The UK government is planning to give additional FCA firm authorization cancellation power. However, after approval, FCA will able to remove authorized firms from the Financial Services Register. How will it impact the FCA Forex Brokers passporting rights?
23 July, 2020 | AtoZ Markets – Financial Conduct Authority or FCA is the UK financial regulator. It aims to protect consumers and promote healthy competition among financial service providers. Moreover, the FCA is under the jurisdiction of the UK HM Treasury and Parliament.
HM Treasury Proposes New FCA Firm Authorization Cancellation Process
HM Treasury is trying to strengthen the way the FCA works with licensed companies by changing its regulatory gateway. It wants to grant FCA additional power to cancel firm authorizations. HM Treasury also said it would create new procedures to enable the FCA to quickly remove inactive lenders and insurers from its financial services business registry. Moreover, HM Treasury said:
“The current process is therefore no longer sufficient to allow the FCA to quickly remove a firm’s authorization where they suspect they are no longer carrying out the authorized activity and reflect that in the Financial Services Register.”
The current reason for FCA firm authorizations cancellation powers is set out in the Financial Services and Markets Act 2000 (FSMA). One month after public notice, the FCA can cancel the company’s authorization if the company fails to:
- Pay their regulatory fees.
- File returns,
- Contrary to its obligations under FCA rules
- Respond to FCA correspondence
According to FCA, 300-400 companies may no longer engage in regulated activities. Moreover, those companies have not requested to cancel their authorizations. Treasury also said, “the register’s accuracy is integral to ensuring consumers considering a financial product or service have the required information to make informed decisions.”
The UK Government will submit this policy to Parliament. However, after approval by the royal family, the FCA will announce a proposal on how to implement these changes.
How Will New FCA Power Impact the Brokers’ Passporting Rights?
Due to FCA’s new power, Brokers’ passporting rights can easily lose their registration and unable to provide services to the rest of Europe. However, UK is currently in a transition period after Brexit, which will last until 31 December 2020. EU law will continue to apply until that time. So, it is good news still for Forex Brokers with an FCA license.
Earlier this month, FCA said it would reopen the temporary permissions regime (TPR) notification window. The TPR would allow inbound passport EEA companies and funds to continue operating in the UK after the Brexit transition period end and the current passport system collapses.
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