A quick browse through the unauthorised firm warnings on the FCA’s website shows the scale of the problem the regulator is trying to deal with.
The warnings range from firms cloning genuine financial services companies to pensions-unlocking, carbon-credit trading and “deposit free” homes.
They are categorised under the “unauthorised firms and individuals to avoid” section of the FCA website and the 142 warnings published since the FCA started up in April is a huge increase on the FSA’s 10 warnings in 2012/13.
However, regulatory experts have highlighted unauthorised business as an area of growing concern. Is there more the FCA or other regulatory bodies should be doing to stop such firms?
Money Marketing research of the last 100 unauthorised firm warnings finds that 74 of the firms promoted their business online through a company website and in nearly half, 31, of these cases the websites are still active.
Inclusion in the FCA’s list makes it more likely that internet searches will pick up the regulator’s warning but this is not always the case.
The FCA says it uses both civil and criminal powers to shut down certain firms but there appears a gap between what the FCA is currently able to achieve and stopping the potential for vulnerable consumers to be taken advantage of.
The regulator also encourages consumers and advisers to report any suspicious looking websites to the regulator through its helpline.
The Advertising Standards Agency has the power to name and shame firms which provide misleading advertising but it has no powers to shut down websites and only limited powers to force other sanctions.
It can pass matters on it the Office of Fair Trading and can also issue sector-wide rulings, as it did earlier this year against letting agents.
Judging by the number of firms appearing on internet searches in recent months such a general ruling should be seriously considered against pension unlocking firms.
Clamping down on unauthorised firms is not an easy task. Many are based offshore and nimble companies can quickly change their name and website. There is also the time and costs associated with bringing successful proceedings against firms.
Regulatory bodies such as the FCA, The Pensions Regulator and the OFT, will need to continue to work hard together to eliminate the problem of unauthorised firms.