On 20 July 2020, HM Treasury published a Policy Statement setting out certain changes to the FCA’s cancellation of authorisation process. The government intends to provide an additional process through which the FCA can cancel the authorisation of firms no longer carrying out FCA-regulated activities. The situation where this will be triggered is where the FCA suspects that an authorised firm may no longer be carrying on any regulated activity to which their permissions apply, such as, when a firm has failed to pay its fees or file returns, contrary to its obligations under FCA rules.
The new proposed process will sit alongside the existing cancellation procedure. This will mean that, in certain situations, where the FCA suspect that an authorised firm may no longer be carrying on any regulated activity to which their permissions apply, they can streamline the firm’s cancellation through a new process. Where the conditions for the new cancellation process are met (described in para 1.18 of the Policy Statement) the FCA will serve a first notice by letter (or by electronic means where agreed with a firm). In the event that the firm does not respond within 28 days, including after a second notice is sent, the FCA will publish a notice on their website, and on the firm’s FCA Register entry, stating that action has been commenced with a view to removing the firm’s authorisation on the basis that it appears they are no longer carrying on a regulated activity. After one month of the publication of this public notice the FCA will cancel the firm’s authorisation. At any stage of the procedure, until cancellation, the firm in question can notify the FCA in writing that it is carrying on a regulated activity. The FCA will then end the procedure and can remove any public notice it has placed. The new process allows for authorisation to be restored where appropriate.
The new process is to apply to solo-regulated firms. Dual regulated firms are not proposed to be in scope.
The government intends to take forward this measure when Parliamentary time allows. Following Royal Assent, the FCA will set out its proposals for how it will implement these changes.