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Financial Conduct Authority (FCA): The UK's Financial Regulator

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Updated August 31, 2022

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What Is the Financial Conduct Authority (FCA)?

As the regulator of the financial services industry in the United Kingdom, the Financial Conduct Authority (FCA) is responsible for the functioning of the U.K.'s financial markets. The goal of the organization is to ensure honest and fair markets for individuals, businesses, and the economy as a whole. The Authority does this by protecting consumers, protecting the financial markets, and promoting competition. The FCA is an independent financial regulator and falls under the purview of the Treasury, which is responsible for the UK's financial system, and the Parliament.

Key Takeaways:

The Financial Conduct Authority (FCA) is responsible for the functioning of the U.K. financial markets.
The FCA aims to ensure honest and fair markets by protecting consumers, protecting the financial markets, and promoting competition.
The FCA is a public body under the purview of the U.K.'s Treasury and Parliament.
The FCA charges fees to the firms that it regulates.

Understanding the Financial Conduct Authority (FCA)

The Financial Conduct Authority (FCA) has three operational objectives in support of its strategic goal—to protect consumers, to protect and enhance the integrity of the U.K. financial system, and to promote healthy competition between financial services providers in the interests of consumers.

The FCA was established on April 1, 2013, and assumed the responsibility for the conduct and relevant prudential regulation from the Financial Services Authority (FSA). The FCA’s statutory objectives were set up under the Financial Services and Markets Act 2000 and amended by the Financial Services Act 2012. The Act of 2012 made major changes to the way financial services firms are regulated in the United Kingdom, and it was introduced to ensure that the financial sector manages and contains risks more effectively following the financial crisis of 2008 to 2009.

FCA Powers

The FCA has sweeping powers to enforce its mandate, including rule-making and investigative and enforcement powers. The FCA also has the power to raise fees, which is necessary since it is an independent body and does not receive any government funding. The FCA, therefore, charges fees to authorized firms that carry out activities regulated by the FCA and other bodies such as recognized investment exchanges.

The Functions of the FCA

According to the FCA's website, the authority regulates the conduct of around 50,000 businesses, supervises 48,000 firms, and sets specific standards for around 18,000 firms. The goal is to ensure honest and fair markets for individuals, businesses of all sizes, and the economy as a whole. The Authority does this by protecting consumers, protecting the financial markets, and promoting competition. The FCA is controlled by the U.K.'s Treasury and Parliament.

Financing the FCA

The FCA is an independent public body that charges fees to the firms it regulates. Periodic fees charged to firms provide most of the funding required by the FCA to carry out its statutory duties. These fees are based on factors such as the type of regulated activities undertaken by a firm, the scale of those activities, and the regulatory costs incurred by the FCA.

Does My Business in the UK Need to Be FCA Authorized?

Firms and individuals providing regulated financial services and offering credit to consumers in the UK must be authorized by the FCA, as established under the Financial Services and Markets Act 2000. If you carry out specified activities relating to specified instruments without appropriate authorization you may be committing a criminal offense under the FSMA.

Who Is the Chair of the Financial Conduct Authority?

Ashley Alder is the Chair of the FCA Board since February 2023. He was previously the CEO of the Securities and Futures Commission (SFC) in Hong Kong and Chair of the Board of the International Organization of Securities Commissions (IOSCO).

What Is the FCA's Warning List?

The FCA's warning list shows the firms that are suspected to be unauthorized and working without the FCA's permission. Consumers can search for unauthorized firms from the FCA's website.

The Bottom Line

The Financial Conduct Authority (FCA) regulates the financial services industry in the UK. Its role includes protecting consumers, keeping the industry stable, and promoting healthy competition between financial service providers. The FCA's role is defined by the Financial Services and Markets Act 2000 and it's accountable to the UK's Treasury and Parliament

The FCA is an independent public body funded entirely by the fees paid by regulated firms.

The FCA uses criminal, civil, and regulatory enforcement powers to protect consumers and act against firms and individuals that are not authorized.

Article Sources

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Financial Conduct Authority. "About the FCA."
Legislation.gov.uk. "Financial Services Act 2012."
Gov.uk. "Apply for Financial Conduct Authority (FCA) authorisation."
Financial Conduct Authority. "FCA Board."

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