FCA definition

What is the Financial Conduct Authority?

The Financial Conduct Authority (FCA) is the organisation responsible for the regulation and oversight of the financial markets and financial service firms in the UK. The FCA protects consumers, keeps the financial services industry stable and promotes healthy competition between different firms within the sector.

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What does the FCA do?

The FCA regulates the conduct and operations of more than 59,000 businesses in the UK. It is also a prudential regulator to over 18,000 of those businesses, which means it ensures these firms:

  • Have sufficient capital
  • Conduct business in a way that ensures consumers’ interests are upheld
  • Take steps to control risk
  • Ensure their practices do not pose a threat to the stability of the UK financial system

What powers does the FCA have in the UK?

One of the most significant powers of the FCA is the ability to impose fines on individuals and businesses who are in breach of regulations. For example, in 2019 the FCA handed out £392,303,087 worth of fines.

Of this number, £45,500,000 was a fine issued to the Bank of Scotland for failing to be open and cooperative in the retail banking sector, and £23,875,000 was to the Prudential Assurance Company, for unfair treatment of customers in the pensions sector.

The FCA often makes public statements about any fines or penalties it imposes and the reasons for these fines, so that the public is aware of any possible illegal or negligent activity by individual firms or companies. These statements can serve as a possible deterrent for other firms.

The FCA can also investigate and, in some cases, bring forward criminal prosecution against individuals or firms that are found to be in breach of financial regulations. Examples of a breach could be insider trading, misleading customers, unfair treatment of customers, or failing to be open and cooperative in the retail banking sector.

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