In a UK payment institution deal, the price is rarely the thing that stops it. FCA change of control is.
A buyer and a seller can agree everything. Price, terms, timeline. The deal still cannot complete until the FCA approves the new owner. When someone acquires control of an SPI, API or EMI, the regulator assesses them first. That assessment is the gate. It runs on its own clock, and that clock does not care about your completion date.
This is the part of a regulated payments deal that buyers underprice and sellers leave to the lawyers. Both are mistakes. The change-of-control gate decides when a deal closes, whether it closes at all, and often what the final price is.
This guide explains how FCA change of control works for payment institutions, what it does to price and timing, and how both sides get through it without losing value. It is written for founders selling an SPI or API, and for buyers acquiring one.
What is FCA change of control?
FCA change of control is the approval you need before you can acquire or increase control of an FCA-regulated firm. For a payment institution, control starts at 10% of shares or voting power. The buyer must notify the FCA and wait for approval before the deal completes. Acquiring control without approval is a criminal offence.
The rule exists to keep unsuitable owners out of regulated firms. A payment institution holds client money and moves funds across borders. The FCA wants to know who controls it. So before control changes hands, the regulator checks the new owner.
This applies to all three entity types Vertice works with. A Small Payment Institution (SPI), an Authorised Payment Institution (API), and an Electronic Money Institution (EMI) are all caught. The buyer of any of them needs FCA approval to take control.
Who counts as a controller
You become a controller when you acquire 10% or more of a payment institution’s shares or voting power. You also become one if your stake lets you exercise significant influence over how the firm is run, even below that level.
Payment and e-money institutions sit in the regulator’s directive-firm category. That sets the control bands at 10%, 20%, 30% and 50%. You notify the FCA when you cross into a new band. You do not need to notify for an increase inside a band you already hold, unless the increase makes you the firm’s new parent.
Holdings can be added together. If several people act in concert to acquire a firm, the FCA looks at their combined stake, and each of them counts as a controller. A deal split across connected buyers does not avoid the rule.
Why it is called a Section 178 notice
The notice you file is called a Section 178 notice, after the section of the Financial Services and Markets Act 2000 that creates it. Payment institutions are not authorised directly under that Act. They are authorised under the Payment Services Regulations 2017. But the Treasury applied the Act’s control regime to payment and e-money institutions, with some changes. So the same Section 178 process applies to an SPI or API deal as to a bank deal.
The practical point is simple. The buyer, or the buyer and the firm together, files the notice before the threshold is crossed. The deal does not proceed until the FCA has reviewed it and approved.
Why change of control is the real gate in a payment-institution sale
Change of control is the one step in a payment deal that neither side fully controls. The commercial terms are yours to agree. The regulatory approval is not.
Most purchase agreements for a regulated firm make completion conditional on FCA approval of the new controller. So the deal is signed, the money is ready, and everyone waits for the regulator. A buyer who has not planned for that wait is exposed. A seller who has not prepared the firm for scrutiny hands the buyer a reason to renegotiate.
Compare it to a normal company sale. In an unregulated deal, signing and completion can happen on the same day. In a regulated payments deal, they cannot. There is always a gap, and the gap belongs to the FCA. Everything that can go wrong in that gap is deal risk: a slower timeline, new conditions, a buyer who gets cold feet, a price that moves.
This is why the gate, not the price, usually decides the outcome. Two parties rarely fall out over a number they have already agreed. They fall out over what happens while they wait.
How long does FCA change of control take?
The FCA has up to 60 working days to assess a change of control case, once it treats the notification as complete. It can stop the clock once, for up to 30 working days, to ask for more information. So a clean case can clear in around three months. A case with gaps can take much longer.
The word that matters is “complete”. The 60-day clock does not start when you file. It starts when the FCA agrees your notification is complete. An incomplete filing sits in a queue before the clock even begins. That is where most of the real delay hides.
Sellers and buyers tend to plan around the 60-day figure and forget the front end. The notification asks for detailed information on the buyer: who they are, where the money is coming from, the people who will run the firm, and the plan for the business. If any of that is thin, the FCA comes back with questions, and each round adds time.
The current data shows the FCA takes this gate seriously. In 2026 it relaxed its targets on most authorisation measures. It kept change of control at a 100% standard. Even so, its own figures for early 2026 show one change-of-control case that missed the deadline. Payment and e-money authorisations and variations are among the areas running late. The direction is clear. The regulatory clock on a payments deal is getting harder to predict, not easier.
What the FCA assesses
The FCA is judging one thing: is this buyer a suitable owner for a regulated firm. It looks at five areas. The buyer’s reputation. The reputation and experience of the people who will direct the business. The buyer’s financial soundness. Whether the firm can keep meeting its obligations under new ownership. And whether the deal raises any money-laundering or terrorist-financing risk.
The FCA and the Prudential Regulation Authority published updated guidance on how they assess these cases in November 2024, known as FG24/5. It sets out what they look at, including how they decide whether a buyer has made a decision to acquire, and what counts as significant influence. A buyer who reads that guidance before filing, and answers its questions in the notification, clears the gate faster.
What change of control does to deal price and structure
The change-of-control gate shapes the structure of every regulated payments deal. Because completion waits on FCA approval, the deal has to be built around that wait.
In practice, three things show up in the paperwork. First, completion is made conditional on FCA approval. The deal signs, but it only closes once the regulator clears the new controller. Second, some of the price is often deferred. A buyer may hold back part of the consideration until approval lands, or until the firm performs after handover. Third, the gap between signing and completion is governed by conditions: what the seller must keep doing, what the buyer can walk away from, and what happens if approval is refused or delayed.
The delay itself has a price. A clean, fast approval protects the agreed number. A slow or stalled one does the opposite. The longer the firm sits in limbo, the more a buyer can argue that something has changed, and the more room they have to chip the price. Time in the gap moves value from the seller to the buyer.
This is the cost sellers do not see coming. They negotiate hard on the headline number, then lose part of it in a drawn-out approval they did not prepare for. The number on the term sheet is not always the number that completes. The gap decides the difference.
Can a foreign buyer acquire a UK payment institution?
Yes, a foreign buyer can acquire a UK payment institution. There is no nationality bar. But a non-UK controller draws closer scrutiny at the change-of-control gate, and that usually means a longer, more detailed approval.
This matters more in 2026 than it did a few years ago. Foreign money is buying UK assets at a record pace. UK-targeted M&A passed $192bn in the first months of the year, more than triple the same point in 2025, on LSEG data reported by Reuters. Foreign buyers drove most of it, with US bidders behind more than half, and financial services was one of the sectors they reached for. More overseas buyers are now looking at UK regulated firms, including payment institutions.
For those buyers, the gate is the same in law and harder in practice. The FCA still has to be satisfied about the buyer’s reputation, funding and plan. When the buyer sits in another country, that takes more work. The regulator looks harder at where the money comes from, at the buyer’s group structure, and at whether it can supervise the firm’s new owners. Source-of-funds evidence that would be quick to confirm for a UK buyer can take weeks for an overseas one.
The lesson for both sides is the same. A foreign buyer should expect the approval to take longer and prepare the notification accordingly. A seller weighing a domestic buyer against a higher foreign offer should price the extra time and uncertainty into the comparison, not just the headline figure.
How to de-risk the change-of-control clock
The change-of-control clock is manageable. The deals that drift are the ones where nobody planned for it. A few decisions, made early, keep a deal on track.
For buyers
File a complete notification, not a fast one. The clock starts when the FCA treats your notification as complete, so a thorough first filing beats a rushed one. Prepare the information the regulator will ask for before you file: the buyer’s identity, the source of funds, the people who will run the firm, and the business plan. Read the FCA’s November 2024 guidance and answer its questions inside the notification. Budget the regulatory clock into your funding and your launch plan, and assume the front end takes longer than the 60-day figure suggests. Engage with the regulator early where the deal allows it.
For sellers
Get the firm ready for scrutiny before a buyer’s diligence starts. The change-of-control assessment looks at the firm as well as the buyer, so loose ends in the firm slow the whole process. Keep the regulatory record clean: returns filed, safeguarding arrangements sound, no open FCA correspondence. Make sure the firm’s information is organised and ready to hand over. A seller who can show a clean, well-documented firm gives the buyer fewer reasons to renegotiate while everyone waits on approval. The work that keeps the firm compliant is the same work that protects the price.
SPI, API and EMI: how control works for each in practice
The change-of-control rule applies to all three entity types, but what is at stake differs. The differences are worth knowing before a deal.
A Small Payment Institution (SPI) is the lighter-touch registration. It has a turnover limit and a narrower set of permissions. An SPI cannot provide account information or payment initiation services. The change-of-control process still applies, and the FCA still assesses the buyer. But the firm itself is simpler, so the firm-side of the assessment is usually lighter.
An Authorised Payment Institution (API) is the fuller authorisation. It carries higher capital requirements, mandatory safeguarding, and a broader set of permissions. The change-of-control assessment on an API tends to be heavier, because the firm has more obligations for the new owner to inherit. A buyer is taking on more, and the FCA looks at more.
An Electronic Money Institution (EMI) issues electronic money as well as providing payment services. It carries its own capital and safeguarding requirements. Like an API, it draws a fuller assessment at the gate.
Safeguarding sits across all of this. From 7 May 2026, the rules on protecting client funds got stricter for authorised payment and e-money firms: daily reconciliation, monthly returns to the FCA, and an annual independent audit for firms holding more than £100,000 of relevant funds. SPIs can opt in rather than being required to comply. For a buyer, this is now a core diligence question on any API or EMI. For a seller, clean safeguarding is part of what makes the firm approvable, and sellable.
What is changing in 2026
Two changes are worth watching, because both touch how control deals will work.
The first is the regulator itself. The Payment Systems Regulator is being folded into the FCA. The legal mechanism is the Financial Services and Markets Bill 2026, which began its passage through Parliament in May. When it completes, payment firms will deal with one regulator instead of two. Industry expects no real change before 2028, but deal documents signed now should account for the transition. A single regulator should, in time, simplify the control assessment for payment firms.
The second is speed. The FCA has set itself faster authorisation targets and has started working to them ahead of any legislation. That is good news for new applications. But it kept change of control at a 100% standard rather than relaxing it, which tells you how seriously it treats the gate. Faster authorisation does not mean a faster controller assessment.
On safeguarding, the picture is more settled than it looks. The stricter operational rules are live from 7 May 2026. The fuller, CASS-style regime that was once planned to follow is now under review, and the FCA has said it will not implement it without further consultation. For a buyer or seller pricing a deal today, the live rules are what matter, not the regime that may or may not come.
Frequently asked questions
What is FCA change of control?
FCA change of control is the approval you need before acquiring or increasing control of an FCA-regulated firm, including a payment institution. For a payment institution, control begins at 10% of shares or voting power. The buyer files a Section 178 notice and waits for FCA approval before the deal completes. Acquiring control without approval is a criminal offence.
Do I need FCA approval to buy a payment institution?
Yes. If you acquire 10% or more of an SPI, API or EMI, or enough to exercise significant influence, you become a controller and need FCA approval first. The deal can be signed, but it cannot legally complete until the FCA has assessed and approved you as the new controller. This applies to UK and foreign buyers alike.
How long does FCA change of control approval take?
The FCA has up to 60 working days to assess a change of control case once the notification is complete, and it can pause that period once for up to 30 working days to request more information. A clean case can clear in around three months. The bigger variable is the front end: the clock only starts when the FCA treats your notification as complete.
What is a Section 178 notice?
A Section 178 notice is the formal notification a buyer files to acquire or increase control of an FCA-regulated firm. It is named after Section 178 of the Financial Services and Markets Act 2000. Payment institutions are authorised under the Payment Services Regulations, but the Act’s control regime was applied to them, so the same Section 178 process governs a payment-institution acquisition.
What percentage counts as control of a payment institution?
Control of a payment institution begins at 10% of its shares or voting power. The control bands are 10%, 20%, 30% and 50%, and you notify the FCA when you cross into a new band. You also become a controller if your holding lets you exercise significant influence over the firm’s management, even below 10%.
What happens if you acquire control without FCA approval?
Acquiring control of an FCA-regulated firm without prior approval is a criminal offence. The FCA can object to the controller, impose restrictions on the shares, and take enforcement action against the firm and the people involved. In a sale, completing before approval also exposes both sides to the deal being unwound. Approval must come before completion, not after.
Can a foreign buyer acquire a UK payment institution?
Yes. There is no nationality bar on owning a UK payment institution. But a non-UK controller usually faces closer scrutiny at the change-of-control gate, particularly on source of funds and group structure, which tends to make approval slower. Foreign buyers should prepare a detailed notification and budget extra time into the deal timetable.
The gate is the deal
In a regulated payments deal, the price is the easy part. The change-of-control gate is what decides when the deal closes, whether it closes, and what the final number is. Buyers who plan for the gate keep their timeline. Sellers who prepare for it keep their price. The ones who treat it as a formality pay for it in the gap between signing and completion.
Vertice Fintech brokers the sale and purchase of SPI and API firms in the UK, and manages the change-of-control process on both sides of the deal. Rodolfo Basilio runs every mandate and has been operating in UK payments since 2007. If you are buying or selling a regulated payment institution, the timing is worth planning before the offer, not after.
