30Sep

Medium sized firms to suffer most from capital adequacy changes

Trade association the Association of Professional Financial Advisers (APFA) is calling for more time for medium-sized financial advisory firms to adjust to what could be significant increases in the amount of capital they need to hold.

Current rules on capital adequacy require firms with up to 25 advisers to hold capital of £10,000. Those with 25 or more advisers must hold the higher of four weeks expenditure or £10,000, while networks (firms with five or more Appointed Representatives) must hold capital equivalent to 13 weeks expenditure.

The new proposals would see the over-riding minimum amount increase to £15,000 from June 30 2016, and to £20,000 from July 31 2017. All firms would also be subject to a new income-based requirement, where they would need to hold 5% of annual income from investment activities if this was higher than the applicable minimum level.

The Financial Conduct Authority (FCA) believes the change is justified on the grounds that the average compensation claim made via the Financial Services Compensation Scheme is now £11,000. The FCA estimates that 684 of every 4,000 firms will experience some form of increase in their capital resources requirement.

The Association has estimated that a firm with between 10 and 25 advisers that can currently get away with holding the minimum of £10,000 could need to hold as much as £100,000 under the new system. One firm has claimed their own requirement will increase by a factor of 20, to £200,000.

APFA has commented on the potential for large increases for medium-sized firms in its response to the FCA’s consultation on the subject, and has called for the regulator to soften the blow by introducing the income-based requirement at 3% for the period commencing June 30 2016, and only increasing it to 5% from July 31 2017.

APFA director general Chris Hannant said:

“Overall, we feel the proposals are sensible. But mid-sized firms will feel the biggest increase and it does not seem right that those with the furthest to go are only given a year to get there.”

Some firms appear resigned to the changes. Tim Page, director of Suffolk-based advisory firm Page Russell, said:

“There is always going to be one sector that is hardest hit, but medium-sized firms would have been even more adversely impacted under the old proposed rules. The cap ad rules have been going round for years and we have finally got to a reasonable outcome so we should just get on with it.”

Whatever the outcome of APFA’s pleadings though, advisory firms need to prepare themselves for some significant changes in this area. The changes are currently scheduled to come into force on June 30 2016, having already been delayed three times.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

28Sep

SRA confirms exemption from FCA regulation for solicitors engaged in certain consumer credit activities

Following a recent consultation, the Solicitors Regulation Authority (SRA) has confirmed that it will be sufficient for most law firms who practise debt collection activities, or certain other consumer credit activities, to be regulated by the SRA for this activity. Provided that their credit activities are ‘incidental’, then there is no need for the firm to also be regulated by the Financial Conduct Authority (FCA), which is the UK’s main regulator of consumer credit and other financial services.

This should ensure law firms do not need to comply with the rules of both regulators, whilst also maintaining protection for clients.

The SRA has been conducting extensive work with the FCA and with HM Treasury in recent months with a view to securing this exemption.

The SRA intends to issue new guidance shortly on what exactly is meant by ‘incidental’ activities in this context.

Law firms that carry out certain activities that are covered by the Financial Services and Markets Act 2000 should not expect to be able to rely on this exemption. This includes:

• Lending money
• Exercising a lender’s rights and duties under an agreement
• Entering into a consumer hire agreement as owner
• Exercising an owner’s rights and duties under a consumer hire agreement
• Operating a peer-to-peer lending platform

The following specific activities also cannot be covered by the exemption:

• Use of Continuous Payment Authority
• Taking articles in pawn
• Entering into credit agreements that are secured on land, or that have variable rates of interest
• Providing debt management plans
• Taking fees for credit broking activities

In the case of lending money, or exercising a lender’s rights and duties under an agreement, the exemption can only be relied upon if the credit agreement relates solely to disbursements or payment of fees to the law firm.

The legal regulator will now seek final approval from the FCA and the Legal Services Board to adopt this stance, and hopes to be able to update the SRA Handbook accordingly by April 1 2016. The proposed changes to the SRA rules will include:

• The need to communicate in a ‘fair and transparent’ manner
• The need to assess clients’ creditworthiness
• The need to provide sufficient information to allow them to make informed purchasing decisions
• The need to allow clients to choose to allocate payments to two or more outstanding agreements in any proportion they see fit
• The need to make clients aware of the number of lenders the firm has access to, when promoting credit broking services

Crispin Passmore, executive director for policy at the SRA, said:

“This is a positive step forward. Everyone at the SRA and FCA has worked exceptionally hard to ensure that the proposals offer a balanced and proportionate approach to regulation for firms following the transfer of responsibility for regulating consumer credit from the Office of Fair Trading to the FCA.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

25Sep

FCA issues data on use of pension freedoms

In September 2015, the Financial Conduct Authority (FCA) issued data regarding consumers’ use of the recently introduced pension freedoms.

There has been much publicity about some providers imposing prohibitively high exit charges before customers can make a withdrawal from their pension fund, or switch to another provider. But based on an analysis of 23 providers, the FCA has revealed that 84% of customers have not been charged such a fee. For a further 9%, the fee charged was less than 2% of the fund. Less than 4% of customers have been hit with fees in excess of 5%. The average time taken to process a transaction was 16 days.

The Government is conducting its own consultation on the issue of pension exit fees.

Of the 204,581 people who have accessed their pension savings between April 6 2015 and July 5 2015 (the period covered by the survey):

• 57,568 (28.1%) made a full cash withdrawal of their fund (this is the new Uncrystallised Fund Pension Lump Sum or UFPLS option that became available in April)
• 53,543 (26.2%) made a partial withdrawal via a drawdown policy
• 43,094 (21.1%) used the small pots payment method – full cash withdrawal of a pension pot worth £10,000 or less
• 17,912 (8.8%) fully encashed their fund via drawdown
• 16,872 (8.2%) withdrew just the tax free lump sum of 25% of the fund as cash
• 12,418 (6.1%) purchased an annuity – this figure is less than one seventh of the number of annuities purchased in the equivalent time period in 2013
• 3,154 (1.5%) made a partial cash withdrawal via UFPLS
• 20 purchased a third way annuity

This means 120,688 (59%) made some form of cash withdrawal and 71,455 (34.9%) used some form of drawdown.

Of the providers surveyed, 61% said they might accept ‘insistent client’ pension transfer business, where a client receives advice from a financial adviser but then chooses to take a different course of action, but would consider the circumstances of the case first. For example, if the ceding pension scheme has any form of safeguarded benefit, then this might be a reason for refusing the business.

Only 9% would automatically accept these cases, while 30% said they would not consider them at all.

The topic of insistent clients has become more relevant with the introduction of the pension freedoms as any client wishing to switch funds of £30,000 or more from a final salary scheme to a money purchase scheme (so that they can benefit from the increased withdrawal flexibility) has to take professional advice. The FCA has indicated it is comfortable with advisers processing insistent client transactions provided a set procedure is followed.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

23Sep

Credit broker loses interim permission for failing to refund fees

On September 14 2015, the Financial Conduct Authority (FCA) announced that it had withdrawn the interim permission of Bury, Lancashire-based credit broker Merlin Loans & Mortgages Limited. The firm no longer has permission to offer credit-related services, and will not be able to obtain full permission in due course.

The firm lost its permission over what seem to be fairly trivial sums of money. Two customers complained that the firm had taken fees of £49.95 each from their bank accounts without permission. The cases were referred to the Financial Ombudsman Service (FOS), which ruled that the fees should be refunded, but despite repeated requests, Merlin did not comply with this instruction.

The FCA considers that the firm’s actions breached two of its high-level principles. Principle 6 says that: “A firm must pay due regard to the interests of its customers and treat them fairly.” Principle 11 requires firms to deal with regulatory bodies in a co-operative manner.

The regulator therefore believes that Merlin is failing to satisfy one of threshold conditions – the basic criteria all authorised firms must meet- because the firm is not ‘fit and proper’ to carry out financial services activity.

Merlin did not appeal the FCA’s decision to the First-Tier Tribunal.

A credit broker cannot request or take a fee or charge unless it complies with a series of recently introduced FCA rules.

Firstly, the firm must provide a credit broking information notice, which communicates the following information to the customer in a durable medium (a format which allows the customer to take away the agreement and consider its provisions):

• The full legal name of the firm as it appears in the Financial Services Register
• A statement that the firm is a broker and not a lender (or if the firm also acts as a lender, a statement that it is acting as a broker for the purposes of this transaction)
• That the customer is required to, or may be required to, pay a fee or charge for the firm’s services
• The amount of the fee or charge, or where this is not known, the basis on which it will be calculated
• When the fee or charge is payable, and details of the method by which the payment will be collected (e.g. via deduction from the contract, via cheque, bank transfer etc).

These requirements also apply to any fees to be paid to third parties.

(Apart from the firm’s trading name and contact details, no other information should be included on the information notice).

Secondly, the firm must receive confirmation from the customer, also in a durable medium, that they have received the above information and are aware of its contents.

The firm must maintain records of each information notice, and the associated customer confirmations.

Customers must also be informed of the circumstances in which a refund of this fee may be available. Section 155 of the Consumer Credit Act requires brokers to refund their fee, less £5, if the customer has not effected credit within six months of the date their details are referred by the broker.

Any decision made by the FOS is legally binding, and once a firm has appealed against an adjudicator’s decision by asking for an ombudsman review, they must promptly pay any redress that is due. Failing to do so is likely to mean that the firm will lose its FCA authorisation.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

21Sep

FCA announces changes to its supervision regime

The Financial Conduct Authority (FCA) has announced some changes to the way it will supervise the firms it authorises. This could mean that some smaller firms are no longer subject to routine monitoring.

At present, for its supervision of firms’ conduct, the FCA classes all firms as C1, C2, C3 or C4. C1 firms are those deemed to present the highest risk, and C4 firms the lowest risk. The C4 category is by far the largest category, and most financial advisory firms are included in this group. C4 firms may only receive a routine inspection once every four years, and even then the audit might be conducted via telephone or via an online survey, rather than a formal inspection visit.

The new supervision regime is outlined by acting chief executive Tracey McDermott in the September 2015 issue of the FCA’s Regulation Round-up bulletin. Now, firms will simply be classed as ‘‘fixed portfolio’ or ‘flexible portfolio’. Flexible portfolio firms, i.e. those deemed to present a lower risk, will now only be supervised via thematic reviews and via ‘event-driven reactive supervision’ (where the FCA decides to investigate further after receiving evidence about a firm’s activities).

So this may mean that smaller firms are less likely to hear from the FCA. However, all firms must continue to work on the basis that the FCA could announce their intention to inspect the firm at any time, and that very little notice of this could be provided.

Any information a firm provides in a regulatory return, or in any other notification, could lead the FCA to believe that they pose an increased risk, and thus result in the firm being inspected under the event-driven reactive supervision system. Examples of information that could give rise to concerns include: changes in a firm’s product mix, rule breaches, high numbers of complaints, advisers ceasing to be deemed competent etc.

The FCA also conducts regular thematic reviews, where it assesses standards across a specific market sector, and these reviews usually involve gathering information from a wide range of firms, large and small.

Ms McDermott commented:

“We know we have to do more to ensure our resources are deployed efficiently, that we can act quickly but effectively and proportionately, using all of the wide range of tools at our disposal, and that we are able to continually evolve as our firms do.”

The FCA chief added that the firms’ section of the FCA website had been revamped, with the aim of making it easier for firms to access information about specific regulatory obligations. The homepage of the new FCA Firms microsite is divided into three sections:

• New firm authorisation – who needs to be authorised, and how to apply
• Tasks for regulated firms – information on appointed representatives, approved persons and variations of permission
• Obligations for regulated firms – information on treating customers fairly, giving investment advice, financial promotions, complaints and much more

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

18Sep

FCA imposes fine and ban over mis-appropriation of insurance premiums

On September 10 2015, the Financial Conduct Authority (FCA) banned Ralph Whittington, a shareholder of insurance broker Savesure Limited, from holding authorised roles in financial services, after he was found to have mis-appropriated insurance premiums for his own use. He has also been fined £42,111, to be paid in three equal instalments in September 2016, September 2017 and September 2018.

Premiums that Savesure’s customers thought they were paying into their policies were instead used by Mr Whittington to allow him to get back money he had invested in the firm, as well as to pay the firm’s regular expenses. He carried out the mis-appropriation by transferring more funds from the firm’s premium account to its main bank account than his firm was entitled to receive in commission. A total of £50,899 was mis-appropriated in this way, and the FCA says in its Final Notice that Mr Whittington was solely responsible for these actions, and that he was fully aware that what he was doing was wrong.

Savesure is now in liquidation.

Unsurprisingly, the FCA has concluded that Mr Whittington is not a ‘fit and proper’ person to work in financial services. Demonstrating fitness and propriety is a key part of the process of applying for authorisation, and approved persons are expected to continue to demonstrate the highest standards of conduct once authorised.
Individual authorisation is required for those carrying out ‘controlled functions’. Holders of controlled functions are known as ‘approved persons’ once the FCA has ratified their application.
The individuals who will require this individual authorisation include:
• Directors
• Chief executive
• Partners
• Apportionment and oversight officer
• Compliance officer
• Money laundering reporting officer
• Those carrying out systems and controls functions
• Those carrying out significant management functions
• Those carrying out customer functions, e.g. financial advisers
The FCA’s fit and proper test includes a series of assessments regarding: honesty, integrity and reputation; competence and capability; and financial soundness.
Examples of information the FCA may use to assess individuals against these criteria include:
• Their conduct in any other controlled functions they may have held
• Their disciplinary record during their career to date, including complaints upheld against them, warnings, dismissals, disqualifications from acting as a director etc.
• A Curriculum Vitae
• A description of the role the individual will carry out
• The minutes of any meetings of the firm’s board in which an intention to appoint the individual to a controlled function was agreed
• Details of the recruitment process followed for the individual, including notes from their interview
• A ‘skills gap analysis’, evidencing whether the individual has the necessary skills and experience to carry out the controlled function
• A Learning and Development Plan, outlining the personal development that the individual intends to undertake if approved to perform the role
• References from past employers and others who have known the individual in a professional capacity
• Credit checks – is there evidence of previous credit defaults, bankruptcies or insolvency events, whether they concern the individual themselves or any firms they have previously been involved in
• Any previous criminal convictions
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

16Sep

FCA indicates it is not minded to ban mortgage commission

The Financial Conduct Authority (FCA)’s director of supervision appears to have ruled out any ban on commission being paid to mortgage advisers and arrangers. Some have suggested that mortgage advisers should be forced to accept fee-based remuneration, similar to the situation that has existed for investment and pension advisers since the introduction of the Retail Distribution Review.

But the FCA’s acting director of supervision (retail and authorisations), Linda Woodall, dismissed these suggestions when she told an FCA conference in September 2015:

“We didn’t find any evidence of commission bias as we did in the financial advice market, so there was nothing to address there. We still don’t have an issue with commission bias in mortgages and so there is no need to take steps in that regard.”

Alpha Investment and Financial Planning director Alan Solomons was amongst the financial advisers to criticise Ms Woodall’s remarks. Mr Solomons said:

“You need a level playing field and if there’s commission, theoretically at least there is the opportunity of bias. So what is in the customer’s best interest? This does seem inconsistent.”

Chair of the trade association the Association of Mortgage Intermediaries, Patrick Bunton, commented that mortgage commission was justified because the remuneration system did not work in the same way as in other areas of financial services. Mr Bunton said:

“The life and pensions firms can say [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][mortgage firms need to be treated the same], but their market saw RDR precisely because of huge discrepancies in the amounts of commission. Procuration fees in the mortgage world typically vary between 35 and 40 basis points. The sort of discrepancies that happened in their sector simply don’t exist.”

At present, all mortgage advisers are free to accept commission payments, but any independent mortgage adviser must offer their clients the option of paying by fees only. Mortgage commissions are sometimes referred to as procuration fees.

The FCA will conduct three studies into the mortgage market over the next 12 months:

• A review of whether lenders are meeting responsible lending criteria
• A general review to ascertain if the mortgage market is working effectively following the recent Mortgage Market Review (MMR)
• A wide-ranging review of access to financial advice, known as the Financial Advice Market Review, which will include an examination of the mortgage advice landscape

The MMR was introduced in April 2014, and its main provisions include:

• A ban on self-certification mortgages
• More rigorous requirements relating to lenders’ checking of affordability
• A ban on non-advised sales in most cases, including where there has been any face-to-face interaction between the customer and the selling firm
• Interest-only mortgages are now only permitted where the borrower has a credible repayment plan

The European Union’s Mortgage Credit Directive comes into force on March 21 2016, but the major impact of this legislation is likely to be felt by firms offering second charge mortgages and buy-to-let loans. The main impact for firms in the first charge market could be the introduction of the European Standardised Information Sheet – a new method of ensuring certain important information is disclosed to the customer, which will replace the existing Key Features Illustration.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.
[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

14Sep

FCA director gives speech about the mortgage market

The impact of recent regulatory changes, the UK’s ageing population, total household debt and the need to maintain a competitive market were all issues addressed by Christopher Woolard, the Financial Conduct Authority (FCA)’s director of strategy & competition, when he addressed the regulator’s mortgage conference in September 2015.

He began by stating that the issue of home ownership was of critical importance to many people in the UK.

Next, he turned his attention to the effectiveness of the FCA’s Mortgage Market Review (MMR), which was introduced in 2013 and brought about some significant changes in the regulator’s mortgage rulebook. Since the financial crisis of 2007, and the reckless lending that precipitated it, he said the mortgage industry’s appetite for taking risks had reduced greatly. He acknowledged that MMR and other developments had made for a more tightly regulated mortgage market, but remarked that mortgage approvals had actually risen following the introduction of MMR, rather than falling by 20% as some commentators had suggested.

Mr Woolard did however acknowledge the need “to remain sensitive to the impact of these reforms over the long run”. With this in mind, he announced that the FCA would be conducting a market study in early 2016 looking at barriers to competition in the mortgage sector, and at the impact MMR has had in this area.

After acknowledging that there was no easy solution to the problem of providing sufficient affordable housing, the FCA director turned his attention to the issue of an ageing society. He remarked that in the UK and Europe, consumers were much more unlikely than their counterparts in the USA to make use of equity release schemes in order to unlock the value of their home. Mr Woolard made reference to the potentially high costs of equity release, and the fact that this type of lending had acquired a bad reputation. “In the not too distant past, equity release became a dirty word,” he said.

Mr Woolard said he wanted to open a debate with the industry and with consumer groups about the equity release issue, acknowledging that there were a great many asset-rich, cash-poor pensioners in the UK today who could potentially benefit from this type of arrangement.

Regarding household debt levels, he said that while mortgage interest rates remained low, many households were taking on additional forms of debt. “Less affluent groups are looking, in increasing numbers, to sources of non-mortgage debt for borrowings” commented Mr Woolard.

In the last section of his speech, he spoke of the need to ensure regulation did not stifle competition, and commented that six large lenders still enjoy an 80% share of the mortgage market.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

11Sep

Consumer panel calls for advisers to staff the Pension Wise service

The body that represents the interests of consumers accessing financial services has called for qualified financial advisers to staff the Government’s Pension Wise guidance service. Pension Wise was set up to provide guidance to those aged 55 or over on their options for accessing their pension savings.

Giving evidence to a Work & Pensions Select Committee inquiry, the Financial Services Consumer Panel (FSCP) said it was concerned by the fact that only around 25% of those contacting their provider about accessing their funds had contacted Pension Wise first. On this subject, the Panel’s letter to inquiry chairman Frank Field MP says:

“The Panel believes [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][the Government] should regularly publish management information to show what proportion of eligible people is making use of the service. It also needs to conduct a thorough review to determine whether Pension Wise is leading to better outcomes for consumers.”

It also expressed concern about the qualifications and experience of Pension Wise staff, observing that those employed by The Pensions Advisory Service (TPAS), which provides the telephone guidance under Pension Wise, require much more experience than those conducting face-to-face guidance sessions for Citizens Advice (CitA). Even for those that use TPAS, the guidance falls short of the service a regulated financial adviser can offer, for example a TPAS or CitA employee cannot recommend a specific course of action to an individual customer.

The FSCP has gone further, and suggested that only qualified financial advisers (with an appropriate QCF Level 4 Diploma) should be allowed to offer guidance. It says:

“We believe that the level of service required by consumers in this area can only be delivered by confident, competent, experienced professionals who do not have to rely on a script. They need to be as qualified and experienced as regulated financial advisers.”

Consumers wishing to switch out of a defined benefit (final salary) scheme to a defined contribution (money purchase) scheme, in order to take advantage of the recently introduced pension freedoms, must consult a regulated adviser. The FSCP agrees with this requirement, but believes that a two-tier system has been created, as those who are not members of defined benefit schemes are not required to take advice. On this issue, it comments:

“It does not seem logical to protect certain groups and not others from taking decisions that are not likely to be in their best interests. The approach to mandatory advice has not been consistent.”

However, the Panel does not appear to indicate how it believes its goal of having guidance delivered by qualified advisers could be achieved.

The Panel has also recommended that consumers are provided with easy access to a retirement income calculation tool; that the Financial Conduct Authority actively monitors whether providers are signposting customers to Pension Wise; and that a system is established to provide effective advice to consumers wishing to sell their annuities, when this becomes an option in the near future.

Aegon has recently announced that its customers cannot make partial withdrawals from their pension funds unless they have obtained financial advice first.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.
[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

09Sep

FCA implements changes to the Financial Services Register

On September 7 2015, a number of changes were made to the Financial Services Register, which lists all firms who are authorised by the Financial Conduct Authority (FCA) and/or the Prudential Regulation Authority. The changes are aimed at making it easier for consumers to view relevant information about a firm they are considering doing business with.

The home page of the Register now has just one search box, where users can search by firm name, the name of an approved person within a firm, a postcode or a registration number.

The main page of a firm’s entry on the Register now lists information such as:

• Address and contact details
• Whether the firm is covered by the Financial Ombudsman Service and/or Financial Services Compensation Scheme
• The firm’s contacts for complaints, and if applicable, for insurance mediation
• The firm’s Companies House registration number
• The date on which the firm became authorised
• Whether the firm is a tied agent
• Whether the firm is registered under the Money Laundering Regulations
• The names of the firm’s approved persons
• Names of any appointed representatives the firm is responsible for
• The activities the firm is authorised to carry out, e.g. investment advice, insurance advice, investment management, lending, credit broking

For the first time, firms are included in the Register if the FCA is aware that they are providing financial services without authorisation. The FCA continues to list warnings about unauthorised firms on a separate page on its site, but concerns have been raised that consumers are not visiting this part of the site. Now, an unauthorised firm appears on the Register with the words ‘Status: Unauthorised’ alongside a warning symbol, all in a prominent pink coloured box. The same arrangements are in place for firms that are authorised but are known to be operating scams, or those that are regarded as ‘clone firms’.

Sometimes an authorised firm will adopt a very similar name to an existing regulated firm in an attempt to trick customers into thinking they are authorised. Cloned firms are often associated with cold calling by fraudsters, in that they use a name which appears to be that of a well-known reputable firm.

The most recent FCA warnings regarding unauthorised firms, as of September 7, concern Fundsaver Services Ltd, Ashmore Wealth Funds, De Vere Group, Unsecured Lends and Payday Loans Now. Of these, Ashmore, De Vere and Payday Loans Now are believed to have cloned the name of a legitimate firm.

The Consumer Credit Interim Permission Register has also been combined with the main register, so it is no longer necessary to visit a separate part of the FCA site to check if certain consumer credit firms are authorised.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

Posts navigation