Previously, the regulator could only suspend a firm or individuals for consumer protection reasons.
The new power is one of several granted to the FSA under the Financial Services Act 2010 which, following a period of consultation which ended in June, will be implemented on 6 August.
Others include the power to impose financial penalties on individuals who have carried out controlled functions without FSA approval, and the power to penalise with a fine those who breach its short-selling rules.
But the new suspension powers have already concerned some stakeholders.
Under the rules, where an authorised person has breached its rules, the FSA can suspend or restrict their activity for no longer than a year.
Similarly, approved persons can also be suspended from performing one or more of their controlled functions for a period not exceeding two years.
At the end of the suspension, however, the person would not need to re-apply for authorisation or approval.
Elsewhere, firms can also be restricted from selling particular products. In this instance, the FSA says firms must ensure consumers do not “suffer any detriment as a result”.
The FSA says its new suspension powers will be an “additional” disciplinary measure at its disposal, but will only be used where it deems suspension would be more effective than banning or imposing a financial penalty.
