"Firms can and should apply to have their permissions cancelled if they no longer plan to use them but many fail to do so."
The FCA says the changes will help to prevent scams and to ensure the Financial Services (FS) Register presents a clearer picture of the permissions firms hold. Firms are required to confirm that the information on the FS Register is accurate on an annual basis.
The new power, granted to the FCA via the Financial Services Act 2021, will 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 FCA will then be able to vary or cancel permissions after 1 month.
The FCA has already undertaken a ‘use it or lose it' exercise with firms – reminding them of their obligation to review regulatory permissions and ensure they are up to date or removed if not needed.
As part of that work, firms that have not used their permissions for 12 months or more are at risk of having them cancelled via the existing cancellations process.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: "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 consultation will run until 29 October 2021.