This always comes out to be a major surprise for a lot of people, after all FCSA and Professional Passport sound so official but actually there is no difference between being accredited and non accredited. There is no official body or accreditation for Umbrella Companies, HMRC will never endorse any Umbrella Company no matter what their accreditation status, they are explicit on this.

So why has the FCSA become so prevalent? The FCSA sounds a lot like the FSCA (The financial service conduct authority) but was in fact formed by several of the largest Umbrella Companies, in essence they created their own accreditation. Having such a large share of the market they then had the sway and marketing budget to promote it to the supply chain up to the point we are in today where many end clients and agencies insist on the use of an FCSA Umbrella. If you Google “FCSA scandal” you’ll soon see that rather than an official government body the FCSA has been deep in controversy many times over its short life span. From holiday pay being withheld to accusations of money changing hands to lockdown the supply chain none of it makes for great reading. For any Umbrella Company wishing to join the FCSA there is an audit process in place and annual membership fee that has to be paid. The general result of this is a more expensive service to the contractor.

What about Professional Passport? Professional passport predates the FCSA but again was a non official accreditation trying to apply a set of rules to the way in which Umbrella Companies should conduct their business. A membership is payable. A large leather bound operational handbook is involved. Many believe that the FCSA was formed originally from a disagreement between Professional Passport members although it is only speculation.

It is purely down to a marketing effort that the mentioned accreditations have become so prevalent in the market. IR35 rule changes have pushed agencies to seek any reassurance possible, no matter how unofficial or mired in controversy. That and relationships between the agencies and Umbrella companies involved. This again may indirectly increase costs to the contractor. There are hundreds of Umbrella Companies out there that whilst processing payroll in exactly the same way as an FCSA member refuse to pay the membership fee to competitors and pass on those savings with lower margins.

As you can see there is no UK government backed regulation/accreditation or approval for the Umbrella Company market, in essence it has been left to be self governing. Whether the Umbrella you choose to work for (after all an Umbrella company becomes your employer) is accredited or not it pays to completely satisfy yourself that you are not only satisfied with the returns you will receive but also the way in which you will receive them.