FCA consumer investments data review

Mar 7, 2022 12:00:00 AM

What has happened?

In March 2022, the FCA published its third consumer investments data review, which covers the period from April to September 2021 and provides information on the regulator’s FCA authorisation, enforcement and registration activities.

What do you need to do?

Some key points that Thistle Initiatives has identified from the review are summarised below.

FCA Authorisations

Between 1 April 2021 and 30 September 2021, the FCA received 2,570 authorisation applications from firms and individuals in the consumer investments market and in the same period, it assessed 2,441 applications in this market. Of the cases assessed, 2,276 were approved, 137 were withdrawn (generally because firms/ individuals could not demonstrate that they met the standards required), and 28 were rejected (generally due to missing or incorrect information submitted). No applications were refused.

Withdrawals were higher for new firms entering the market. The FCA assessed 135 new authorisation applications from firms; 28 of these were withdrawn and four were rejected, which represents almost one in four applications. In nine of these cases, the FCA suspected phoenixing or lifeboating (cases where individuals have set up and sought authorisation for a new firm before their existing firm started to receive complaints about poor past advice) by advice firms (the same number was reported in the last review for the whole of the previous 12-month period).

The FCA published 735 consumer alerts about unauthorised firms or individuals in the 6-month period. This continued the upward trend noted in the previous report, with 1,317 consumer alerts over 12 months in 2020/21 and 742 over 12 months in 2019/20. There were over 16,300 reports of potentially unauthorised activity in the review period.

Enforcement

FCA enforcement work led to custodial sentences for three unauthorised individuals and three bankruptcy orders against individuals, and the FCA also persuaded 27 authorised firms to provide voluntary requirements (VREQs) and imposed own initiative requirements (OIREQs) on 10 authorised firms (compared with 21 VREQs and 9 OIREQs imposed for the previous 12 months), restricting firms’ activities to prevent harm.

Scams/crypto firm registration

In the previous consumer investments data review, reported enquiries to the FCA about possible scams increased sharply from mid-2020 onwards. In this review, it was found that scam enquiries remained consistently high between April and September 2021. There were over 16,400 enquiries about possible scams in the period, approximately a one-third increase in enquiries over the same period in 2020 (12,400). The top four types of scams reported were boiler rooms, cryptocurrency scams, FCA impersonation scams and recovery rooms.

The FCA noted an increase in reports about possible cryptocurrency scams, both to its Supervision Hub (up 14% on the previous six months) and its ScamSmart website (up 49%). The Cryptoasset team in Supervision (which is responsible for firms’ compliance with the Money Laundering Regulations) opened over 300 cases relating to potential unregistered cryptoasset businesses in this period, many of which are likely to be involved in scams. During the same period, it added 172 firms to the Unregistered Cryptoasset Businesses list.

How can we help you with FCA authorisation?

If you’d like to know more about how we can help you with your FCA authorisation, enforcement or cryptoasset registration arrangements, or with any other regulatory compliance issues, our specialist team is here to help.

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