Concept
In the United Kingdom, a regulated business—for example, fund management—can be launched under someone else's FCA licence. An appointed representative (AR) conducts regulated activities under the licence of a principal (FSMA 2000, s.39). In funds, the role of principal is played by a host AIFM—a separate FCA firm that officially becomes the manager (AIFM) of your fund, while the sponsor works as an investment adviser under delegation. This is the fund vertical of embedded finance.
A host AIFM typically has full-scope AIFM status with MiFID top-up. Portfolio management and risk management formally remain with the host; the sponsor, as an AR, conducts investment ideas, deal due diligence, and investor relations under a delegation agreement. For UK venture managers, a related regime is VCFM.
🍓 The principal is responsible to the FCA for the actions of the AR. Therefore, the host must substantively control the sponsor; the FCA directly criticised formal tick-box onboarding in its 2023 review of host models.
How It Works
The distribution of roles is set by the delegation agreement. The host holds the licence, regulatory reporting, capital, and compliance functions; the sponsor-AR conducts the investment side within the mandate. Legally, the host manages the fund; the sponsor drives the economics and deal decisions—within the limits of what the host has agreed and controls.
What You Need to Launch
You don't need your own FCA licence. You need a host AIFM (full-scope + MiFID top-up) and registration of the sponsor as an AR or sub-manager under delegation. Onboarding—guideline 4–6 weeks: sub-threshold SCSp 2–4 weeks, RAIF 4–6, depending on documents and service provider onboarding. The fund can charge a management fee from the very start.
What the host requires: investor due diligence (AML and financial crime), a delegation agreement with clearly described functions, regular reviews of delegated activities, sometimes secondment of sponsor personnel under host supervision. The FCA's 2023 review criticised formal AR onboarding—the host must control substantively, not just on paper.
Compliance
Host perimeter: SMCR on key individuals, AML, conflicts of interest management, capital adequacy, regular reviews of each AR. The FCA's 2023 review identified typical failures: weak supervision of secondees (working remotely, primary employer is the sponsor, hence conflict of interest), insufficient host participation in due diligence, capital not accounting for the number of funds and ARs, misleading statements (AR calling itself an investment manager). Supervision of ARs must be ongoing.
How It's Done in the Market
UK hosting providers: Sturgeon Ventures, G10 Capital (IQ-EQ), Sapia Partners (IQ-EQ), ACA Mirabella, Brooklands, Privium, Khepri, Laven—profiles in the UK host AIFM review. Hosting economics: setup fee, fixed annual fee and percentage of AUM or share of management fee. What to look for: capacity and reputation of the host (its problems with the FCA hit all ARs on the platform), real depth of supervision, conflicts, and exit terms.
The continental analogue is third-party ManCo/AIFM in Luxembourg and Ireland (Waystone, IQ-EQ, Universal Investment, Apex/FundRock, Ocorian, Alter Domus, Carne, Gen II) for cross-border distribution via EU passport; more details—third-party ManCo in the EU. The general logic of choosing and comparing structures is in the material on funds. When AUM and management fee cover the cost of your own AIFM licence, firms transition to their own.
Applicable Regulation
The foundation is FSMA 2000, s.39 (AR regime) and FCA AIFM hosting. After the Greensill collapse, Parliament recommended narrowing the AR regime; the FCA issued PS22/11 (December 2022, enhanced principal supervision), and HMT is consulting in 2026 on a gateway—a separate permission to be a principal and extension of SMCR to AR personnel. Where the perimeter is moving overall—in the material on regulatory perimeter trends.
| Pros | Cons |
|---|---|
| Launch a fund in 4–6 weeks, without your own AIFM licence | The principal is responsible to the FCA for the AR; host controls tightly |
| Management fee can be charged from the very start | Share of economics goes to the host (fee + percentage of AUM) |
| Ready-made regulatory and compliance infrastructure | Dependence on the capacity and reputation of the host |
| Clear path to your own licence as AUM grows | Tightening: PS22/11, gateway consultation, SMCR on AR personnel |
Q/A
Do you need your own FCA licence to launch a fund
No. The host AIFM becomes the fund manager under its own licence, and the sponsor works as an AR or investment adviser under delegation. Your own AIFM licence is obtained later, as AUM grows.
How long does onboarding take
Guideline 4–6 weeks: sub-threshold SCSp—2–4 weeks, RAIF—4–6. Depends on documents and service provider onboarding. The fund can charge a management fee from the very start.
What did the FCA find unsatisfactory in host models
2023 review: weak supervision of secondees (remote, conflict of interest with primary employer), insufficient host participation in due diligence, capital not accounting for the number of funds and ARs, misleading statements about the AR's role.
This material is prepared as an expert overview and does not constitute individual legal advice.
FAQ
How long does onboarding take
Guideline 4–6 weeks: sub-threshold SCSp—2–4 weeks, RAIF—4–6. Depends on documents and service provider onboarding. The fund can charge a management fee from the very start.
What did the FCA find unsatisfactory in host models
2023 review: weak supervision of secondees (remote, conflict of interest with primary employer), insufficient host participation in due diligence, capital not accounting for the number of funds and ARs, misleading statements about the AR's role.
Key factual claims
- UK hosting providers: Sturgeon Ventures, G10 Capital (IQ-EQ), Sapia Partners (IQ-EQ), ACA Mirabella, Brooklands, Privium, Khepri, Laven—profiles in the UK host AIFM review.
- The foundation is FSMA 2000, s.39 (AR regime) and FCA AIFM hosting.