The Financial Conduct Authority has launched a working group to tackle phoenixing in the financial services industry, in the first collaboration of its kind.
In a statement released today (May 3) the regulator confirmed it is working with the Financial Services Compensation Scheme, the Financial Ombudsman Service, the Insolvency Service and Scotland’s Accountant in Bankruptcy to collate and share data on individuals and companies as a means to combat phoenixing.
Phoenixing involves companies and individuals deliberately seeking to evade liabilities by closing down a business, only to resurface in another.
The FCA said this can have a "devastating impact" on individual consumers and a "knock-on effect" on the wider economy.
Whilst the issue of phoenixing has been discussed between the regulatory bodies in the past, this is the first time a formal group has been created to tackle the problem.
The FCA confirmed sharing information, such as FSCS claims and unpaid ombudsman awards, has proved "highly effective" in detecting cases of phoenixing and helping the regulator refuse applications for authorisation.
Sarah Rapson, director of authorisations at the FCA, said: "We have a shared responsibility to protect consumers and by working closely together we can prevent firms and individuals from deliberately avoiding their liabilities."
Last year the FCA confirmed it was training case officers to spot instances of phoenixing, but clarified previous misconduct should not necessarily be an automatic bar to working in the financial services sector again.
The FSCS has also said it would focus on tackling phoenixing as part of its business strategy for the coming years.
Alex Kuczynski, chief corporate affairs officer at the FSCS, said: "This is a great opportunity for the FSCS to share its knowledge and insights.
"This working group will support better outcomes for both consumers and levy payers who have to step in to fund FSCS’s compensation, and fully aligns with the 'prevent' pillar of our strategy for the 2020s."
Debbie Enever, head of external relations for the Financial Ombudsman Service said: "It is very frustrating for consumers to find that a business has phoenixed to avoid its responsibilities.
"We’re pleased to be working with our partners to help to ensure that businesses are held accountable for their actions."