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What is FCA (Financial Conduct Authority)?

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What is the FCA?

Financial Conduct Authority FCA

Simply put, the Financial Conduct Authority (FCA) is an independent, non-governmental body that is responsible for regulating the UK’s financial services industry. Read on for further information on ‘what is the FCA’, to discover what they do, and how they impact financial institutions.

The Financial Conduct Authority (FCA) was established in 2013 following the Financial Services Act (2012) and replaced the Financial Services Authority (FSA). The FCA was introduced with a new regulatory framework and a mandate to maintain both the stability of the UK’s financial markets and the safe conduct of its financial services firms.

The structure of the FCA’s regulatory authority takes in the Bank of England’s Prudential Regulatory Authority (another FSA successor), and the Financial Policy Committee. The FCA is responsible for the conduct of around 58,000 businesses which employ 2.2 million people and contribute around £65.6 billion in annual tax revenue to the UK economy.

What Does the FCA Do?

The FCA has wide-reaching powers which it uses to pursue three operational objectives:

  • To secure an appropriate degree of protection for consumers
  • To enhance market integrity and protect the UK financial system
  • To promote competition in the interests of consumers

It has the power to introduce and enforce the rules which govern the UK’s financial services industry – and it may investigate both organisations and individuals suspected of violating them. The FCA’s authority broadly involves:

Financial Conduct Authority Supervision

The FCA sets out the minimum standards which financial services products – such as pensions, credit cards, ISAs, and investments – must meet to enter the markets, and it may force firms to withdraw or change those products which fall short. Ultimately, the FCA has the authority to ban financial products for up to a year – and decide whether to impose an indefinite ban following that period.

FCA Regulations

The FCA performs a supervisory role with banks and other payments institutions, ensuring that they treat their customers fairly, operate safely, and do not behave in a way which stifles competition or creates unacceptable risks for the UK economy. Money laundering is a particular focus of the FCA: banks and other financial firms must adhere to specific AML compliance regulations, including monitoring suspicious activity, performing risk assessments, and appointing reporting officers.

Financial Conduct Authority Authorisation

All UK financial service providers, investment firms, and consumer credit firms must be registered and authorised by the FCA. The application process can take from between 6 to 12 months and involves a fee. Firms must demonstrate that they meet regulatory standards and will work with the FCA in an open and proactive manner.

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Originally published September 20, 2018, updated August 18, 2022

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

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