The FCA has updated its trading names guidance web page, outlining the appropriate use of trading names, explaining what a firm should and should not do, and reminding firms that they can register a trading name that is different from its Company name. The web page contains guidance in relation to regulatory breaches, FCA action, and consumer harm.
The FCA encourages firms to review this and take necessary action to ensure they are continuing to act in compliance with its rules.
One of the links on the updated web page is to the FCA guidance on ‘sensitive business names’, which should also be read in conjunction with the information about trading names.
In its most recent Regulatory Round-Up e-mail, the FCA set out its concerns that some firms are misusing trading names. Recently the FCA has seen examples of firms registering trading names in the wrong circumstances and/or using them in a way that may mislead consumers.
Examples of the misuse the FCA has seen include:
- Firms adopting and registering trading names of unauthorised persons to circumvent the Appointed Representative regime (registering a trading name has no legal effect and isn’t an alternative to being appointed as an Appointed Representative); and
- Registering a trading name that may be misleading for consumers.
A trading name could mislead if it suggests that:
- The firm is carrying out regulated activities which it doesn’t have permission for;
- That consumers can access the Financial Ombudsman Service or Financial Services Compensation Scheme when they cannot; and
- The firm is or is associated with, another unconnected firm.
Where the FCA has identified firms that appear to be misusing trading names, it has intervened. This included removing trading names from the Financial Services Register and, in a more serious case, also requiring an authorised firm to cease conducting its regulated activities without the FCA’s prior written consent.
The FCA will be increasing its focus in this area and will intervene with firms where it identifies misuse of trading names.