The Financial Conduct Authority (FCA) has said it will use new powers to “more swiftly” cancel or change what regulated activities firms are permitted to do (known as permissions).
The FCA will now provide a firm with two warnings if it believes it is not using its regulatory permission. The regulatory body will then be able to cancel the permission, or change it, 28 days after the first warning, if the firm has not taken appropriate action.
This new power is available following a change in the law, allowing the FCA to “streamline” and shorten the removals process.
This will reportedly strengthen consumer protection by reducing the risk of consumers misunderstanding or being misled about their exposure to financial risk and how much consumer protection they have.
The FCA said the new expedited process will also allow the body to act quickly when cancelling a firm’s permission when it is no longer required and to respond “swiftly” to “inappropriate” uses of permission.
It added that where a firm fails to pay its regulatory fees, submit returns or complete annual declarations, the FCA may view these as indicators of a lack of regulated activity which may lead to permission being removed through use of this new power.
The new power also supports the FCA’s existing ‘use it or lose it’ initiative, which has seen the FCA carry out 1,090 assessments since May 2021 to see whether firms are undertaking the financial activity for which they have permission.
This has reportedly resulted in 264 firms applying to voluntarily cancel, and a further 47 to modify, their permission to carry out regulated activities.
Mark Steward, executive director of Enforcement and Market Oversight at the FCA, said: “Businesses with permissions they don’t need or use, risk misleading consumers. These new powers will enable us to take quicker action to cancel permissions that are not used or needed.
“Firms should regularly review their permissions, ensure they are correct, and they are acting in accordance with them. If they are not needed or used, they should seek to cancel them.”