HM Treasury has confirmed a blanket exemption for the British Business Bank (BBB) and a slate of its subsidiaries under the Financial Services and Markets Act 2000. The Statutory Instrument was made on 24 February 2026, laid on 25 February, and takes effect on 27 March 2026. It also adds National Housing Bank Limited to the same list of exempt bodies. The move places the state-backed lender and its investment arms in the small group of UK entities permitted to carry on regulated activities without FCA or PRA authorisation, as exempt persons under FSMA’s general prohibition framework.

The Order names British Business Bank plc alongside British Business Finance Ltd, British Business Financial Services Ltd, British Business Investments Ltd, British Patient Capital Ltd, BBB Investment Holdings Ltd, BBB Mandates Ltd, BGP General Partner I LLP, British Business Aspire HoldCo Ltd, Nations and Regions Investments Ltd, and National Housing Bank Limited. In practical terms, counterparties will see these names appear as ‘exempt persons’ rather than ‘authorised firms’ in onboarding and compliance files.

Exemption here refers to FSMA’s section 19 “general prohibition”, which bars a person from carrying on a regulated activity in the UK unless they are authorised or exempt. Exempt status means the entity can carry on specified regulated activities without authorisation; it does not confer a consumer licence to do anything they wish, nor does it remove other legal duties that may apply. The principle is set out in FSMA and associated explanatory material on the regime. (legislation.gov.uk)

For SMEs, the most immediate effect is operational rather than dramatic. BBB programmes should be easier to structure and launch because the Bank and its subsidiaries won’t need case‑by‑case permissions to perform regulated steps within programme delivery. That should trim lead times when renewing guarantees, standing up new fund mandates, or adjusting co‑lending terms-useful in a year when working capital costs and refinancing timetables remain tight for smaller firms.

Where this matters day‑to‑day is in the programmes BBB already runs at scale. British Business Financial Services administers schemes such as the Growth Guarantee Scheme, ENABLE Guarantee and Recovery Loan Scheme phases, while British Business Investments backs private credit, regional angels and other intermediated finance. Those functions continue; the exemption primarily reduces regulatory friction around execution and new product roll‑outs. (british-business-bank.co.uk)

Venture capital is another pressure point. British Patient Capital (BPC) remains a legal entity within the group and, as at March 2024, reported £3.125bn in assets with commitments of £2.3bn, calling itself the UK’s largest domestic investor in venture and venture‑growth capital. The exemption should simplify BPC’s ability to make and manage commitments alongside private LPs, though investment decisions and governance are unchanged. (british-business-bank.co.uk)

Branding has been rationalised across the group since 2025, when BBB shifted to a unified brand architecture-while keeping BPC and BBI as legal entities. For fund managers and GPs, the takeaway is that contracts and capital calls still reference the same companies; marketing names may differ. The new FSMA exemption does not alter those legal identities. (sifted.eu)

Counterparties should note that BBB and subsidiaries are not authorised or regulated by the FCA or PRA and do not operate as banking institutions-a long‑standing position the group discloses in its materials. The new Order formalises exempt‑person status; it does not permit retail deposit‑taking or relax anti‑money laundering, subsidy control, procurement or state‑aid‑derived obligations that may sit elsewhere. Compliance teams should update firmwide onboarding rules to treat BBB group names as exempt persons under FSMA, not as authorised firms. (british-business-bank.co.uk)

The addition of National Housing Bank Limited is strategically notable. Government set out in June 2025 that a publicly owned housing bank would mobilise £16bn of public capacity to unlock over £53bn of private capital and support more than 500,000 new homes; the company was incorporated in November 2025. Exempt status should speed its ability to structure guarantees and finance vehicles with lenders and developers. (gov.uk)

For lenders, the practical questions are straightforward. First, transaction eligibility: where programme rules reference dealing with an “authorised or exempt person”, BBB subsidiaries now clearly satisfy the latter. Second, control environment: client‑asset and conduct rules tied to authorisation may not bite on an exempt counterparty, so firms should ensure contractual protections (reporting, conflicts, data, complaints routing) are specified in documentation rather than assumed via handbook rules. Third, risk appetite: exposures to BBB‑backed programmes often benefit from partial guarantees; those economics are unaffected by the Order and remain programme‑by‑programme.

For founders and CFOs, nothing changes about how to apply for finance from Nations and Regions Investment Funds or via accredited lenders; the application routes and product menus are the same. The benefit is more behind the scenes: the Bank should be able to iterate programme terms faster as market conditions shift, including co‑investment vehicles, evergreen funds and regional mandates. That could make follow‑on finance-or a bridge to profitability-arrive weeks sooner in 2026.

Timing matters. The exemption starts on 27 March 2026. Within days, a separate change-the new “providing targeted support” activity-takes effect on 6 April 2026 under the Regulated Activities Order, clarifying when information‑rich help to consumers counts as advice. Firms operating near the retail perimeter should map both changes together to avoid gaps between exempt‑person interactions and evolving advice rules. (regulationtomorrow.com)

One final note on governance. The Explanatory Note to the Order says no significant impact assessment was produced; nonetheless, the policy intent is plain: reduce procedural friction for a state lender already central to SME finance and scale‑up capital, while keeping statutory oversight through ministerial ownership. We’ll watch how quickly this translates into faster mandate launches and whether it nudges more pension capital into UK growth funds over the next two quarters.