FCA places restrictions on twice as many consumer investment firms this year

The Financial Conduct Authority stopped 17 firms and seven individuals attempting to obtain a new FCA authorisation in the investment market where phoenixing or lifeboating was suspected.

The restrictions come as the FCA announced it has placed restrictions on twice as many firms in the investment market compared to last year, as part of its strategy designed to prevent harm in the consumer investment market.

The restrictions include preventing firms from promoting and selling certain products or providing specific services like advice on defined benefit pension transfers.

Phoenixing and lifeboating are where firms or individuals try to avoid the consequences of having provided unsuitable advice by moving to or setting up a new firm.

The FCA also stopped the UK operations of 16 contracts for difference providers, which had entered the UK’s temporary permissions regime in 2021, where suspected scam activity was detected, or consumers were encouraged to trade excessively to generate revenue. Without FCA action, consumers could have lost around £100 million a year.

The work forms part of the FCA’s updated consumer investments strategy, which is aimed at helping people invest with confidence, while seeking to reduce the number of people who are persuaded to invest in products that are too risky for their needs and to slow the growth in investment scams.

The actions the FCA is taking to prevent harm in the consumer investment market are aligned with key commitments in its wider three-year strategy, including enabling consumers to help themselves, dealing with problem firms and reducing and preventing financial crime.

Sarah Pritchard, executive director of markets at the FCA, said it will take time to see the full impact of all our interventions, particularly given the worsening economic environment, but has committed to update each year on the progress that is being made.

Source Financial Accountant click here to read more.