FCA Regulation Consumer Protection Overview:
- Who: The Financial Conduct Authority (FCA) now has more power to cancel or change what regulated activities firms are permitted to do
- Why: The FCA says the changes will strengthen consumer protection by reducing the risk of consumers being misled about their exposure to financial risk and how much consumer protection they have.
- Where: The changed apply to the UK.
The Financial Conduct Authority (FCA) announced it will crack down on companies that have permission to provide a financial activity but either do not use it or use the permission inappropriately.
In a press release posted on the FCA website May 19, the agency says it has new powers to more swiftly cancel or change what regulated activities firms are permitted to do, known as “permissions.”
The FCA will now provide a firm with two warnings if it believes it is not using its regulatory permission. If the firm has not taken appropriate action within 28 days of the first warning, the FCA may cancel or change the permission.
The new power is available following a change in the law that allows the agency to streamline and shorten the removals process, the FCA says.
New Rules Provide Better Protections for Consumers, FCA Says
The changes strengthen consumer protections by reducing the risk of consumers misunderstanding or being misled about their exposure to financial risk and how much consumer protection they have, the agency says.
It will also allow the FCA to act quickly when canceling a firm’s permission when it is no longer required, and allows the agency to quickly respond to inappropriate uses of permissions, it said.
For example, companies have used permissions wrongfully to market high-risk products that are not regulated by the FCA.
“Businesses with permissions they don’t need or use, risk misleading consumers,” says FCA Executive Director of Enforcement and Market Oversight Mark Steward in the press release. “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.”
The new power also supports the FCA’s existing ‘use it or lose it’ initiative, which has seen the FCA carry out 1,090 assessments since May 2021 to see whether firms undertake the financial activity for which they have permission, the agency explains.
This has resulted in 264 firms applying to voluntarily cancel and a further 47 to modify their permission to carry out regulated activities.
The news comes after the FCA told four “buy now, pay later” companies to change their contract terms after finding they may have harmed consumers.
What do you think of the FCA’s changes in its enforcement power and strategy? Let us know in the comments!
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