Some 136 firms have been referred to the Financial Conduct Authority as potential cases of phoenixing as the regulatory crackdown begins.
Caroline Rainbird, chief executive of the Financial Services Compensation Scheme, said the lifeboat scheme had identified 136 potential cases through its anti-phoenixing work and had passed these on to the City watchdog.
In the scheme’s plan and budget for 2020-21 published today (January 16), Ms Rainbird said: “Since September 2019, our claim handlers have picked up 19 potential cases of phoenixing which have been shared with the FCA.
“A further 117 separate cases have been identified, leading to them being referred to the FCA.”
In April 2019 the Financial Services Regulatory Partners Phoenixing Group was set up by a number of regulatory bodies — including the FSCS, FCA and the Financial Ombudsman Service — to tackle phoenixing.
Ms Rainbird said the group was “working well” and “coordinating efforts to prevent future harm to consumers and the industry as a whole”.
Last month, the FCA highlighted early successes from the crackdown after the regulators had prevented seven suspected phoenix firms or people from becoming authorised.
Marshall Bailey, chairman of the FSCS, said it was encouraging to know the FSCS’s work under the ‘Prevent’ pillar, which includes its anti-phoenixing work, had been welcomed by members of the industry.
Mr Bailey added: "The FSCS is focused on helping facilitate good customer outcomes. We are working at pace with our colleagues to prevent further detriment. The early successes of our joint work on phoenixing has great support."
He said another major challenge for the financial services industry was a continuing rise of complex pension claims.
In recent years such claims have overtaken payment protection insurance in terms of volume, now accounting for 40 per cent of claims.
The main causes are advice to transfer out of defined benefit pensions and the wrapping of risky and illiquid investments into self-invested personal pension schemes, Mr Bailey said.
A rise in the volume and complexity of claims, and in particular Sipp claims, has forced the FSCS to increase its management levy by 5 per cent and the amount the industry pays towards compensation to jump up £87m to £635m.
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