"Deliberate abuse of the insolvency process by directors to prejudice creditors through phoenixism strikes at the heart of economic confidence"
The FCA has launched a new working group with a number of regulators to tackle the ongoing issue of phoenixing in financial services.
Phoenixing involves firms and individuals deliberately seeking to avoid their liabilities to consumers or poor conduct history by closing down firms – or resigning senior positions – only to re-emerge in a different legal entity.
Representatives of the Financial Services Compensation Scheme, the Financial Ombudsman Service, the Insolvency Service and Scotland’s Accountant in Bankruptcy joined the FCA to discuss approaches to tackling phoenixing and how they can more effectively share data and intelligence on individuals and firms.
The FCA says the new collaboration will help it build cases to refuse applications for authorisation.
Sarah Rapson, director of authorisations at the FCA, said: "We have a shared responsibility to protect consumers and by working closely together we can prevent firms and individuals from deliberately avoiding their liabilities."
Alex Kuczynski, chief corporate affairs officer at the FSCS, commented: "This is a great opportunity for the FSCS to share its knowledge and insights. This working group will support better outcomes for both consumers and levy payers who have to step in to fund FSCS’s compensation, and fully aligns with the 'Prevent' pillar of our strategy for the 2020s."
Debbie Enever, head of external relations for the Financial Ombudsman Service, added: "It is very frustrating for consumers to find that a business has phoenixed to avoid its responsibilities. We’re pleased to be working with our partners to help to ensure that businesses are held accountable for their actions."
Gareth Allen, assistant director for investigation and enforcement services at the Insolvency Service, concluded: "Deliberate abuse of the insolvency process by directors to prejudice creditors through phoenixism strikes at the heart of economic confidence and we welcome the opportunity to strengthen our collaboration with other members of the group to address this practice."