FCA stops 1 in 5 new consumer investment firms who applied from entering market
The UK Financial Conduct Authority (FCA) today published data summarizing its work to tackle consumer harm in the investment market between 1 April 2022 and 31 March 2023.
During the relevant period, the FCA:
- stopped 1 in 5 new consumer investment firms who applied from entering the market;
- published 1,716 consumer alerts about unauthorised firms or individuals;
- secured £4.9 million in consumer redress from unauthorised investment business.
At the same time, FCA’s consumer-facing work shows the challenges investors face. Enquiries to FCA’s consumer helpline about potential scams have increased significantly since 2020, and this trend continued into 2022/23 (a 12% annual increase).
The ScamSmart website also had 12% more visitors than the previous year. The FCA saw significant increases in enquiries about potential recovery room scams (21%), FCA impersonation scams (38%) and cryptocurrency scams (17%). While most consumers contact the FCA helpline about potential scams before investing, 80% of consumers who contacted the FCA about potential cryptocurrency scams did so after investing.
The FCA received over 25,000 reports of potential unauthorised business between April 2022 and March 2023. Many of these reports are either already known to us or fall outside the FCA remit. The regulator either logs the remaining reports for intelligence purposes or open them as enquiries for further review. Enquiries may involve the FCA working to disrupt unauthorised business, such as issuing consumer alerts, taking steps to remove websites and working with firms to resolve a breach. The most serious cases become enforcement investigations into serious misconduct using FCA’s formal powers.
The FCA currently has 48 enforcement investigations into 212 unauthorised firms and individuals.
Due to the high volume of reports and their complexity, the outcomes of these can vary from year to year depending on many factors. These include the nature of the reports, FCA’s approach to triaging cases and the resources it can dedicate to this work.
In previous periods the FCA has obtained significant redress for consumers in relation to unauthorised firms. The £4.9m for 2022/23 is a return to more typical levels.