What Is the FCA?
The Financial Conduct Authority is an independent public body that regulates the conduct of financial services firms and financial markets in the UK. It was established on 1 April 2013, replacing the Financial Services Authority (FSA), which was abolished following the 2008 financial crisis and subsequent reviews that found weaknesses in the existing regulatory structure. The FCA is funded by fees from the firms it regulates and is accountable to HM Treasury and Parliament, but operationally independent of government.
The FCA's regulatory scope is broad. It conducts supervisory oversight of retail and wholesale financial services firms, authorises firms to carry on regulated activities, sets rules for how firms must treat customers and conduct their business, investigates potential breaches of its rules, and takes enforcement action. It also has competition powers under the Financial Services and Markets Act 2000 (FSMA) and is a concurrent competition authority alongside the Competition and Markets Authority (CMA) in financial services markets.
The FCA works alongside the Prudential Regulation Authority (PRA), a subsidiary of the Bank of England. While the FCA regulates conduct, the PRA regulates the prudential soundness of banks, building societies, credit unions, insurers, and major investment firms. Many large UK financial institutions are dual-regulated, subject to both the FCA's conduct requirements and the PRA's prudential requirements.
FCA Mandate and Regulatory Objectives
The FCA has one strategic objective and three operational objectives set by FSMA. Its strategic objective is to ensure that relevant markets function well. Its three operational objectives are: protecting consumers (ensuring appropriate consumer protection), protecting and enhancing the integrity of the UK financial system, and promoting effective competition in the interests of consumers.
The FCA applies a risk-based approach to supervision. It categorises firms by their potential impact on consumers and markets, and allocates supervisory resources accordingly. The largest and most systemically important firms receive close, ongoing supervision. Smaller firms are typically subject to reactive supervision, where the FCA monitors for signals of problems and intervenes when risks are identified.
The FCA also has a consumer duty, introduced in July 2023, which sets higher standards of consumer protection across financial services. The Consumer Duty requires firms to act to deliver good outcomes for retail customers, embedding a substantive outcomes standard (rather than just a process standard) into their products, services, customer communications, and customer support.
Authorisation and the FCA Financial Services Register
Most financial activities carried out in the UK require FCA authorisation under FSMA. Regulated activities include accepting deposits, issuing electronic money, effecting insurance contracts, dealing in investments as principal or agent, arranging deals in investments, managing investments, providing investment advice, and operating a collective investment scheme, among others.
The FCA Financial Services Register is the public record of firms and individuals that are, or have been, regulated by the FCA. It is searchable at register.fca.org.uk and allows anyone to check whether a firm is authorised, what permissions it holds, any requirements or restrictions on its authorisation, and whether it has faced enforcement action. The Register also includes appointed representatives, which are firms or individuals who conduct regulated activities on behalf of a directly authorised firm.
The FCA maintains a Warning List of firms and individuals that may be operating in the UK without authorisation or running scams. Before dealing with any UK financial services firm, investors should check both the Financial Services Register and the Warning List. Dealing with unauthorised firms means you lose access to the Financial Ombudsman Service and the Financial Services Compensation Scheme.
Enforcement Powers and Consumer Redress
The FCA has extensive enforcement powers. It can impose unlimited financial penalties on authorised firms and individuals, withdraw or vary a firm's authorisation, publicly censure firms or individuals, apply to court for injunctions and restitution orders, and in serious cases bring criminal prosecutions for insider dealing and market abuse under the Criminal Justice Act 1993 and FSMA.
When a regulated firm has treated a customer unfairly, the primary redress route is through the firm's own internal complaints procedure. FCA rules require that firms acknowledge complaints promptly and provide a final response within 8 weeks. If the firm's response is unsatisfactory or it fails to respond within 8 weeks, customers can escalate to the Financial Ombudsman Service (FOS), a free and independent service that can award compensation of up to £430,000 per complaint.
If a regulated firm fails and is unable to pay claims against it, the Financial Services Compensation Scheme (FSCS) provides a safety net. FSCS covers eligible deposits up to £85,000 per person per institution, investments held by failed investment firms up to £85,000, and insurance policies up to 90% of the claim (with some exceptions). FSCS protection is available only for claims against firms that were FCA-authorised at the time of the failure.
FCA and Cryptoasset Regulation
The FCA's role in regulating cryptoassets has expanded substantially since 2020. Under the Money Laundering Regulations, crypto asset businesses operating in the UK must register with the FCA for AML and CFT supervision. This requirement applies to crypto exchanges, peer-to-peer exchange providers, initial coin offering platforms, and custodian wallet providers.
From 8 October 2023, the FCA extended financial promotion rules to cryptoassets, requiring that marketing of cryptoassets to UK consumers is fair, clear, and not misleading, and introducing a cooling-off period for first-time investors. Firms that market crypto to UK consumers without FCA approval are breaking the law, even if they are based overseas.
The Financial Services and Markets Act 2023 provided powers for the FCA to regulate cryptoasset activities more comprehensively. The FCA is developing rules for crypto exchanges, stablecoin issuers, and custody providers, with a full regulatory regime expected to come into force in stages. Investors should check the FCA's register to confirm whether a crypto firm is registered, and note that cryptoassets are generally not covered by FSCS protection.
Frequently Asked Questions
What does the FCA regulate in the UK?
The FCA regulates the conduct of over 50,000 financial services firms operating in the UK, including retail banks, investment firms, stockbrokers, fund managers, insurance intermediaries, consumer credit providers, and financial advisers. The FCA also has competition powers in financial services markets. Prudential regulation of systemically important banks and insurers is shared with the Prudential Regulation Authority (PRA), a subsidiary of the Bank of England.
How do I check if a UK firm is FCA-authorised?
You can check the FCA Financial Services Register at register.fca.org.uk. The Register shows whether a firm is authorised, what activities it is permitted to conduct, and any restrictions or requirements on its authorisation. Be aware that the Register only covers firms authorised to conduct regulated activities in the UK. Some firms providing services to UK consumers may do so under an overseas exemption or may be unauthorised. The FCA publishes a Warning List of firms known to be operating without authorisation.
How do I make a complaint about an FCA-regulated firm?
You must first complain directly to the firm. FCA-regulated firms are required to have an internal complaints procedure and must provide a final response within 8 weeks. If the firm does not resolve your complaint satisfactorily, you can refer the complaint to the Financial Ombudsman Service (FOS) free of charge. The FOS can award compensation of up to £430,000 per complaint. If a firm has failed and cannot pay, the Financial Services Compensation Scheme (FSCS) may be able to pay compensation up to the relevant limit.
Does the FCA regulate crypto in the UK?
The FCA has a partial and evolving role in UK crypto regulation. Since January 2020, crypto asset businesses operating in the UK are required to register with the FCA under the Money Laundering Regulations. From October 2023, the FCA extended financial promotion rules to cryptoassets, requiring compliant marketing to UK consumers. Under the Financial Services and Markets Act 2023, the FCA is developing a broader regulatory regime for cryptoassets covering exchanges, stablecoin issuers, and custody providers. Investors should check the FCA register to confirm whether a crypto firm is properly registered.
References
- FCA: Official Website: Home of FCA policy statements, consultation papers, rules, guidance, press releases, and the Warning List of unauthorised firms.
- FCA: Financial Services Register: The public register of FCA-authorised firms and individuals, their permitted activities, requirements, and enforcement history. Essential for verifying UK financial firm credentials before investing.