21st July 2020

HM Treasury has published a policy statement setting out the government’s plans to streamline the Financial Conduct Authority’s (FCA) process for cancelling the authorisation of firms no longer carrying out FCA-regulated activities.  The government’s intended introduction of an additional process would enable the FCA to quickly remove an inactive firm’s authorisation would be taken forward when Parliamentary time allowed.  The change will only be applicable to solo-regulated firms.

The policy statement explains that the grounds for the FCA to cancel a firm’s authorisation were set out in legislation in the Financial Services and Markets Act 2000 (FSMA).  The FCA-regulated population had grown significantly since those grounds for cancellation were set down to include many small firms whose primary business was not financial services. The current process was deemed to pose a significant risk to customers as it was no longer sufficient to allow the FCA to quickly remove a firm’s authorisation where they suspected they are no longer carrying out authorised activity and reflect that in the Financial Services Register.

The statement sets out how the new procedure will work in practice, including the situations in which it can be triggered.  Essentially, a firm will only be considered for this new process where the FCA suspects that an authorised firm may no longer be carrying on any regulated activity to which their permissions apply, such as, if it fails to pay its fees or file returns, contrary to its obligations under FCA rules.  In all other situations, the existing FSMA process will apply.

Members may access the statement by clicking here.

While this is not a formal consultation, the Treasury said it would welcome views on these intended changes.

Once Royal Assent had been given, the FCA will then set out its proposals for how it will implement the changes.  This will include more information about the process including, as necessary, the effect of restoration for consumers, what types of situations may satisfy the conditions for restoration and the individuals at the firm who can make an application for restoration.

BIBA members’ compliance and regulation queries should be directed to: [email protected].



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