Financial watchdog cracks down on problem firms and supports struggling borrowers

Press Releases First published: Last updated: 20/07/2023

In the past year, the FCA has reduced harm to consumers and businesses by stopping 627 firms, that failed to meet the minimum standards, from operating. 

This is up 30% from the previous year, illustrating the FCA’s determination to enforce high standards in the financial services sector.

The figures come as the regulator has set out how it has worked to reduce and prevent serious harm, set and test higher standards and promote competition and positive change as part of its report on performance during 2022-2023.

In a year when many people felt pressure from the rising cost of living the FCA has: 

  • acted quickly to set out how lenders should provide tailored support to struggling borrowers 
  • warned insurers to protect their customers from unnecessary add-ons or unfair penalties  
  • secured up to £47 million in redress for borrowers in financial difficulty for the way their lenders treated them 

In addition to working to protect consumers from harm, the FCA continues to support competition across the sector and the proposed reforms to listing will remove barriers to entry for companies tapping the market for capital.

The FCA has also published the first set of performance statistics from the first year of its 3-year strategy.

The FCA estimates that for every pound spent on its operations last year, firms and individuals benefitted by £17 through its action.

Ashley Alder, Chair of the FCA, said: 'Maintaining high standards is key to supporting growth. We are helping firms test their innovative products, guiding firms through the authorisation process and are supporting a range of supply and demand-side market reforms.

'On the 31 July, the new Consumer Duty will raise the bar for retail financial services and place good consumer outcomes at the heart of everything they do.'

Nikhil Rathi, Chief Executive of the FCA said: 'The FCA has evolved into a more proactive, assertive and data-led regulator better equipped to face challenges like the rising cost of living in a more agile and effective way.

'Tailored support is important for those struggling with debt and we continue to work with firms to make sure people receive the right help to manage their finances, especially with the rising cost of living.'

The FCA has made significant progress in the first 12 months of its strategy, including:

Reducing and preventing serious harm:

  • Scanning 100,000 websites a day looking for unlawful activity and protecting the public from over 8,500 potentially misleading adverts in 2022, 14 times more than in 2021.   
  • Imposing financial penalties of £215.8 million. Following a trial in early 2023, 3 individuals were imprisoned for a binary option fraud. The FCA started prosecutions into alleged market manipulation, money laundering, insider dealing and investment fraud. 
  • Working with other law enforcement agencies to intervene against illegal crypto activity, including acting against crypto ATMs operating without FCA authorisation.

Setting and testing higher standards: 

  • Finalising the rules for the Consumer Duty, which come into effect at the end of July, firing the starting gun on the most far-reaching consumer protection intervention for decades that places consumers at the heart of retail financial services. 
  • Introducing stronger rules to help tackle misleading adverts that encourage investing in high-risk products and helping less experienced investors make well-informed decisions and avoid unaffordable risk through its £11 million InvestSmart campaign.  

Promoting competition and positive change: 

  • Proposing new listing rules to make sure the UK remains an attractive place to invest and make it easier for more companies to join the market quicker.  
  • Bringing down the authorisations caseload by 60% from a peak of 12,500 cases in December 2021 to 5,500 as of the end of March 2023, allowing more firms to offer services across the financial sector. This dovetails with continued scrutiny of applications, with 1 in 4 rejected or withdrawn for not being good enough. 
  • Working hand in hand with 870 firms to date to test drive cutting edge products for consumers through the world-leading Regulatory Sandbox and Innovation Pathways, helping the rubber to hit the road for a wide range of innovative products.    
  • Making sure over 300 firms hit the ground running with high standards and maintain them through the Early and High Growth oversight programme, helping firms to meet industry standards so they can grow successfully and nip in the bud any potential issues down the road.

Notes to editors

Today the FCA has published: