The FCA has launched a working group in collaboration with other key bodies to tackle the ongoing issue of phoenixing in financial services.
Phoenixing is where firms and individuals deliberately try to avoid their liabilities to consumers or poor conduct history by closing down firms – or resigning senior positions – only to re-emerge in a different legal entity.
Representatives of the Financial Services Compensation Scheme, the Financial Ombudsman Service, the Insolvency Service and Scotland’s Accountant in Bankruptcy have joined forces with the FCA to tackle the problem.
An update from the watchdog today says the taskforce will discuss how these groups can work together more closely in the future by sharing data and intelligence on individuals and firms.
It adds this is the first time that they have come together as a group and in a formal way to discuss and tackle the issue.
The update goes onto say sharing data on issues such as FSCS claims, complaints and director disqualifications is proving highly effective in detecting instances of phoenixing.
It is also helping the FCA build cases to refuse applications for authorisation and expanding on the types of data shared through the working group can only improve this.
FCA director of authorisations Sarah Rapson says: “We have a shared responsibility to protect consumers and by working closely together we can prevent firms and individuals from deliberately avoiding their liabilities.”
FSCS chief corporate affairs officer Alex Kuczynski adds: “This is a great opportunity for the FSCS to share its knowledge and insights. This working group will support better outcomes for both consumers and levy payers who have to step in to fund FSCS’s compensation, and fully aligns with the ‘Prevent’ pillar of our strategy for the 2020s.”