The Financial Conduct Authority (“FCA”) is to begin to use new powers which will allow the regulator to remove unused regulatory permissions from firms within just 28 days.
The FCA will provide 2 warnings to firm and should firms fail to take appropriate actions, the FCA will then be able to cancel those permissions within 28 days of the firms first warning.
The regulator’s new powers have been granted under new law changes which the FCA believe will assist them in protecting consumers by reducing risk of misunderstanding. 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 use of these new powers.
The FCA have pushed its ‘use it or lose it’ initiative, which has seen the FCA carry out 1,090 assessments of firms since May 2021 to assess whether firms are undertaking the regulated activity for which they have permission. This lead to 264 firms applying to voluntarily cancel permissions, and a further 47 to modify their permission to carry out regulated activities.
Firms should ensure that they have the necessary permissions and review any permissions which it may not use. Similar, firms should ensure that they submit all required returns to the FCA in a timely manner or run the risk of enforcement and supervision action.