It revealed that consumers could be misled about the level of protection offered by a firm, or give credibility to a firm’s unregulated activities, due to incorrect or outdated permissions on the Financial Services (FS) Register.
The changes, granted to the watchdog via the Financial Services Act 2021, is set to streamline and shorten the process of removing firm permissions by allowing 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 authority will then be able to vary or cancel permissions after one month.
The FCA believes it will help prevent scams and ensure the Financial Services (FS) Register presents a clearer picture of the permissions firms hold.
Companies are required to confirm that the information on the FS Register is accurate on an annual basis.
The consultation will run until 29th October.
As part of its transformation, the FCA recently announced separate changes to its decision making and governance to enable it to make faster and more effective assessments.
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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 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 no longer needed.
As part of that work, those that have not used their permissions for 12 months or more are at risk of having them cancelled via the existing process.
This is part of the regulator’s response to tackle issues raised by Dame Elizabeth Gloster’s review into the regulation of London Capital & Finance (LC&F).
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