that an activity should be brought inside the perimeter, or that an exclusion should be narrowed, it is usually the Treasury that consults on the change and lays an amending order before Parliament. Larger changes can need a new Act.

The FCA’s role sits on top of that. It authorises and supervises firms inside the perimeter, makes rules for them, takes action against people carrying on regulated activities without permission and publishes guidance on how it reads the legislation, mainly in its Perimeter Guidance manual. Where there is a real dispute about what the law means, the courts decide.

Some regimes sit alongside the RAO rather than inside it. Payment services and e-money are governed by the Payment Services Regulations 2017 and the Electronic Money Regulations 2011, which have their own authorisation and registration routes. Registration under the money laundering regulations is different again and is not the same as authorisation. Being told that a business is “FCA regulated” does not on its own tell you which regime applies or what it covers.

What is the FCA perimeter report?

The FCA has published perimeter reports setting out the issues it sees at the edge of its remit. In general terms they describe activities that can cause harm while sitting outside regulation, areas where firms commonly misunderstand where the line falls and areas where the FCA has raised possible changes with the Treasury. They are useful for understanding the FCA’s concerns and where change may be coming. They do not change the law. Only legislation can move the perimeter.

How does the perimeter move over time?

The perimeter is not fixed. Two recent changes show how a business model that was outside it can end up inside it.

Buy now pay later

Buy now pay later products provided by third-party lenders had relied on an exemption from consumer credit regulation. Deferred payment credit became FCA regulated on 15 July 2026. In this context it means a credit agreement that charges no interest, repayable in 12 or fewer instalments over 12 months or less, provided by a lender that is not the seller. Agreements where the lender is the seller are not covered by the new regime, and nor are agreements entered into before 15 July 2026. Lenders that were not yet authorised could carry on under a temporary permission regime. How the rules apply to buy now pay later

Cryptoassets

Since 8 October 2023 promotions of qualifying cryptoassets have been within the financial promotion regime. A wider regime for cryptoasset activities is now coming in. The FCA’s cryptoasset authorisation gateway opened on 30 September 2026, the FCA expects firms that want to keep operating in the UK to apply by 28 February 2027 and the new regime goes live on 25 October 2027. Firms currently registered under the money laundering regulations must apply for authorisation, because registration does not convert automatically. Where cryptoasset businesses sit

The point for any business is that a perimeter answer is given at a point in time. A model that relies on an exclusion or an exemption needs looking at again when the legislation around it changes, and when the business itself changes.

Can you be regulated for one activity and not another?

Yes. Authorisation is not a blanket status. An authorised firm holds permission under Part 4A of FSMA for particular regulated activities, sometimes with limitations attached. If it carries on a regulated activity outside that permission, section 20 of FSMA treats that as a contravention the FCA can act on. A firm with permission for credit broking, for example, does not by that alone have permission to arrange deals in investments.

The reverse also applies. An authorised firm can run business lines that are not regulated activities at all. Those lines generally do not need permission, although some FCA rules and principles can reach unregulated activities in some circumstances, and how a firm runs them can still matter to its supervisor.

Exempt persons work in a similar way. An appointed representative is exempt only for the business its principal has accepted responsibility for, and anything outside that scope needs its own answer. Appointed representatives and direct authorisation

Operations and marketing are separate tests

The perimeter for what you do is set by section 19 and the RAO. The rules for how you market it come from section 21 of FSMA and the Financial Promotion Order. A business that is outside the perimeter for its operations can still be making financial promotions, for example when it invites people to invest in it. Being outside one test tells you nothing certain about the other. See how the operations test works and how the marketing test works.

Common misunderstandings

When a written opinion helps

A written legal opinion is worth considering when your business model depends on an exclusion or an exemption, when the law around your activity is changing, or when a bank, investor or partner asks you to show where you sit. A solicitor applies the legislation and guidance to your actual documents and processes and records the reasoning. This page explains how the perimeter is drawn. It cannot tell you which side of it you are on. How written opinions work