News Details

04 Dec, 2008

Phoenix Firms - be warned, FSA to take action

Phoenixing is the term given to a Company that ceases to trade one day and then a new Company opens up, with similar name and same staff; premises etc. The assets of the former Company are moved to the new body but the liabilites are left behind/

The Financial Services Authority is determined to stop Phoenix Firms operating in the Regulated Sector. The FSA has stated that there are a number of measures that they can take including:

  • Requiring the Directors to sign a personal guarentee to honour the liabilites in relation to any customer claims on their previous business.
  • Encourage Firms to ring fence funds to be held by the departing Firm to meet potential liabilites and also take out "run-off" PI cover.
  • Refuse an application for authorisation of phoenix firms where the directors of the departing companies refuse to make any reasonable arrangements for claims arising from their previous activities.
  • Where customers have been actively disadvantaged then refer individuals to the Enforcement team - It should be noted that any individual that is in a controlled function may be subject to enforcement action even if they are no longer involved in FSA Regulated activities.

The FSA are encouraging "whistle blowing" to identify potential phoenix situations.

Back to News

Contact Compliant Solutions Ltd Now

Please use the Quick Contact Form below to get in touch with us or call 01376 514166


By submitting your data you are happy for us to contact you by phone or email. Tell us if you wish to opt out.