FCA publications on Consumer Investments

The FCA has been busy.

Monday saw the publication of three FCA publications on Consumer Investments.


  • A Consumer Investments 2020 Data Update
  • Our ‘use it or lose it’ statement on firms’ permissions
  • An update on the Defined Benefit pension transfer market

Although the papers are quite data heavy in places, they are well worth a read as they provide a clear indication of where the FCA’s focus has been and is likely to be.

Consumer Investments 2020 Data Update
The Consumer Investments 2020 Data Update highlights the different ways in which the FCA is working to protect consumers from investment harm by stopping and disrupting potentially harmful firms and activities.

The headlines

  • 1,542 supervisory cases were opened involving scams or higher risk investments*
  • 343 firms were refused authorisation
  • 131 firms had authorisation removed
  • 12 financial adviser firms prevented from gaining authorisation where phoenixing was suspected
  • Between 1 January and 31 October 2020, the FCA received over 24,000 reports about potential unauthorised business
  • The FCA’s work on scams has resulted in approximately £14.3 million being awarded under restitution orders, over £6.9m worth of funds being frozen and over £5.9m being secured for investors for redistribution
  • Over 1,000 consumer alerts were issued

* The FCA considers the following to be higher risk investments and have stated that, for most retail clients, needs should be able to be satisfied by ‘straightforward mass-market investments’.

  • mini-bonds (also known as high interest returning bonds) and other non-readily realisable securities
  • unregulated collective investment schemes (UCIS)
  • some structured products, derivatives and Contracts for Difference (CFDs)
  • Venture Capital Trusts (VCTs)
  • exchange tokens or cryptocurrencies (e.g. Bitcoin)
  • investment-based crowdfunding
  • peer-to-peer lending

Permissions – use it or lose it
The FCA is also calling on firms to ‘use it or lose it’, with regard to using all of their regulatory permissions. It’s crucial that firms notify the FCA and amend their regulatory permissions as necessary. Firms that don’t risk losing market access. The FCA considers that incorrect or out of date permissions increase the risk of harm to consumers as they can mislead consumers about the level of protection offered or give credibility to unregulated activities. The FCA gave the following reasons why this is important.

  • helps to assure you that firms will continue to meet the threshold conditions
  • and that firms are demonstrating effective oversight of your business
  • meeting the firm’s obligations under the SM&CR
  • providing accurate information to consumers
  • ensuring the annual attestation that information held on the FS Register is accurate
  • ensures firms do not pay unnecessary fees for unused or out of date permissions

To back up this reminder about unused permissions, the FCA will soon have new powers to act more quickly where they consider firms are no longer carrying out regulated activities.

With the new powers, where the FCA believes that a firm is not carrying on a regulated activity, the regulator will be able to serve notice on the firm, asking for a written response within 14 days. If the firm does not respond the FCA will be able to publish a second, public notice, explaining it appears that the firm is not carrying on a regulated activity. The FCA can then vary or cancel the firm’s permissions after 1 month.

Defined Benefit Transfers Market Data Update
In the Defined Benefit (DB) pension transfers market data update, the information the FCA has received from firms in response to various data requests is summarised. The update includes a lot of data. The key points are:

  • The data shows some signs of improvement in the DB transfer advice market, most notably:
  • The significant fall in conversion rates indicates that firms are starting to act more in line with the FCA’s expectation and messages that for DB advice, in most cases, a transfer is not in the client’s best interest
  • A significant reduction in clients proceeding to transfer against advice as insistent clients
  • The data shows a reduction in the number of firms offering DB advice, some 1521 firms with DB transfer advice permission (at the time of publication)

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

While these sorts of papers can appear a bit dry and number heavy, there are often useful indicators of where the regulatory focus is likely to be. Well worth a read.

Action Required By You

Take time out to read the papers – even a quick scan will be useful. Contact your usual ATEB Consultant for further assistance or contact ATEB using the button below.
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About the Author

Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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