The UK’s Financial Conduct Authority (FCA) has issued a draft for a new power that would help it accelerate the process of removing regulatory permissions no longer used by financial services firms.
This will be aimed at removing incorrect or outdated permissions on the Financial Services Register, which can mislead consumers about the level of protection offered by a firm. These old rules could also give credibility to a firm’s unregulated activities.
With the new power, the FCA hopes to prevent scams and ensure the Financial Services Register presents a clearer picture of permissions firms have. Firms are required to confirm information on the register are correct each year.
The power streamlines the process of removing these outdated rules, with it being able to start the cancellation process as soon as it considers a permission not in use, by issuing a 14 days’ notice on a firm. After this, the FCA would be be able to vary or cancel permissions after one month.
FCA executive director of enforcement and market oversight Mark Steward 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 regulator has previously implemented a “use it or lose it” mentality with firms, reaffirming their obligation to review regulatory permissions and ensure it is up to date.
A consultation on the proposed power will run until 29 October 2021.
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