The FCA has announced it is to use new powers to swiftly cancel or change what regulated activities firms will be permitted to do.

This new power will be available following a change in the law that allows the regulator to streamline and shorten the removals process.

Under the changes, the FCA will provide a firm with two warnings if it believes it is not using its regulatory permission. The regulator would then be able to cancel the permission, or change it, 28 days after the first warning if the firm has not taken appropriate action.

The FCA suggested the move will strengthen consumer protection by reducing the risk of consumers misunderstanding or being misled about their exposure to financial risk, and how much consumer protection they have. This could include consumers believing that unregulated activities are covered by the Financial Services Compensation Scheme when they are not.

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 the new power.

The new expedited process will also allow the FCA to act quickly when cancelling a firm’s permission when it is no longer required and to swiftly respond to inappropriate uses of permission.

Furthermore, the regulator said these new powers will also support its existing “use it or lose it” initiative, which has seen the FCA carry out 1,090 assessments since May 2021 to see whether firms are undertaking the financial activity for which they have permission. This action has resulted in 264 firms applying to voluntarily cancel, and a further 47 to modify, their permission to carry out regulated activities.

FCA executive director of enforcement and market oversight, Mark Steward, said: “Businesses with permissions they don’t need or use, risk misleading consumers. 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.”

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