Proposed changes to the FCA’s cancellation and variation powers

“Use it or lose it.” The FinancialConduct Authority is sending out a stronger message to firms that fail to utilisetheir regulatory permissions. Charlotte HillandArnavGupta explain the details of the regulator’s consultation.

Charlotte Hillis a partner and head of the Financial Services Regulatorygroup at Taylor Wessing in London, whereArnav Guptais anassociate. Contact them on c.hill@taylorwessing.com anda.gupta@taylorwessing.com.

The FCA is aiming to reduce the risk of harmto consumers and markets by ensuring that only firms that are activelyproviding FCA-regulated activities should generally remain FCA-authorised andstay on the Financial Services Register. In its Business Plan 2021/22,published on 15 July 2021, the FCA warned that it would be undertaking a ‘useit or lose it’ exercise to remove firms’ permissions if they are not carryingout regulated activities. [1] The Financial Services Act 2021 (the ‘FS Act’)has now given the FCA additional powers to do so. On 9 September 2021, the FCAconsulted on the use of these powers in CP21/28: ‘New cancellation andvariation power: Changes to the Handbook and Enforcement Guide’ (the‘Consultation’). [2]