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UK financial watchdog rejects more licence applicants as fraud rises

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By Reuters

By Huw Jones

LONDON – Britain’s financial watchdog has stopped a quarter of all licence applications over the past year from companies wanting to offer investment services to consumers, it said on Thursday, as it seeks to tackle rising financial fraud.

The Financial Conduct Authority (FCA), under pressure from lawmakers to be more assertive in tackling scams, said the proportion of licence applicants being rejected was up from one in five in its previous financial year.

In an update on consumer investments data, the FCA also said that between April and September 2021 it received 16,400 enquiries about possible scams, up nearly a third from the same period in 2020, and focused on cryptoassets, as well as so-called boiler room and recovery room scams which involve high-pressure cold calls to consumers.

The FCA has long warned investors about cryptoassets and scams generally, but lawmakers want to see enforcement action as well.

“Instead of just flashing the warning lights about the number of consumers being lured into risky crypto investments and scams, the financial watchdog is now getting a lot tougher on stopping suspect firms from entering the market,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

Over the April-September period the regulator opened over 300 cases relating to possible cryptoasset businesses not registered with the watchdog, it said.

The FCA said it has 50 live investigations into unauthorised businesses and was preparing for several trials, both criminal and civil, which will take place in the next 15 months.

“The FCA is drawing on all the tools at its disposal, including more assertive supervision and enforcement action, and being tougher with firms who want to operate here,” said Sarah Pritchard, executive director for markets at the FCA.

The watchdog has asked for more powers to tackle online financial scams and is likely to get new powers to regulate cryptoassets.