FCA Moves to Streamline Removal of Unused Permissions

The Financial Conduct Authority (FCA) in the UK is proactively enforcing the perimeter by urging firms to review and, if necessary, remove unused regulated permissions. This initiative aims to enhance transparency, protect consumers, and streamline regulatory processes.

Why the Push for Unused Permission Removal?

Several factors drive the FCA’s focus on unused permissions. Primarily, outdated or inaccurate information on the Financial Services (FS) Register can mislead consumers about a firm’s authorised activities. This could give the impression of greater protection than a firm actually offers, potentially increasing vulnerability to scams. Additionally, retaining unused permissions creates unnecessary administrative burdens for both firms and the FCA. This includes maintaining compliance requirements, paying fees, and undergoing regulatory scrutiny for activities a firm doesn’t engage in.

New Powers, Faster Action:

In 2021, the Financial Services Act empowered the FCA to move faster in removing unused permissions. This streamlined process allows the FCA to initiate cancellation directly, bypassing the previous reliance on a firm’s application or consent. This means the FCA can now serve a 14-day notice to initiate the cancellation process if it believes a firm is not utilising a specific permission. Following two warnings with at least 14 days apart, the FCA can cancel or modify the permission after 28 days if the firm fails to respond or take corrective action.

Benefits of Removing Unused Permissions:

For firms, removing unused permissions translates to several advantages. It reduces administrative burdens, minimises regulatory fees, and enhances transparency by accurately reflecting their actual business activities. This can also improve business reputation by showcasing a commitment to good regulatory practice.

For consumers, the initiative fosters greater clarity and trust. An accurate FS Register empowers them to make informed decisions based on accurate information about firms’ authorised activities. This reduces the risk of confusion and potential harm from misleading information.

Challenges and Considerations:

While the initiative brings significant benefits, some challenges remain. Firms might hesitate to initiate permission removal due to concerns about future expansion into activities covered by the unused permission. Additionally, navigating the process and ensuring compliance can be complex.

Recommendations for Firms:

The FCA encourages firms to proactively review their permissions and identify those no longer actively used. They should then:

• Initiate the variation or cancellation process: Firms can apply through the FCA’s Connect system to remove unused permissions.
• Seek guidance: The FCA offers various resources and guidance materials to assist firms with the process.
• Engage with the FCA: Open communication with the FCA can address any concerns and ensure a smooth process.

Looking Ahead:

The FCA’s initiative to remove unused regulated permissions signals a commitment to a more transparent and efficient financial services landscape. By encouraging firms to actively participate and utilise the streamlined process, the FCA aims to empower consumers, reduce regulatory burdens, and ultimately strengthen the integrity of the market.

How Jeremy Gordon can help?

Our team includes experienced practitioners who have defended companies and individuals under criminal and regulatory investigation by the FCA. In addition, our head of Financial Services Regulation was previously employed by the FCA enforcement division and advised on criminal and regulatory investigations into companies and individuals.