Financial Conduct Authority  

FCA investigating ‘phoenixing’ failed advice firms

FCA investigating ‘phoenixing’ failed advice firms

The Financial Conduct Authority has revealed it is investigating the phenomenon of ‘phoenixing’, whereby the members of failed advice firms return to the financial advice market under new names.

Speaking on Tuesday (22 November), FCA director of life insurance and financial advice Linda Woodall said she was in the middle of a “project” on the issue.

Her comments, made at a conference on pension freedoms hosted by Defaqto, came in response to a question from a financial adviser, claiming he had previously identified a firm that was “blatantly doing it”.

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But he said the FCA didn’t “seem to be doing much to stop it.”

Ms Woodall responded: “That’s an interesting point because it’s one that I have a project going on as we speak. 

“I think there’s a challenge here in that, if firms fail, that’s not of itself a breach of our rules unless they’ve done something that was deliberate or malicious.”

She said this meant the fact that they failed previously “of itself may not prevent them from coming back in a different guise”. 

She went on: “I would agree … that we need to get our information sources and our processes into a better place so that we can reduce the likelihood of that happening.” 

On the wider issues of scams, Ms Woodall said there was “clearly more” the FCA could do to prevent it, and that the FCA was “alive” to this fact. But she said advisers must also share some of the responsibility.

“There’s certainly more that advisers can do in alerting consumers when they come to see them about all of this and it’s one area where we all just have to come together,” she said.

“We have a view that the whole activity around scamming is becoming ever more innovative, and you close one door and another one opens.

“I would say it’s like a life’s work, the issue around scams, and whenever we see them we certainly take steps to stop them.”

She said the FCA would be running a series of programmes and thematic reviews directly targeted at scam activity, and had also set up a “multidisciplinary, multi-functional programme of work” looking at how to get better at intelligence before scams do too much damage.

In his Autumn Statement tomorrow (23 November) chancellor Philip Hammond will announce a number of measures to tackle scammers, including a ban on cold calling and a ban on using dormant limited companies as the sponsors of small self-administered schemes (Ssas).