In a report issued today, the FCA has highlighted the action it has taken during the first ten months of 2020, when many consumers found their finances under pressure as a result of coronavirus lockdowns and restrictions.

During this ten-month period, the FCA stopped applications for authorisation from 343 (almost one in ten) financial services firms and individuals, where the potential for consumer harm was identified. It also opened over 1,500 supervisory cases involving scams or higher risk investments.

The financial watchdog also received over 24,000 reports of unauthorised activity and published over 1,000 consumer alerts – an 82% increase on the previous year.

The FCA also takes action against firms found to have caused consumer harm. This includes pursuing 47 enforcement investigations against unauthorised businesses in 2020, securing almost £6m to be returned to consumers and obtaining court orders ordering that over £14m be returned to consumers which the FCA will take steps to recover.

It also issued fines totalling more than £80m to regulated firms and individuals over the course of 2019 and 2020.

The FCA is also publishing data on the Defined Benefit (DB) pension transfers market. This market is particularly susceptible to consumer harm and has been a focus for the FCA.

As a result of action taken by the FCA in 2020, 130 firms stopped providing DB transfer advice. The proportion of pension scheme members who are recommended to transfer following advice has fallen from an average of 69% in October 2018 to 57% in March 2020.

To reduce the risk of harm to consumers, the FCA is also calling upon financial services firms to ‘use it or lose it’, with regard to using all of their regulatory permissions. A firm’s business model may evolve over time. When it does, it’s crucial that firms notify the FCA and amend regulatory permissions as necessary. Firms that don’t risk losing market access. Outdated or incorrect permissions can mislead consumers about the level of protection offered or give credibility to unregulated activities.

Sheldon Mills, executive director, consumers and competition, said: “The UK has one of the world’s leading financial services industries, offering consumers access to a wide range of investment products. In some areas however, the consumer investment market is not working as well as it should and too often consumers are offered unsuitable products or advice. Protecting consumers and ensuring they have confidence in the suitability of advice they receive is a key priority for the FCA and today’s report highlights some of the work we are undertaking to achieve this.

“Incorrect or out of date permissions increase the risk of harm to consumers as they can mislead consumers about the level of protection offered or give credibility to unregulated activities. This is why we’re today calling on firms to review their permissions and ensure they reflect current business models. We will take action where we consider out of date permissions may cause harm to consumers. The message is clear, use it or lose it.”