The Financial Conduct Authority plans to give itself the power to move faster to remove regulatory permissions that are no longer used by financial services firms.
In draft guidance published today (September 9) the FCA said the power will allow it to vary or cancel a firm's permissions after a month, specifically where those firms appear to be carrying on no FCA-regulated activities for which they have permission, and have not responded to the regulator's outreach.
Currently firms are required to confirm that the information on the register is accurate on an annual basis.
With the new power, 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 regulator will then be able to vary or cancel permissions after 1 month.
The regulator hopes the changes will help it to prevent scams and to ensure the register presents a clearer picture of the permissions firms hold, warning incorrect or outdated permissions could mislead consumers about the level of protection offered by a firm. Indeed, it warned, they could give credibility to a firm’s unregulated activities.
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.
"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."
He added: “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 changes will only affect firms authorised by the FCA under Part 4A of Financial Services and Markets Act 2000, meaning they will not apply to firms such as payment service providers or electronic money issuers.
This new power comes after earlier this week, the Complaints Commissioner upheld in part a complaint which alleged the FCA's register had shown a firm as an active company years after it was wound up.
The firm in question was an EEA based firm passported in from Germany, which was shown as an active company on the FCA register until January 16, 2020, even though the original company was wound up in 2018.
Meanwhile, in line with the regulator's 'transformation', the FCA announced separate changes to its decision-making and governance to enable it to make faster and more effective decisions.
It has also undertaken a ‘use it or lose it' exercise with firms – reminding them of their obligation to review regulatory permissions and ensure they are up to date or removed if not needed.