FCA to Use New Powers to Cancel Permissions More Quickly

The FCA will be able to use new powers to more swiftly cancel or change what regulated activities firms are permitted to do (known as permissions). This new power is available following a change to the law which has allowed the FCA to streamline and shorten the removals process.

A firm will receive two warnings from the FCA if the regulator believes it is not using its regulatory permission. If the firm has not taken appropriate action 28 days after the first warning, the FCA will then be able to cancel or change the permission.

The aim of this change is to strengthen consumer protection “by reducing the risk of consumers misunderstanding or being misled about their exposure to financial risk and how much consumer protection they have.” The FCA gives the following example: a customer believing that unregulated activities are covered by the Financial Services Compensation Scheme when they are not.

‘Use it or lose it’

The FCA’s new powers support its existing initiative – ‘use it or lose it’ – which reminds firms to regularly review their regulatory permissions. The FCA has carried out 1,090 assessments since May 2021 to find out whether firms are undertaking the financial activity for which they have permission.

As a result, 264 firms have applied to voluntarily cancel their permission to carry out regulated activities with a further 47 applying to modify them.

Executive Director of Enforcement and Market Oversight at the FCA, Mark Steward, said, “Businesses with permissions they don’t need or use, risk misleading consumers. These new powers will enable us to take quicker action to cancel permissions that are not used or needed. Firms should regularly review their permissions, ensure they are correct, and they are acting in accordance with them. If they are not needed or used, they should seek to cancel them.”

Go here to read the Policy Statement in full: https://www.fca.org.uk/publication/policy/ps22-5.pdf

If you need any advice on this or any other compliance issues, please contact your RWA Business Manager or email helpdesk@rwagroup.co.uk.

About the author

Kirk joined RWA in 2015, having worked in the financial services sector for many years. He started out in both the general insurance and mortgage advice arms of HSBC, before becoming the Compliance Officer at Go Compare and Training & Competence Manager at Optimum Credit. 

At RWA, Kirk is Deputy Head of Compliance. He supports RWA clients by looking after their compliance, training and competence needs and keeping them up to date with regulatory changes. He promotes the achievement of fair customer outcomes and specialises in designing and implementing T&C schemes for firms of all sizes.

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