Tag Archives: FCA

NatWest Plc pleads guilty in criminal proceedings

National Westminster Bank Plc (NatWest) entered guilty pleas at Westminster Magistrates’ Court to criminal charges brought by the Financial Conduct Authority (FCA) under the Money Laundering Regulations 2007 (MLR 2007).

NatWest accepts that it failed to comply with regulation 8(1) between 7 November 2013 until 23 June 2016; and regulations 8(3) and 14(1) between 8 November 2012 until 23 June 2016 under MLR 2007 in relation to the accounts of a UK incorporated customer. These regulations require certain firms, including those regulated by the FCA, to ensure they have adequate anti-money laundering systems and controls to prevent money laundering.

The case has now been referred to the Southwark Crown Court for sentencing.

This is the first criminal prosecution under the MLR 2007 by the FCA.

No individuals are being charged as part of these proceedings.

Consumer warning on Binance Markets Limited and the Binance Group

Binance Markets Limited is not permitted to undertake any regulated activity in the UK. This firm is part of a wider Group (Binance Group).

Due to the imposition of requirements by the FCA, Binance Markets Limited is not currently permitted to undertake any regulated activities without the prior written consent of the FCA.

No other entity in the Binance Group holds any form of UK authorisation, registration or licence to conduct regulated activity in the UK.

The Binance Group appear to be offering UK customers a range of products and services via a website, Binance.com.

Investing in cryptoassets generally

Be wary of adverts online and on social media promising high returns on investments in cryptoasset or cryptoasset-related products.

Most firms advertising and selling investments in cryptoassets are not authorised by the FCA. This means that if you invest in certain cryptoassets you will not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme if things go wrong.

While we don’t regulate cryptoassets like Bitcoin or Ether, we do regulate certain cryptoasset derivatives (such as futures contracts, contracts for difference and options), as well as those cryptoassets we would consider ‘securities’ – find out more information. A firm must be authorised by us to advertise or sell these products in the UK – check our Register to make sure the firm is authorised. You can also check our Warning List of firms to avoid.

You should do further research on the product you are considering and the firm you are considering investing with. Check with Companies House to see if the firm is registered as a UK company and for directors’ names. To see if others have posted any concerns, search online for the firm’s name, directors’ names and the product you are considering.

Always be wary if you are contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true.

FCA proposes stronger protection for consumers in financial markets

The FCA has today set out plans for a new Consumer Duty, which will set a higher level of consumer protection in retail financial markets for firms to adhere to.

Firms are already bound by FCA rules and principles to treat customers fairly and many firms are delivering the right outcomes for consumers, including good products and services at fair prices, supported by high standards of customer service and clear communications.

The FCA has seen evidence of practices that cause consumer harm, including firms providing information which is misleadingly presented or difficult for consumers to understand, hindering their ability to properly assess the product/service. This may provide some insight into why 1 in 4 respondents to the FCA’s 2020 Financial Lives Survey said they lack confidence in the financial services industry and only 35% of respondents agreed that firms are honest and transparent in their dealings with them.

As part of the FCA’s ongoing work to monitor and address behaviour that could lead to poor outcomes for consumers, the FCA is proposing to expand its existing rules and principles to ensure firms provide a higher level of consumer protection consistently which will enable consumers to get good outcomes.

The new Duty will drive a shift in culture and behaviour for firms, meaning that consumers always get products and services that are fit for purpose, that represent fair value and are clearly communicated and understandable. This will help, rather than hinder, consumers to make good choices and be confident that they will receive good customer service.

Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said: ‘The package of measures we are proposing will enhance our existing rules and is designed to tackle the harms we see in financial services markets, and their causes, as well as put consumers in a stronger position to make good decisions.

‘We want firms to be putting themselves in the shoes of consumers and asking ‘would I be happy to be treated in the way I treat my customers?’. We want consumers to be able to advance their financial wellbeing and build positive futures for themselves and their families.’

The Consumer Duty, which firms will have to follow or face regulatory action, including enforcement investigations if they fail to do so, will have 3 key elements:

  1. The Consumer Principle, which will reflect the overall standards of behaviour the FCA expects from firms. The wording being consulted on is: ‘a firm must act in the best interests of retail clients’ or ‘a firm must act to deliver good outcomes for retail clients’.
  2. Cross-cutting rules which would require 3 key behaviours from firms, which include taking all reasonable steps to avoid foreseeable harm to customers, taking all reasonable steps to enable customers to pursue their financial objectives and to act in good faith.
  3. It will also be underpinned by a suite of rules and guidance that set more detailed expectations for firm conduct in relation to 4 specific outcomes – communications, products and services, customer service and price and value.

The consultation is open for comment until 31 July 2021. The FCA expects to consult again on proposed rule changes by the end of 2021 and make any new rules by the end of July 2022. The FCA is also consulting on the potential benefits of attaching a private right of action to the new Duty, and what any unintended consequences of this might be.

Read CP21/13: A new Consumer Duty

FCA stops FXVC offering CFDs to UK customers

The FCA has acted to stop a Cypriot based firm, Finteractive Limited (trading as FXVC), from offering high risk contracts for difference (CFDs) to UK investors.

FXVC used a variety of inappropriate techniques, including misleading financial promotions which appeared to offer consumers the opportunity to purchase shares in a well-known company and failed to mention that they were actually promoting CFDs.

Many of the FXVC’s customers were unclear about the nature of the investments that they were being persuaded to make and the risks involved in trading in CFDs. The firm used pressure tactics, described by one customer as ‘relentless’, to encourage consumers to invest ever increasing sums of money. Some customers were even encouraged to declare they were professional investors despite not meeting the necessary criteria for such categorisation.

The FCA has stopped FXVC conducting any regulated activities in the UK and required the firm to close all trading positions and return the money to customers.

FXVC operates in the UK under the Temporary Permission Regime (TPR) put in place for firms who used to operate in the UK under a passport and who wish to continue to operate here following the UK’s exit from the European Union. These firms operate under the TPR until their application for full authorisation by the FCA can be considered.

FCA warns that younger investors are taking on big financial risks

The Financial Conduct Authority (FCA) has published research findings into better understanding investors who engage in high-risk investments like cryptocurrencies and foreign exchange.

The findings reveal there is a new, younger, more diverse group of consumers getting involved in higher risk investments, potentially prompted in part by the accessibility offered by new investment apps. However, there is evidence that these higher risk products may not always be suitable for these consumers’ needs as nearly two thirds (59%) claim that a significant investment loss would have a fundamental impact on their current or future lifestyle.

The research found that for many investors, emotions and feelings such as enjoying the thrill of investing, and social factors like the status that comes from a sense of ownership in the companies they invest in, were key reasons behind their decisions to invest. This is particularly true for those investing in high-risk products for whom the challenge, competition and novelty are more important than conventional, more functional reasons for investing like wanting to make their money work harder or save for their retirement. 38% of those surveyed did not list a single functional reason for investing in their top 3.

Sheldon Mills, Executive Director, Consumer and Competition at the FCA said: ‘Much of the consumer investments market meets consumers’ needs. But we are worried that some investors are being tempted – often through online adverts or high-pressure sales tactics – into buying higher-risk products that are very unlikely to be suitable for them.

‘This research has helped us better understand what drives and motivates consumers so we can tell them about the risks involved in these investments through our investment harm campaign.

‘We want to make sure that we encourage the ability to save and invest for lifetime events, particularly for younger generations, but it is imperative that consumers do so with savings and investment products that have a suitable level of risk for their needs. Investors need to be mindful of their overall risk appetite, diversifying their investments and only investing money they can afford to lose in high risk products.

‘We also hope our research will provide valuable insights for other organisations that are involved in tackling harm in this market.’

The research shows that investors often have high confidence and claimed knowledge. However, it also shows a lack of awareness and/or belief in the risks of investing, with over 4 in 10 not viewing ‘losing some money’ as one of the risks of investing, even though as with most investments their whole capital is at risk. In some cases, investors can lose more than they initially invested for example with contract for difference investments. These investors also have a strong reliance on gut instinct and rules of thumb, with almost four in five (78%) agreeing “I trust my instincts to tell me when it’s time to buy and to sell” and 78% also agreeing “There are certain investment types, sectors or companies I consider a ‘safe bet’”.

Research findings indicate that this newer audience has a more diverse set of characteristics than traditional investors. They tend to skew more towards being female, under 40 and from a BAME background. This newer group of self-investors are more reliant on contemporary media (e.g. YouTube, social media) for tips and news. This trend appears to be prompted by the accessibility offered by new investment apps.

These younger investors may have the lowest levels of financial resilience making them more vulnerable to investment loss. Research showed that a significant loss could have a fundamental lifestyle impact on 59% of self-directed investors with less than 3 years’ experience, who are more likely to own high risk investment products, compared with 38% of investors with greater than 3 years’ experience.

Tackling harm in the consumer investment market is a priority for the FCA. The FCA commissioned BritainThinks to conduct in-depth research into self-directed investors’ behaviours, attitudes and financial resilience. Together with feedback from its Call for Input on the consumer investment market, this research will underpin the FCA’s work in the consumer investment market. In particular, the research will help design a new campaign to address the harm caused from consumers investing in high risk, high return, illiquid investments that may not be suitable for their needs.

Alongside the publication of this research, the FCA has today launched its digital disruption campaign to prevent investment harm. The campaign uses online advertising to disrupt investors’ journeys and drive them to the high return investments webpage – which covers key questions consumers should ask before investing.

The FCA advises consumers to consider five important questions before they invest: 

  1. Am I comfortable with the level of risk?
  2. Do I fully understand the investment being offered to me?
  3. Am I protected if things go wrong?
  4. Are my investments regulated?
  5. Should I get financial advice?

The FCA has recently published work to tackle consumer harm in the investment market including banning the mass-marketing of speculative mini-bonds and will set out its further plans later this year. The regulator also published a warning to consumers on the dangers of investments advertising high returns based on cryptoassets.

The End of LIBOR

The FCA has announced the dates that panel bank submissions for all LIBOR settings will cease, after which representative LIBOR rates will no longer be available. This is an important step towards the end of LIBOR, and the Bank of England and FCA urge market participants to continue to take the necessary action to ensure they are ready.

The FCA has confirmed that all LIBOR settings will either cease to be provided by any administrator or no longer be representative:

  • immediately after 31 December 2021, in the case of all sterling, euro, Swiss franc and Japanese yen settings, and the 1-week and 2-month US dollar settings; and
  • immediately after 30 June 2023, in the case of the remaining US dollar settings

Based on undertakings received from the panel banks, the FCA does not expect that any LIBOR settings will become unrepresentative before the relevant dates set out above. Representative LIBOR rates will not, however, be available beyond the dates set out above. Publication of most of the LIBOR settings will cease immediately after these dates. As ISDA has confirmed separately, the ‘spread adjustments’ to be used in its IBOR fallbacks will be fixed today as a result of the FCA’s announcement, providing clarity on the future terms of the many derivative contracts which now incorporate these fallbacks. 

The Bank of England and the FCA have made it clear over a number of years that the lack of an active underlying market makes LIBOR unsustainable, and unsuitable for the widespread reliance that had been placed upon it. Accordingly, both have worked closely with market participants and regulatory authorities around the world to ensure that robust alternatives to LIBOR are available and that existing contracts can be transitioned onto these alternatives to safeguard financial stability and market integrity.

Market-led working groups and official sector bodies, including the Financial Stability Board, have set out clear timelines to help market participants plan a smooth transition in advance of LIBOR ceasing. Today’s announcements confirm the importance of those preparations for all users of LIBOR. Regulated firms should expect further engagement from their supervisors at both the Prudential Regulation Authority and the FCA to ensure these timelines are met.

Authorities have also recognised that there are some existing contracts which are particularly difficult to amend ahead of the LIBOR panels ceasing, often known as the ‘tough legacy’. The FCA is taking steps to help reduce disruption in these cases. The FCA will consult in Q2 on using proposed new powers that the government is legislating to grant to it under the Benchmarks Regulation (BMR) to require continued publication on a ‘synthetic’ basis for some sterling LIBOR settings and, for 1 additional year, some Japanese yen LIBOR settings. It will also continue to consider the case for using these powers for some US dollar LIBOR settings. Any ‘synthetic’ LIBOR will no longer be representative for the purposes of the BMR and is not for use in new contracts. It is intended for use in tough legacy contracts only. The FCA will also consult in Q2 on which legacy contracts will be permitted to use any ‘synthetic’ rate.

The FCA has also published today statements of policy in relation to some of these proposed new BMR powers. These statements of policy confirm its policy approach, explain its plans set out above and its intention to propose using, as a methodology for any ‘synthetic rate’, a forward-looking term rate version of the relevant risk-free rate plus a fixed spread aligned with the spreads in ISDA’s IBOR fallbacks.

FCA CEO Nikhil Rathi said:

‘Today’s announcements provide certainty on when the LIBOR panels will end. Publication of most of the LIBOR benchmarks will cease at the same time as the panels end. Market participants must now complete their transition plans.’

Bank of England Governor Andrew Bailey said:

‘Today’s announcements mark the final chapter in the process that began in 2017, to remove reliance on unsustainable LIBOR rates and build a more robust foundation for the financial system. With limited time remaining, my message to firms is clear – act now and complete your transition by the end of 2021.’

FCA warns consumers of the risks of investments advertising high returns based on cryptoassets

The FCA is aware that some firms are offering investments in cryptoassets, or lending or investments linked to cryptoassets, that promise high returns. Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of product, they should be prepared to lose all their money. 

As with all high-risk, speculative investments, consumers should make sure they understand what they’re investing in, the risks associated with investing, and any regulatory protections that apply.

For cryptoasset-related investments, consumers are unlikely to have access to the Financial Ombudsman Service (FOS) or the Financial Services Compensation Scheme (FSCS) if something goes wrong. Consumers can find out more about which cryptoasset activities the FCA regulates in PS19/22: Guidance on Cryptoassets.

Consumers should be wary if they’re contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true. Visit the FCA’s ScamSmart pages for more information on how consumers should protect themselves from fraud.

Firms offering these products should make sure they comply with all relevant regulatory requirements and are authorised by the FCA where this is required. Since 10 January 2021, all UK cryptoasset firms must be registered with the FCA under regulations to tackle money laundering. Operating without a registration is a criminal offence.

What are the risks?

The FCA’s concerns about high-return investments based on cryptoassets include:

  • Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements. 
  • Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
  • Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market. 
  • Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.  
  • Marketing materials: Firms may overstate the returns of products or understate the risks involved.

Consumers should be aware of the risks and fully consider whether investing in high-return investments based on cryptoassets is appropriate for them. They should check and carefully consider the cryptoasset business involved. 

What to do:

Step 1: Consumers should check if the firm they’re using is on the Financial Services Register or list of firms with Temporary Registration (Note: appearing on the Temporary Registration Register does not mean that the FCA has assessed them as fit and proper, nor that the FCA has determined their application for the purposes of the Money Laundering Regulations).

Step 2: If they’re not, consumers should ask the firm whether they are entitled to carry on business without being registered with the FCA. 

Step 3: If they’re not, the FCA suggests that consumers should withdraw their cryptoassets and/or money. This is because the firm is operating illegally if it has not ceased trading by 9 January 2021.

Visit the FCA’s Cryptoassets pages for more information.

Brexit countdown for UK financial services sector

With one week to go until the end of the Brexit transition period, the FCA is urging financial services companies to ensure they are ready. Customers should also be aware of any changes that may apply to them. Irrespective of the outcome of the negotiations between the UK and the EU on a free trade agreement, firms will need to be prepared for the end of the transition period.

The Brexit transition period ends at 11pm on 31 December 2020. After this point EU law will no longer apply in the UK. For many financial services businesses, this will mean changes to existing systems and services. The FCA expects firms to have ensured they have assessed the impact on them and their customers, and have taken action so they are ready for the end of the transition period.

As part of the FCA’s preparations the FCA will be making changes to the Financial Services Register. This is to take account of the end of passporting for firms and funds and the start of the temporary permissions regime (TPR). To make these changes the register will be unavailable from late evening 31 December to early morning 4 January.  

More information about this can be found on the FCA website.

Nausicaa Delfas, Executive Director for International at the Financial Conduct Authority said:

‘With only a week to go, firms should have taken all the necessary steps to prepare for the end of the transition period.  At the FCA we have been working closely with other agencies in the UK and Europe, as well as with businesses, to ensure customers are protected and markets work well.’

Firm preparation

Passporting will no longer be possible after the end of the transition period. The FCA, working with other UK authorities, has introduced the temporary permissions regime (TPR). The TPR will allow EEA-based firms passporting into the UK to continue operating in the UK within the scope of their current permissions for a limited period, while they seek full FCA authorisation, if required. The deadline for EEA firms to notify the FCA they want to enter the TPR closes on 30 December 2020.

The TPR will enable various EEA funds to continue to be marketed in the UK for a limited period provided the fund manager has notified the FCA before the window for notification closes on 30 December 2020.

In addition, the FCA and other UK authorities have also introduced the financial services contracts regime (FSCR). This will allow EEA passporting firms that do not enter the TPR to wind down their UK business in an orderly fashion.

When passporting ends at the end of the transition period, the extent to which UK firms can continue to provide services to customers in the EEA will be dependant on local law and local regulators’ expectations. The FCA expects UK firms to take the steps available to them to ensure they act consistently with these local laws and expectations. The FCA is clear that firms’ decisions need to be guided by obtaining appropriate outcomes for their customers, wherever they are based.

Firms should also be prepared for any regulatory changes that will come into force. To help firms adapt to some of the new rules the Treasury has given the FCA new powers to make transitional provisions, known as the temporary transitional powers (TTP). Whilst the FCA has applied the TTP on a broad basis, there are some key exceptions where firms will need to comply with the changed requirements from the end of the transition period. Firms should check the implications of these for their business.

Systems and operational changes

The FCA continues to urge firms to be fully prepared for the end of the transition period. Whilst much progress has been made on preparations, the FCA recognises the challenges for firms in making the systems and operational changes required. The FCA intends to take a pragmatic approach to any issues should they arise, where firms can demonstrate that they have taken all reasonable steps to prepare.

The FCA’s focus during this time will be on our strategic objective of ensuring markets function well. The FCA will continue to monitor both primary market and associated secondary market activities closely, including for any misconduct by market participants, throughout this period during which some market volatility could arise.

This monitoring will include order book reporting, suspicious order and transacting reporting, inside information disclosures, price movement monitoring, and reporting on net short positions and the FCA will use its powers to request information and make enquiries where behaviour that may be abusive or creating a disorderly market is identified.

The FCA is calling on issuers to be particularly vigilant in ensuring procedures, systems and controls for the protection and disclosure of inside information are met and on market participants to be aware of the FCA’s significant detective capabilities.

Customers

For UK based customers, the FCA has put in place plans to ensure any possible disruption to UK financial services is minimised at the end of the transition period. Nevertheless, there will be some changes.  Customers should have been contacted by their firms if they will be impacted by any of these changes.

Customers living in the EEA could be affected if they have a UK provider who cannot continue to operate in the EEA in the same way after the transition period ends.  Many UK providers are planning to continue providing services. For example, some UK banks plan to continue providing services to customers resident in the EEA. If a bank is no longer able to provide services in the EEA, the FCA expects they should give customers sufficient notice that it plans to close an account. This will allow customers to look for alternative banking arrangements.

At the end of the transition period there may also be changes impacting travel insurance products that cover travel between the UK and the EEA. Customers who are likely to be impacted by this should visit the FCA website for information, and may want to check the position with their travel insurance provider in advance.

UK customers will still be able to make payments and cash withdrawals in the EEA after 31 December 2020, but these may be more expensive and could take longer. From 1 January 2021, banks and payment services providers will also have to provide additional information when making payments between the UK and the EEA, which includes the name and address of the payer and payee. If this information is not provided there could be disruption to payments. If customers have important payments, particularly direct debits, going out of their account to a European company, they may want to check these are going through as normal from 1 January 2021.

At the end of the transition period there will also be changes to some of the financial protections for customers. UK customers of a UK firm will continue to have the same access as currently to the Financial Ombudsman Service and the FSCS.

However, for UK customers of an EEA firm that’s operating in the UK under the TPR, or under the FSCR, protections may be different. Customers of EEA firms should also be aware that these firms will not have been authorised or otherwise assessed by UK regulatory authorities before entering into these temporary regimes.

Customers who are unsure whether they are covered by the FSCS or the Financial Ombudsman Service, should get in touch with the financial services provider to find out, or find out more about the TPR and FSCR.

Customers are advised to speak to their financial services providers now about any concerns, and to check the FCA’s updated information, available at: fca.org.uk/consumers/how-brexit-could-affect-you. Information can also be obtained from the Money Advice Service.

FCA fines Charles Schwab UK £8.96 million over safeguarding and compliance failures

The Financial Conduct Authority (FCA) has fined Charles Schwab UK Ltd (CSUK) £8.96 million for failing to adequately protect client assets, carrying out a regulated activity without permission and making a false statement to the FCA.

Customers affected by the breaches were all retail customers, who require the greatest level of protection. 

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:

‘Charles Schwab UK failed to get the correct permissions from the FCA; then failed to be open with us and, finally, failed to put in place the necessary safeguards to ensure, if required, there could be an orderly return of client assets. 

‘As we saw with Lehman Brothers and subsequent cases, a lack of client asset protections can easily lead to increased costs to consumers and funds being trapped for long periods of time. 

‘Firms, including newly-established businesses or firms coming into the UK from overseas, are responsible for ensuring they comply with our rules, and are expected to make sure they have the right protections in place.’

The breaches occurred between August 2017 and April 2019, after CSUK changed its business model. Client money was swept across from CSUK to its affiliate Charles Schwab & Co., Inc. (CS&C), a firm based in the United States. 

The client assets, which were subject to UK rules, were held in CS&C’s general pool, which contained both firm and client money and which was held for both UK and non-UK clients. 

CSUK failed to arrange adequate protection for its clients’ assets under UK rules. Specifically, the firm:

  • did not have the right records and accounts to identify its customers’ client assets
  • did not undertake internal or external reconciliations for its customers’ client assets
  • did not have adequate organisational arrangements to safeguard client assets 
  • did not maintain a resolution pack, which would help to ensure a timely return of client assets in an insolvency

CSUK carried out a regulated activity without permission. The firm did not at all times have permission to safeguard and administer custody assets, and failed to notify the FCA of the breach when applying for the correct permission. 

CSUK made a false statement to the FCA. Without making adequate enquiries to check whether this was correct, the firm inaccurately informed the FCA that its auditors had confirmed that it had adequate systems and controls in place to protect client assets. 

The firm took remedial action at various points after discovering the breaches. There was no actual loss of client assets and CSUK stopped holding client assets from 1 January 2020. 

CSUK agreed to settle the case and qualified for a 30% discount. The financial penalty would otherwise have been £12,804,600. 

FCA establishes Temporary Registration Regime for cryptoasset businesses

The Financial Conduct Authority (FCA) has established a Temporary Registration Regime to allow existing cryptoasset firms, who have applied to be registered with the FCA, to continue trading. The FCA is advising customers of cryptoasset firms which should have applied to the FCA, but have not done so, to withdraw their cryptoassets or money before 10 January 2021. 

From 10 January 2020, the FCA became the anti-money laundering and counter terrorist financing (AML/CTF) supervisor for these types of firms, which includes firms that exchange money to and from cryptoassets and those that safeguard their customers’ cryptoassets. From this date, ‘existing cryptoasset businesses’ (ie firms operating immediately before 10 January 2020) have had to comply with the Money Laundering Regulations; such firms were required to be registered with the FCA by 10 January 2021.

New businesses (who began operating after 10 January 2020), are required to obtain full registration with the FCA before conducting business. 

The Temporary Registration Regime is for existing cryptoasset businesses which have applied for registration before 16 December 2020, and whose applications are still being assessed. This is to enable those existing businesses to continue to trade after 9 January 2021 until 9 July 2021, pending the FCA’s determination of their application.  

The FCA was not able to assess and register all firms that have applied for registration, due to the complexity and standard of the applications received, and the pandemic restricting the FCA’s ability to visit firms as planned.

Firms that did not submit an application by 15 December 2020 will not be eligible for the temporary registration regime. They will need to return cryptoassets to customers and stop trading by 10 January 2021. Firms that do not stop trading by that date are at risk of being subject to the FCA’s criminal and civil enforcement powers.

The FCA is advising consumers who deal with cryptoasset firms to:

  1. Check if the firm they use is on the FCA’s Register or list of firms with Temporary Registration
  2. If they are not, check whether they are entitled to carry on business without being registered with the FCA (this may apply if they are registered in a different country). 
  3. If the firm is not entitled to carry on business, then consumers should withdraw their cryptoassets and/or money before 10 January 2021. This is because the firm will be operating illegally if it does not cease trading from 10 January 2021. 

Many cryptoassets are highly speculative and can therefore lose value quickly. The FCA does not have consumer protection powers for the cryptoasset activities of firms. Even if a firm is registered with the FCA, we are not responsible for ensuring cryptoasset businesses protect client assets (ie customers’ money), among other things.  

It is unlikely that you will have access to The Financial Ombudsman or Financial Services Compensation Scheme, irrespective of whether a firm has temporary or full registration.

Notes to editors

  1. Since 10 January 2020, existing businesses (operating before 10 January 2020) carrying on cryptoasset activity in the UK have needed to be compliant with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, as amended and need to be registered with the FCA. 
  2. Find out more information about the FCA.