The average length of time taken by the Financial Conduct Authority (FCA) to authorise financial services start-ups is now back up to its highest levels, according to data obtained by City law firm RPC.
Firms had to wait 25.8 weeks in the second quarter of 2013 for final FCA approval, 6% longer than the previous quarter.
That is almost twice as long as the 13.9 weeks taken to authorise a new firm in the second quarter of 2008 in the first stage of the regulatory tightening after the collapse of Northern Rock.
RPC said that the growing wait for firms is concerning as it is a first indication of how long the new FCA is taking to approve new financial services start ups since it started in April this year.
RPC partner Richard Burger said: "If the split of the FSA is causing long delays in allowing new financial services firms to enter the market that is a concern. It is troubling for the entrepreneurs and their backers trying to launch new businesses enterprises and for consumers who benefit from the competition created by new market entrants.
"Such are the delays in getting approval from the regulator that many very viable financial services businesses never get off the drawing board.
"Obviously the regulator wants to ensure quality control over the business plans and the management of new businesses but they also need to weigh that against the costs and uncertainties that the approval process causes for new businesses."
Burger said if the FCA continues to scrutinise new start-ups much more rigorously than its predecessor, then the industry can expect to see long authorisation times becoming a "big problem".
"In many areas we are seeing a growing sense of pragmatism by the regulators, which is to be applauded, but that is clearly not the experience of many regulated firms or new start-ups."
RPC points out that some financial start-ups like banks and insurers need authorisation by both the FCA and The Prudential Regulation Authority.
Burger said: "Businesses and politicians are crying out for new businesses to enter the financial services market, most urgently to bring new capital into SME lending, mortgage finance and personal loans, but many other areas would benefit from more competition."
Burger points out that whilst the 25.8 weeks delay to get an approval from the FCA is only an average, there will be many more firms that have to wait far longer.
