The FCA halted 1 in 4 firms from entering the retail finance market in a six month period in 2021 as it stepped up its war on scammers.

The news comes as reports of scams and scam attempts reach record levels, according to the latest FCA data released today.

The Financial Conduct Authority said it was taking “assertive action” to tackle harm in the consumer investments market and stem the tide of scams.

Data for the period April to September 2021 showed the watchdog stopped 25% of applicants from entering the market.

Key figures from the new data show:

• 16,400 enquiries about possible scams, a one third increase on the same period in 2020 (12,400). The top 4 types of scams were boiler rooms, cryptocurrency scams, FCA-impersonation scams and recovery rooms.
• An increase in reports about possible cryptocurrency scams. The FCA's Cryptoasset team opened over 300 cases. In the same period, the FCA added 172 firms to its Unregistered Cryptoasset Businesses list.
• The FCA published 735 consumer alerts about unauthorised firms or individuals 
• 32 new firms (1 in 4) were stopped from entering the consumer investments market. In 9 cases, there was suspected 'phoenixing' or 'lifeboating' by advice firms
• The FCA Pension Scams team opened 51 cases related to suitability of pension transfer advice and potential scams
• There were custodial sentences for 3 unauthorised individuals. The FCA also persuaded 27 authorised firms to provide voluntary requirements (VREQs) and imposed own-initiative requirements (OIREQs) on 10 authorised firms (compared with 21 VREQs and 9 OIREQs for the previous 12 months), restricting firms’ activities to prevent harm.

The data showed that 1 in 4 applications from new firms were being stopped by the FCA, up from 1 in 5 in the previous financial year. 

There were nine cases of ‘phoenix’ firms where individuals responsible for unsuitable advice tried to move to or set up new firms. In some cases individuals set up and sought authorisation for a new firm before their existing firm started to receive complaints about poor past advice.

The top types of scams reported to the FCA included cryptoasset, boiler room and ‘recovery room’ scams. Recovery room scams occur when crooks falsely offer to help scam victims get their money back.

During the half year in 2021 the FCA opened over 300 cases relating to possible cryptoasset businesses not registered with the FCA. The FCA says many of these may be scams, and that it has 50 live investigations, including criminal probes, into unauthorised businesses.

The FCA has urged consumers to use the InvestSmart and ScamSmart services to check they are not being scammed.

The FCA’s ScamSmart campaign encourages those considering investing to check a dedicated website. The site features an online tool, and a Warning List. The FCA's InvestSmart campaign launched in October 2022 targets consumers who are new to investing.