Who Is The FCA?

In April 2013, our regulator was restructured and the Financial Conduct Authority, the FCA, came into our lives.

 

As we know, the FCA came about as a result of the perceived “failings” of the previous regulator, the Financial Services Authority (FSA) during the banking crisis and its apparent failure to protect the public. The 2012 Financial Services Act came into being and the FCA was born on 1 April 2013, together with its sibling, the Prudential Regulation Authority (PRA).

 

For clarity, The PRA is responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms. In total the PRA regulates around 1,700 financial firms. It is a division of the Bank of England, and will soon be restructured to become a subcommittee of the Bank and reporting to the Court of the Bank of England.

 

The FCA supervises the retail or sales conduct of some 26,000 financial firms and regulates the prudential standards of around 23,000 of those. Those regulated include General Insurance Intermediaries; Independent Financial Advisers (IFAs), Mortgage Brokers, Secondary Intermediaries (such as Car dealers) and those where insurance is not core to their business.

 

It also regulates all firms who previously held a Consumer Credit licence (approximately 45,000 firms).

 

The FCA is operationally independent of Government, and is accountable to the Treasury and, through that body, to Parliament.

 

The FCA has one main overall statutory objective  (Strategic):

 

   “Protecting and enhancing confidence in the UK Financial Services Market”

 

There will be three statutory sub objectives  (Operational):

 

  1. Securing consumer protection.
  2. Efficiency and choice in the financial sector.
  3. Protect and enhance integrity in the UK financial sector.

 

These are supported by a set of principles of good regulation which the FCA must have regard to when discharging their functions.