The Financial Conduct Authority (FCA) has been using its regulatory powers on European firms operating in the UK since the end of the Brexit transition period on 31 December 2020.
Chief executive Nikhil Rathi said that while the UK is open for business, it expects overseas firms to meet the FCA’s regulatory standards, during his speech at City Week on 22 June 2021.
There are currently 1,450 firms from the European Economic Area (EEA) accessing UK markets via the Temporary Permission Regime; but Rathi said that as the industry moves towards a more permanent arrangement, “there will be a rigorous review of all firms seeking to enter the UK authorisation gateway”.
That is why the watchdog has told firms with the potential to grow quickly, and that pose a greater risk of harm, to apply for authorisation as soon as possible.
Rathi added that since the end of the transition period, the regulator has taken action against 13 firms by restricting their business, and it is in the process of removing a further 120 companies from its “regulatory perimeter”.
A similar course of action has been taken against cryptoassets firms, after the FCA identified 111 operating without registration.
‘Use it or lose it’
Rathi added: “Our robust approach continues in our supervision of firms. If, once we do authorise a firm, we see they are not using their authorisation or indeed misusing it, we are not afraid to act quickly to remove their permissions.
“They will have to ‘use it or lose it’. We also anticipate in more cases, where there are significant risks, that we will need to supervise overseas firms accessing the UK market more directly to make sure they meet our standards.
“Our approach will mean the firms we want to encourage here are authorised and able to grow and scale successfully. We will support this with our pioneering regulatory sandbox and through the creation of a regulatory nursery in response to the recommendations of the Kalifa Review of UK Fintech.
“We recognise that fintech firms often need greater regulatory engagement in their early years and the FCA has led regulatory innovations over a number of years and will continue to do so.”
