The City watchdog has launched new powers that will allow it to crackdown on inactive financial services firms quicker, it announced today.
A sweeping set of reforms will allow the Financial Conduct Authority to cut the amount of time it needs to wait to revoke regulated firms’ permission to carry out regulated activities.
The measures have been launched in response to the FCA’s failures to properly oversee the failed fund manager London Capital and Finance.
“The changes will help to prevent scams and to ensure the financial services register presents a clearer picture of the permissions firms hold,” the FCA said.
The regulator is consulting with affected parties until 29 October.
The FCA will be able 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 1 month.
Previously, the regulator had to wait 12 months. The new powers were granted under the Financial Services Act.
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.”
“Unless firms notify us and keep their permissions up to date, they will risk losing market access.”
Simon Morris, financial services partner at law firm CMS, said: “This is an important housekeeping measure designed to hit two targets.”
“First, many firms’ FCA licences cover business they no longer do, or never did. The FCA wants to prune these so both it and customers can clearly see what the firm actually does. Second, a firm that is part or fully dormant should have its licence trimmed accordingly.”
“This is to stop another London Capital, where the firm remained FCA authorised but without any regulated business.”