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FCA outlines actions after weaknesses found in its policies

written by Bella Palmer

An independent investigation found the bondholders were entitled to receive more protection from the regulatory regime in relation to an FCA authorised firm

The FCA has outlined a number of key actions it will take in the next six months after an independent investigation found "significant gaps and weaknesses" in its policies and practices.

A review into the London Capital & Finance mini-bond scandal found that the FCA's failed to fulfil its statutory objectives, calling the handling "wholly deficient".

The investigation concluded the bondholders were "entitled to expect, and receive, more protection from the regulatory regime in relation to an FCA authorised firm than that which, in fact, was delivered by the FCA".

In response, the FCA has outlined a restructuring to join up its policy, supervision and competition functions.

As part of the changes, the FCA will undertake a “use it or lose it” exercise, with firms that have not used their regulatory permissions to earn any regulated income for the last 12 months at risk of having their authorisation revoked. The FCA says this will reduce the risk of firms having a permission to carry out regulated activity "purely to add credibility to their unregulated activities".

It will also implement new measures to tackle pension scams with DWP, enhance training for all frontline staff, and recruit additional prudential specialists to act as quality assurance and assess firms with complex business models.

The FCA has already made permanent the temporary restrictions it imposed on the marketing of speculative illiquid securities, such as those issued by LCF.

Charles Randell, chair of the FCA, said: There are a number of things we could have done better in our supervision of these two firms and both reports highlight the need for the FCA to continue to change to better protect consumers from harm. We accept all the recommendations that have been made to the FCA and we are profoundly sorry for the mistakes we have made.


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