FCA Speeds Up Cancellation of Unused Financial Services Permissions

The United Kingdom’s financial market supervisor, FCA, announced on Thursday that it is speeding up the process of removal of regulatory permissions of companies that are not using the granted permission.

Under the new rules, the Financial Conduct Authority (FCA) will issue two warnings to the company it believes that is not using the regulatory permission. If the company fails to take any appropriate action, the regulator will cancel or change the granted permission only 28 days from the first warning.

“Businesses required to prove they are carrying out the regulated activities they are permitted to or face losing this permission,” the UK regulator stated.

The regulator obtained this authority from its 'use it or lose it' initiative that mandates companies to regulatory review their regulatory permissions. Earlier, the regulator could cancel the unused permissions after 12 months.

“Where a firm fails to pay its regulatory fees, submit returns or complete annual declarations, the FCA may view these as indicators of a lack of regulated activity which may lead to permission being removed through the use of this new power,” the FCA explained.

Additionally, the regulator revealed that it carried out 1,090 assessments since May 2021 and 264 firms applied for voluntary cancellation of permissions with another 47 seeking modifications.

Strengthening Consumer Protection

In addition, it believes that the updated power will strengthen consumer protection by reducing the risks of misunderstanding or misleading about the financial risks. Moreover, it will expedite the regulatory actions in case of inappropriate uses of permission.

“Businesses with permissions they don’t need or use, risk misleading consumers,” said Mark Steward, FCA’s Executive Director of Enforcement and Market Oversight. “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.”