As one of the consumer protection steps, the UK’s regulatory body has taken away inactive financial licenses. These new regulations have been in effect since 2022

The FCA was quick to strip off the licenses that it had issued in the preceding year from financial entities that lacked utilization of the same. It indicated that the aim for doing so was protecting consumers from a higher level of hazard posed by these companies. The most recent statistics indicate that the authority has used this power for the first time more than one thousand times affecting operations of over seven hundred sixty-two companies.

The FCA was asked on financial news’ behalf, using the Freedom of Information Act, about how frequently it suspends licenses for operations not aligned with authorization by firms. In October 2023, FCA said that a total of 1400 business lines were compromised by this. The regulator withdrew over 300 licenses, while other firms voluntarily surrendered them. Earlier on, FCA could withdraw a license twelve months after issuing an initial cautionary. Nonetheless, the present legislation makes it possible in the course of just twenty-eight days.

“One year back, the British Markets Authority insisted that companies show they operate authorized regulated activities if want to retain these permissions,”

Talking about the answer even if a licensed company is not using their licenses, it can be risky to your consumers. Also, they indicate that inactivity of a license can create an illusion that the business is controlled, when this may not actually be so. This may deceive consumers that they are safe while all along they are not. Moreover, unutilized coupons also presented a challenge in terms of consumer security as they could be used as a base for frauds.

FCA, revamped authority will strengthen consumers’ assurance against any risk and/or confusion in connection with financial risks. Moreover, it will also fasten regulatory measures in case of misuse of permission.

Said Mark Steward, the FCA’s Executive Director of Enforcement and Market Oversight: “Companies holding relevant permissions they do not use/require can mislead customers”.

In several industries that involve regulated firms, it seems like companies take advantage of such regulatory frameworks in order to draw consumers towards non-regulated products or services that tend to deceive them. For example, it became known about the collapse of London Capital and Finance, which gave way to doubts regarding what should be done about the £236 million invested funds.

Similarly, the FCA actively supports the services and goods that various financial institutions provide. The FCA looked at 1,211 financial promotions in the third quarter. A majority of them were under active monitoring by the FCA.