FCA chief executive Martin Wheatley says it is “not acceptable” for a firm to leave behind its liabilities and “phoenix” into a new business.
The term phoenixing describes a company which collapses, leaving behind its liabilities, and resurfaces with the same directors under a different name.
Speaking at the FCA’s annual public meeting in London yesterday, Wheatley said: “It is not acceptable for somebody who has a set of liabilities to run away from those liabilities and simply set up as a new organisation.
“We have in our authorisation process a requirement to look at the fitness and properness of individuals and the business model of the firm.
“We would also take into account what previous issues the firm has had with the Financial Ombudsman Service or legal claims when deciding whether to authorise a new firm. But the concept of phoenixing is not one we like.”