Regulation 

FCA trains staff to spot phoenixing

FCA trains staff to spot phoenixing

The Financial Conduct Authority has said it is training case officers to spot instances of phoenixing.

In its Approach to Authorisations document, published today (November 28), the regulator said it was aware phoenixing was an issue but previous misconduct should not necessarily be an automatic bar to working in the financial services sector again.

The FCA's 41-page document stated: "We know that there is an issue with firms or individuals seeking to avoid liabilities by liquidating and transferring their assets to a new or different firm where they will continue to trade. This is often known as 'phoenixing'.

"The challenge here is that evidence of mis-selling and resultant liabilities to consumers can take a long time to emerge and is often not available when firms or individuals seek authorisation in new or different firms.

"We are looking at how we can strengthen the quality and timeliness of the data we gather on firms and individuals, for example, in the financial advice sector.

"We are also rolling out a training programme to support our case officers to spot phoenixing by financial advisers using this enhanced intelligence."

The FCA has previously said it was seeking to use analytics to help it spot when a firm might be a phoenix, using data to spot trends and patterns.

The regulator said the past record of a firm or individual is an important factor in judging whether they will meet its minimum standards but it said past misconduct will not necessarily prevent someone from working in the financial services sector again.

The City watchdog said it would take into account the severity of the misconduct, the time that has elapsed, the efforts taken to rehabilitate, the nature of the role applied for and the controls in place to oversee individuals' conduct.

The FCA said: "An authorisation process, no matter how effective, cannot guarantee that firms or individuals will not subsequently treat customers unfairly or engage in misconduct.

"If poor behaviour does occur post-authorisation, we will assess the extent of the potential or actual cause of harm, and its cause, then decide which of our supervisory or enforcement tools to use."

Back in April, a HM Treasury minister said he woulf urge the Financial Conduct Authority to take action on phoenixing so it does not undermine trust in the financial services sector.

Robert Jenrick, the Exchequer secretary to the Treasury, was speaking after a debate in Parliament this morning (24 April) on the regulation of financial advisers.

The debate had been requested by Thirsk & Malton MP Kevin Hollinrake after two of this constituents lost money after being advised given by an adviser called Scott Robinson, who owned and operated a firm called TBO Investments until 2016.

Mr Hollinrake said despite a complaint to the FCA, a successful claim to the Financial Ombudsman Scheme and it being established that Mr Robinson was providing advice without the required professional indemnity insurance, he remained an approved person on the FCA Register and had closed his previous firm to open a new one, called Mount Sterling Wealth, taking his clients with him.

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