We are consulting on changes to our Handbook and Enforcement Guide and want your feedback. These changes will provide guidance on our new power to cancel or vary the statutory permissions of many FCA-authorised firms to carry on FCA-regulated activities.
Why we are consulting
The Financial Services Act 2021 (FS Act) has given us an additional power, which allows us to more quickly and efficiently:
- vary or cancel the statutory permissions to conduct FCA-regulated activities of many FCA-authorised firms, where those firms:
- appear to be carrying on no FCA-regulated activities for which they have permission, and
- have not responded as we have directed to our notices warning of the risk of such action, and
- reflect such variations and cancellations on the Financial Services Register
We are consulting on changes to our Handbook and Enforcement Guide. These changes reflect the new power and provide guidance on how we will use it. They also provide guidance on the possibility, also introduced by the FS Act, that we may, when relevant firms apply, reverse or annul our decisions to use the new power.
Who this applies 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, and therefore the guidance we are consulting on will not relate to such firms.
This consultation may also be of interest to individuals who hold approved functions at Part 4A FCA-authorised firms and to professional advisers to such firms.
Only firms that continue to carry on FCA-regulated activities should generally remain FCA-authorised and appear as authorised on our Financial Services Register.
This accuracy is important. Otherwise, consumers could assume that some of the products and services firms offer are regulated by us when they are not. Consumers are also at risk of being defrauded by criminals impersonating or cloning authorised firms that no longer conduct FCA-regulated activities.
FCA-authorised firms that no longer intend to carry on any such activities should apply to us to have their statutory permissions to do so cancelled. When they do so and we agree to cancel, we update the Register to show they are no longer authorised. Unfortunately, many firms do not do this.
Since 2001, we have had a power to cancel or vary these permissions without application by or consent from the relevant firm. We can use this power in various situations, including where the firm has, for 12 months or more, not been conducting an activity covered by its permission.
The FS Act has given us an additional power to cancel or vary permissions without such application or consent. We can use this new power if we consider that a firm is currently carrying on none of the regulated activities it has permission for. We no longer have to wait 12 months.
The FS Act also sets a more streamlined procedure for us to follow when using this new power and provides for the possibility that we can reverse or annul our decisions to use it.
Respond to this consultation
Please send us your comments by 29 October 2021. We will not treat your response as confidential unless you tell us that it is.