The Financial Conduct Authority (FCA) has new powers to remove a firm's unused permissions from the Financial Services register more quickly.
It says incorrect or outdated permissions on the Financial Services Register can mislead consumers about the level of protection offered by a firm or give credibility to a firm’s unregulated activities.
The changes will help to prevent scams and to ensure the Register presents a clearer picture of the permissions firms hold. Firms are required to confirm that the information on the FS Register is accurate on an annual basis.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “We want to use this power to take quicker action to prevent consumers being misled. It is part of our transformation and drive to be more assertive, drawing on an innovative approach and using new streamlined processes to make important regulatory interventions.
“Firms can and should apply to have their permissions cancelled if they no longer plan to use them but many fail to do so. We understand that business models may evolve over time and there may be valid reasons why regulatory permissions are not being used, but unless firms notify us and keep their permissions up to date, they will risk losing market access.”
The new power, granted to the FCA via the Financial Services Act 2021, enables it to start the cancellation process as soon as it considers permissions are not being used, by serving 14 days’ notice on a firm. The FCA will then be able to vary or cancel permissions after one month.
The FCA has already undertaken a ‘use it or lose it' exercise with firms – reminding them of their obligation to review regulatory permissions and ensure they are up to date or removed if not needed.
As part of that work firms that have not used their permissions for 12 months or more are at risk of having them cancelled via the existing cancellations process. It is part of the FCA’s response to tackle issues raised by Dame Elizabeth Gloster’s review into the regulation of London Capital & Finance (LC&F).