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Martin Wheatley warns ‘phoenixing’ is unacceptable

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.”


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There are 12 comments at the moment, we would love to hear your opinion too.

  1. Marvin the paranoid android 18th July 2014 at 9:05 am

    I think we all find it unacceptable..and yet it still goes on with the FCA continually re-authorising Directors/Principals of firms which have wound up and dumped debts on the FSCS etc.

    Step up to the plate Mr Wheatley…. Some of these issues have been create by the FSA with its pronouncements on things like “Run off” cover and its soft touch on the likes of Capita and Keydata etc.. whilst driving advisory firms into the dust… If this really is a new era of regulation Mr Wheatley..lets see it…

  2. Nick Pilkington 18th July 2014 at 9:11 am

    I thought that was exactly what happened when FIMBRA was replaced by LAUTRO who were replaced by the PIA who were replaced by FSA who were replaced by FCA ( I may have left someone out or got the order wrong!).
    We are told by each new organisation that they are not the same although it is very hard to spot the difference.

  3. Isnt this what happened with the FCA. One day it was that FSA and the next day it became the FCA and lost all responsibility for the mess made by its predecessor…

  4. Quietly resigned 18th July 2014 at 9:29 am

    Reply to Nick and Jeremy above – the FCA is indeed a Godzilla phoenix organisation itself, important points well made.

  5. Personally, I’d like to support the FCA on this point rather than use it as a means to criticise. The profession is being dragged down by various issues, many of which are being used to try and prevent the minority from taking advantage of the broader populace.

    Whilst the regulator may have had various guises, that’s nothing to do with what Martin Wheatley is trying to achieve now and if his aim is to stamp out bad pratices and make the regulated world more client focussed, then I’m all for it!

  6. Gee….you’d think after all the years this has been an issue, someone, somewhere would have sorted it out……anyone???

  7. Whilst accepting the point, Mr Wheatley is making, should this not be a wider issue than simply financial services.

    The “order” BTW, is that FIMBRA and LAUTRO ran in parallel (FIMBRA for IFAs and LAUTRO for providers). Then the PIA. All three where “self regulatory” organisations under what amounted to a licence from Securities and Investments Board Limited, which later changed its name to Financial Services Authority Limited and then to Financial Conduct Authority Limited.

    So, in legal terms, the regulator has not phoenixed at all.

    However, it is 30°C and sunny – so I shall now take my anorak off!

  8. I whole heartedly support the FCA on this one, however the buck does start and end with them, as Marvin has highlighted they are in sole control of the authorisation process !

    Quote from MW-:
    “We have in our authorisation process a requirement to look at the fitness and properness of individuals and the business model of the firm.

    So my question is; how the hell are these people allowed to be re-authorised ? major system failure at the FCA ! and which brings me on to; why do RMAR returns, why do on line reporting and why have a register ? if all is going to be ignored in the authorisation process when people quite simply close one door and reopen another ?

    A prime example of the good paying for the bad !! and why are you still giving yourselves bonuses on what seems to be a major failure on something that seems to happen with alarming regularity ?

  9. Rich! coming from someone who has just “Phoenixed” his own organisation from the FSA to FCA!

    I agree with the principle however when the regulator has already done this itself………….Hypocrisy comes to mind!

  10. Pot, kettle, black…

  11. Couldn’t we ask for a ban on the phoenixing of the same speech every 18 months. This statement has been made by the Regulator so often one wonders why. The hierarchy at the Regulator are paid too much money to be totally stupid (notwithstanding they try hard to disprove that belief), so maybe AT @ TSC could query them as to why they feel it necessary to roll out the same warnings ad nauseam – when the Regulator is in charge of who can get a licence in the first place.

  12. For how many years before it phoenixed into the FCA was the industry trying to get the FSA to do something about this? Still, maybe under MW’s leadership, measures finally will be enacted to put a stop to it.

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