The Financial Conduct Authority has published draft guidance on powers that will enable quicker removal of unused regulatory permissions.

The FCA says the change will streamline and shorten the process of removing firms' permissions.

Under the new power, out for consultation, the regulator will be able to start the cancellation process as soon as it considers permissions are not being used by serving a 14-day notice on the firm.

The FCA will then be able to vary or cancel permissions after a month.

The regulator said incorrect or outdated permissions on the Financial Services Register can mislead consumers about the level of protection offered by a firm or give unwarranted credibility to a firm’s unregulated activities.

The changes will help the FCA to prevent scams and to ensure the Financial Services Register presents a “clearer picture” of the permissions held by firms. Firms are required to confirm that the information on the Register is accurate on an annual basis.

The consultation will run until 29 October.

Mark Steward, executive director of enforcement and market oversight at the FCA, said:  “We want to use this power to take quicker action to prevent consumers being misled. It is part of our transformation and drive to be more assertive, drawing on an innovative approach and using new streamlined processes to make important regulatory interventions.

“Firms can and should apply to have their permissions cancelled if they no longer plan to use them but many fail to do so. We understand that business models may evolve over time and there may be valid reasons why regulatory permissions are not being used, but unless firms notify us and keep their permissions up to date, they will risk losing market access.”

The FCA has already undertaken a ‘use it or lose it' exercise with firms, reminding them of their obligation to review regulatory permissions and ensure they are up to date or removed if not needed.

As part of that work firms that have not used their permissions for 12 months or more risk having them cancelled via the existing cancellations process.

The changes are part of the FCA’s response to tackle issues raised by Dame Elizabeth Gloster’s review into the regulation of London Capital & Finance (LCF).

Some 11,625 investors lost savings worth a total of £237m when LCF collapsed. 

The announcement comes soon after the FCA said it was making changes to its decision-making and governance to enable it to make faster and more effective decisions.

The changes proposed by the regulator in its July consultation will give greater responsibility for decisions to senior members of FCA staff from its Regulatory Decisions Committee (RDC) to its Authorisations, Supervision and Enforcement Divisions. 

The proposed changes aim to streamline decision making on authorisation applications and specific supervisory and enforcement decisions.

The regulator aims to publish a policy statement with the final decision on the changes in November.