The Financial Conduct Authority (FCA) has reported that it is taking assertive action to tackle harm in the consumer investments market, with data published today showing it has stopped 1 in 4 firms from entering this market. The FCA is also urging consumers to be InvestSmart and ScamSmart, following an increase in the number of scams being reported to it.
Between April and September last year, the FCA received 16,400 enquires about possible scams, up nearly a third from the same period in 2020. The top types of scams being reported to the FCA included cryptoasset, boiler room and recovery room scams.
The FCA has also revealed that over six months, it opened over 300 cases relating to possible cryptoasset businesses not registered with the FCA, many of which may be scams, and that it has 50 live investigations, including criminal probes, into unauthorised businesses.
The FCA’s ScamSmart campaign encourages those considering investing to check its dedicated website. The site features an online tool, and the Warning List, which allows users to find out more about the risks associated with an investment and view a list of firms the FCA knows are operating without its authorisation. The FCA’s InvestSmart campaign launched in October 2021, targeting consumers who are new to investing, and aims to provide them with information to make better-informed investment decisions.
The FCA is drawing on all the tools at its disposal, including more assertive supervision and enforcement action, and being tougher with firms who want to operate here.
The latest data shows a quarter of applications from firms wanting to join the consumer investment market are being stopped by the FCA. The proportion is up from 1 in 5 in the last financial year. 9 of these firms were prevented from gaining authorisation where it was suspected that individuals responsible for unsuitable advice tried to avoid the consequences of their actions by moving to or setting up new firms, or where individuals set up and sought authorisation for a new firm before their existing firm started to receive complaints about poor past advice.
Addressing the risk of harm at the authorisation stage prevents firms that do not meet the FCA’s minimum standards from entering the regulatory perimeter. It also helps prevent problems further down the line which may require supervision or enforcement action.