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FCA refuses to authorise more than 340 firms

As it prevents 12 financial advice companies from phoenixing


The Financial Conduct Authority (FCA) has stepped up its efforts to protect the consumer investment market in 2020, following increasing scam and risky activity due to the financial uncertainty brought by the covid-19 pandemic.

As part of this enhanced consumer protection strategy, during the first 10 month of 2020, the UK watchdog:

  • Blocked 343 applications from financial services firms seeking authorisation, almost 1% of all applications;
  • Revoked authorised status to 131 companies;
  • Prevented 12 financial advice businesses from gaining authorisation due to phoenixing concerns;
  • Opened more then 1,500 supervisory cases involving scams or higher risk investments; and,
  • Received over 24,000 reports of unauthorised activity and published more than 1,000 consumer alerts – an 82% increase from the previous year.

As a result of these actions, the FCA pursued 47 enforcement investigations against unregulated businesses, securing just under £6m to return to clients and obtaining court orders securing £14m ($19m, €16m) to be refunded to consumers.

Fines to both regulated firms and individuals throughout 2019 and 2020 amounted to more than £80m, the regulator added.

‘Use it or lose it’

Sheldon Mills, executive director of consumers and competition at the FCA, said: “The UK has one of the world’s leading financial services industries, offering consumers access to a wide range of investment products.

“In some areas, however, the consumer investment market is not working as well as it should and too often consumers are offered unsuitable products or advice. Protecting consumers and ensuring they have confidence in the suitability of advice they receive is a key priority for the FCA and today’s report highlights some of the work we are undertaking to achieve this.

“Incorrect or out of date permissions increase the risk of harm to consumers as they can mislead consumers about the level of protection offered or give credibility to unregulated activities.

“This is why we’re calling on firms to review their permissions and ensure they reflect current business models. We will take action where we consider out of date permissions may cause harm to consumers.

“The message is clear, use it or lose it.”

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