The Financial Conduct Authority (FCA) is a regulatory body in the United Kingdom that oversees and regulates the financial services industry. It operates independently of the UK government and is funded by the fees and levies imposed on the firms it regulates, covering around 50,000 different banks, payment and investing services.
The FCA's primary objective is to ensure that the financial markets are fair, transparent, and effective. It aims to protect consumers, enhance market integrity, and promote healthy competition in the financial industry. The FCA regulates various sectors, including banking, insurance, pensions, mortgage providers, and investment firms.
Its role includes protecting consumers, keeping the industry stable, and promoting healthy competition between financial service providers. It is an independent body directly funded by the firms it regulates. Where required, it has the power to remove a firm's authorisation to operate, prohibit specific individuals from conducting regulated activities and issue fines where there has been a rule infringement.
The key responsibilities of the FCA include:
- Regulation and Supervision: The FCA sets and enforces rules and standards for financial firms operating in the UK. It grants licenses to firms, monitors their activities, and takes action against those that fail to meet the required standards.
- Consumer Protection: The FCA works to protect consumers by ensuring that financial products and services are marketed and sold honestly and fairly. It promotes competition to benefit consumers and tackles misconduct and unfair practices in the industry.
- Market Integrity: The FCA seeks to maintain the integrity of the financial markets by monitoring market abuse, insider trading, and other fraudulent activities. It enforces regulations to prevent market manipulation and promotes transparency and fairness in trading.
- Policy and Regulation Development: The FCA contributes to the development of financial policies and regulations in the UK. It engages with industry stakeholders, conducts research, and provides guidance to firms and consumers on regulatory matters.
- Financial Crime Prevention: The FCA plays a role in combating financial crime, including money laundering and terrorist financing. It sets anti-money laundering and counter-terrorism financing regulations and works with other law enforcement agencies to detect and prevent financial crimes.
The FCA works alongside other regulatory bodies in the UK, such as the Prudential Regulation Authority (PRA), which is responsible for the prudential supervision of banks, building societies, credit unions, insurers, and major investment firms.