UK FCA Rejects 20% of Firms Applying for Authorization

The UK Financial Conduct Authority (FCA) says it now rejects, at first attempt, one in five firms that apply for authorization in contrast to 1 in 14 last year.

Nikhil Rathi, the Chief Executive Officer of the financial markets regulator, stated this in a draft of the speech he delivered on Thursday at the Lord Mayor’s City Banquet at Mansion House.

Rathi disclosed this while speaking on efforts taken by the regulator to strengthen its duties, including increasing its manpower.

“We have a greater willingness to take more legal risk, to intervene earlier, and to test our powers to the limits.

“This has included the first criminal case against a bank for money laundering failings, securing tens of millions under our consumer redress powers, and imposing the first account forfeiture order.

“Our gateway is more robust as we have learned the lessons from independent review. Now 1 in 5 firms are initially rejected for authorization compared to one in 14 in the previous year.”

Rathi added that despite the FCA’s extra security and increased workload, the regulatory body has made “huge progress” on its backlog and plans to improve further on this by investing in automation technology.

FCA: Consumers and the Cost of Living Crisis

The FCA said that the COVID-19 pandemic and the Russia-Ukraine war precipitated its challenge with the cost of living in the United Kingdom. With recent global inflation causing energy and food prices to skyrocket, the cost of living has been on the rise, including in the UK.

In addition, a survey of 19,000 people that it conducted last week found that more citizens expect to struggle in the coming months. However, the regulator pledged that it remains “ever more vigilant to actors preying on consumers’ vulnerabilities.”

The FCA said it is “intervening at our fastest pace ever against problematic financial promotions, 8 times more interventions year-to-date compared to last year.”

FCA’s Recent Actions

In Mid-October, the FCA disclosed that it halted the operation of 16 contracts for difference (CFDs) operators.

The regulator said it also placed restrictions on 17 firms and seven individuals trying to get local investment market licenses.

The regulator in its fourth Consumer Investments Data Review published last week disclosed that it has opened 432 regulatory cases regarding possible crypto scams or unregistered businesses in the United Kingdom.

The FCA said it observed a 59% increase in inquiries about cryptocurrency scams between April 1, 2021, and March 31, 2022.

Earlier this week, the markets supervisor launched a discussion on how competition among Big Tech companies in the country's financial industry could impact consumers.

The regulator, which published a report examining the potential competitive impacts of Big Tech firms on the payments, consumer credit, insurance and deposit-taking sectors in the UK, is collating responses on the subject until January 2023.