The FCA has drafted guidance on a new power that would allow the regulator to remove regulatory permissions that are no longer being used by financial services firms more quickly.

Incorrect or outdated permissions on the Financial Services (FS) Register can mislead consumers about the level of protection a firm offers or give credibility to a firm’s unregulated activities.

The FCA suggested the changes would help to prevent scams and ensure the FS Register presents a “clearer picture” of the permissions that firms hold. At present, firms are required to confirm that the information on the FS Register is accurate on an annual basis.

However, the new power – granted to the FCA via the Financial Services Act 2021 – would streamline and shorten the process of removing firm permissions. The FCA will be able to start the cancellation process as soon as it considers permissions are not being used, by serving 14 days’ notice on a firm. The regulator could then be able to vary or cancel permissions after one month.

FCA executive director of enforcement and market oversight, Mark Steward, commented: “We want to use this power to take quicker action to prevent consumers being misled. It is part of our transformation and drive to be more assertive, drawing on an innovative approach and using new streamlined processes to make important regulatory interventions.

“Firms can and should apply to have their permissions cancelled if they no longer plan to use them, but many fail to do so. We understand that business models may evolve over time and there may be valid reasons why regulatory permissions are not being used, but unless firms notify us and keep their permissions up to date, they will risk losing market access.”

The regulator confirmed the consultation will run until 29 October 2021.

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