UK financial watchdog promises to shut down failing firms faster

Signage is seen for the FCA (Financial Conduct Authority), the UK’s financial regulatory body, at their head offices in London, Britain March 10, 2022. REUTERS/Toby Melville

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LONDON, April 7 (Reuters) – Britain’s financial watchdog said on Thursday it will create 80 new jobs to shut down problem companies faster as it faces pressure from lawmakers to deal with corporate collapses more efficiently and tackle a rising volume of scams.

The Financial Conduct Authority said its new three-year strategy plan would be a “step change” which should over time cut serious harm to consumers, thereby bringing down compensation bills and the watchdog levy on firms.

It is the latest leg in a transformation which CEO Nikhil Rathi has said will turn the watchdog into a faster, more aggressive regulator to cope with demands such as the surge in online scams and the emerging crypto sector.

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It has also faced criticism for being too slow to prevent failures such as the collapse of investment fund London Capital & Finance, which is costing taxpayers up to 120 million pounds in compensation. read more

The watchdog, which employs around 4,000 people, was already hiring 95 people to strengthen its authorization unit to stop unsuitable companies being licensed in the first place.

The FCA has an increased budget of 640.1 million pounds ($836.93 million) this year, up 4.3%.

Internal changes have led to disquiet among some staff, with the outcome of a union vote on industrial action due next week.

The FCA said on Thursday it will, for the first time, measure itself annually against published outcomes and targets.

Currently the watchdog has patchy powers to intervene when problems arise in sectors including cryptoassets and in cases of online financial fraud until the government legislates to bring them under the regulatory net.

“Our expectation is that over time we will be able to intervene before harms become systemic,” Sarah Pritchard, the FCA’s executive director of markets, said.

Firms also face a tougher ‘consumer duty’ later in the year.

Simon Morris, a financial services partner with CMS law firm, said the strategy plan was ambitious and augurs real change in tone and substance.

“But in positioning itself as a more powerful regulator and controlling the FCA’s greatest challenge is accountability, especially to the firms it regulates,” Morris said.

The FCA will consult shortly on “side pockets” to ring-fence Russian assets in investment funds, Pritchard said. read more

There will also be a consultation on regulating stablecoins following the government’s announcement this week.[nL5N2W23WH[nL5N2W23WH

(This story was refiled to add dropped word to headline.)

($1 = 0.7648 pounds)

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Reporting by Huw Jones; editing by Jason Neely and Andrew Heavens

Our Standards: The Thomson Reuters Trust Principles.

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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