FCA Registration for dental practices

What is the FCA?

The Financial Conduct Authority (FCA) is the regulatory body overseeing all financial services in the UK. Any business which carries out ‘regulated activity’ must, unless exempt, be registered with the FCA. In this article, we will look at the key considerations around FCA registration when looking to purchase a dental practice. We will focus specifically on practice share purchases, i.e. where the practice in question is operated through a limited company with an existing FCA registration, and the key considerations in this scenario.

FCA principals and authorised representatives

To legally engage with regulated financial activities, firms must be either directly authorised by the FCA or registered with them as an appointed representative. Typical regulated financial activity by a dental practice would include patient credit/finance systems, such as a payment plan for their ongoing dental treatments. Commonly, the practice acts as an appointed FCA representative of another authorised firm, for example a payment solution company/financial services firm (i.e. Chrysalis), who offer financing options to the practice’s patients. The finance company, known as ‘the principal’, manages the accounts and transactions, whilst the practice carries out certain regulated activities on its behalf, such as introducing patients and providing their financing options.

FCA registration considerations when buying a dental practice

If you are considering buying a dental practice through a shared purchase, there are certain considerations you should take into account when doing your due diligence:

  1. Firstly, ensure you check the existing registration status of the practice you are looking to buy. Not only is it important to know whether it is registered, but also in what capacity; is it an authorised firm or an appointed representative of another company? You can check the status on the FCA’s online register, which includes the details of any financial services provided by the practice.
  2. When taking control of a practice with existing FCA registration, you will inherit any obligations and liabilities associated with that registration. These could include ensuring continued compliance with FCA rules and regulations, and dealing with any potential fines or penalties the practice has received. It is essential to have a solid understanding of what these responsibilities entail and be prepared to take them on before completing the purchase.
  3. When taking over a dental practice via a shared purchase, you must ensure you obtain the required authority. As the ownership (and therefore the control) of the company will change upon completion of the sale, you must submit an application to the FCA, to enable them to perform their necessary checks on the buyer. There are two choices of application, depending on your intentions for future regulated activity:
    • If you intend to continue offering financing options to the practice’s patients, you must submit a change of control application, known as a Section 178 Notice. It is a criminal offence to acquire control of an authorised firm without FCA approval. The FCA has up to 60 working days upon receiving the completed application to carry out their assessments, so it’s important to submit as early as possible to avoid any potential delays to the purchase.
    • If you decide not to offer finance options or any other registrable services to patients after purchasing the practice, it is recommended to submit a cancellation of registration application. The FCA aims to process cancellation applications within 3 to 6 months of receiving them, so this process is much longer.
  4. FCA regulations, and the applications themselves, are extremely complex. We recommend seeking professional legal advice and guidance during the application process to avoid potential delays to your purchase caused by submitting a potentially incomplete or incorrect application. Our dedicated team of corporate solicitors for dentists can assist you in buying a dental practice and submitting your FCA application, making the process run as smoothly as possible.