FCA to move faster to remove unused firm permissions
September 13, 2021
What has happened?
In September 2021, the FCA published draft guidance in its Consultation Paper CP 21/28 on a new power that allows it to move faster to remove regulatory FCA permissions that are no longer used by financial services firms.
This will apply to firms authorised or deemed, under the temporary permissions or supervised run-off regimes, to be authorised by the FCA under Part 4A of the Financial Services and Markets Act 2000.
The new power does not apply to firms authorised by the FCA otherwise than under Part 4A, for example, as payment service providers or electronic money issuers.
What do you need to do?
Incorrect or outdated FCA permissions on the Financial Services Register can, in the FCA’s view, mislead consumers about the level of protection offered by a firm or can appear to give credibility to a firm’s unregulated activities. The changes are intended to help to prevent scams and to ensure that the Register presents a clearer picture of the permissions firms hold. Firms are required to confirm annually that the information on the Register is accurate.
The new power, granted to the FCA via the Financial Services Act 2021, will streamline and shorten the process of removing firm permissions. The FCA will be able to start the cancellation process as soon as it considers that FCA permissions are not being used, by serving 14 days’ notice on a firm. The FCA will then be able to vary or cancel permissions after one month.
The specified circumstances in which the FCA may form the view, before using the new power, that a firm is no longer carrying on any FCA-regulated activities, are the firm’s failure to pay a periodic fee or levy or to provide the FCA with information where required by the Handbook. Such information would include a report required by Chapter 16 of SUP
The FCA has already 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. As part of that work, firms that have not used their permissions for twelve months or more are at risk of having them cancelled via the existing cancellations process. It is part of the FCA’s response to tackle issues raised by Dame Elizabeth Gloster’s review into the regulation of London Capital & Finance.
The consultation will run until 29 October 2021.
How can we help you?
If you’d like to know more about how we can help you with your regulatory FCA permissions, or with any other regulatory compliance issues, our expert team is here to help.