Wolverhampton Wanderers (Wolves) held permissions for offering credit brokering services and were there regulated by the Financial Conduct Authority but have now been stripped of their regulatory status by the regulator.
This is a pro-active move by the regulator as there had been no regulated activity carried out by Wolves and they were therefore squatting on a license they may or may not want to use in the future.
It’s good to see the regulator taking the initiative and removing regulatory status from firms who aren’t using it.
It has a number of benefits for consumers and the regulator:
1. Reducing burden on the regulator
Removing licenses that are sitting dormant frees up the regulators time to focus their attentions on the thousands of firms who are conducting business.
2. Avoiding option to Phoenix regulated firms
Whilst this doesn’t apply to Wolves, a lot of companies have applied for FCA licenses as back ups to try and Phoenix their firms. A Phoenix is when a firm needs to close its doors either due to complaints and claims or due to other liabilities it cannot afford to pay.
Regulated firms report quarterly to the regulator on their activity, assets and liabilities. In the event a firm closes then the assets of the business should remain in the business to be sold by the administrators at fair market value and with the regulators consent.
It is also worth noting that when firms with liabilities go out of business the liability for any mis-sold pension, investments, loans or mortgages stays with the liquidated firm. It is therefore imperative that regulated companies are not able to walk away with the assets to reduce the burden on the Financial Services Compensation Scheme (FSCS).
Sadly, in the past a lot of regulated Financial Advisers have been successful in moving their clients to a new company and then referring their clients to claims management companies to claim against the FSCS for advice they gave!
Removing dormant FCA licenses is a positive step to ensure companies who have made money whilst breaching FCA rules, don’t strip the value out of their failing firms.
If you have dealt with a regulated business and are worried you may have been mis-advised, we offer a no obligation free-consultation .
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The club, which secured a 14th-place finish in last season’s Premier League, is among the most high-profile organisations affected by this campaign, where firms have been losing permissions if they are not actively using them.
Back in 2021, Sheldon Mills of the FCA stated that firms must either ‘use it or lose it’ when it comes to the permissions they hold, emphasising that outdated permissions can lead to consumer confusion.
It might seem surprising that a top-tier football club would hold financial regulatory permissions. However, many Premier League clubs, including giants such as Arsenal and Manchester United, are listed on the FCA’s register as holding permissions for credit broking services.
Other clubs, including Wolves’ local rivals West Bromwich Albion, who currently play in the Championship, act as appointed representatives for outsourced compliance companies that secure partnerships on their behalf.
According to an FCA notice, Wolves held permissions for credit broking but evidently were not utilising these permissions. In April, the FCA warned the club that it would revoke their permissions after returns indicated no regulated business activity was taking place.
Wolves ‘failed to respond to the notice in the manner specified in the directions,’ prompting the regulator to issue a final notice. Once again, ‘the firm failed to take the steps specified in the further notice,’ leading the FCA to cancel the club’s permissions at the end of July.
This notice from the FCA adds to what has been a challenging start to the new football season for Wolves, who suffered a 2-0 defeat in their opening Premier League match against Arsenal on Saturday.
