Financial Conduct Authority (FCA)

A Consumer Council guide to:
•The Financial Conduct Authority (FCA); and
•The Prudential Regulation Authority
On April 1st 2013 the Financial Services
Authority was split into two separate
regulatory authorities:
• Financial Conduct Authority (FCA)
• Prudential Regulation Authority
The Financial Conduct Authority (FCA) regulates the
financial services industry in the UK such as: banks,
building societies, credit unions and financial advisers.
They are accountable to the Treasury and, through
them, to Parliament. They are operationally independent
of Government and funded entirely by the firms which
they regulate.
The Financial Conduct Authority’s aim is to:
• Protect consumers
• Ensure the financial services industry remains stable and
promote healthy competition between financial services
They have rule-making, investigative and enforcement powers
and ensure that they are fair and principled in their approach to
The Financial Conduct Authority supervise the conduct
of 26,000 financial firms and regulate the prudential
standards of 23,000 of those.
FCA promote healthy competition between financial
service firms, help them keep to the rules and maintain
high conduct standards. The FCA intervenes when a
firm treats consumers unfairly and behaves in ways
that risk the integrity of the market.
The FCA regulate the financial services industry to ensure
firms stick to the rules and consumers don't fall victim to scams
or get tied to unfair contracts.
They ensure firms:
• Take appropriate steps to protect themselves against
• Can detect and prevent money laundering
• Understand that FCA will take action against them if they
use corrupt or unethical methods.
The Financial Conduct Authority ensures the financial
services industry treats consumers fairly and keeps to their
rules and standards.
• Regulate financial service providers to ensure they
offer consumers the most appropriate products for their
personal circumstances
• Set standards for financial advisers so they give
unbiased advice on a broad range of products
• Expect firms to train their staff well so that they explain
products knowledgeably and behave ethically.
The FCA make sure:
• Firms put consumers at the heart of their
• Markets work well; and
• Know there are real and meaningful
consequences for those firms and
individuals who don’t play by the rules.
The Financial Conduct Authority want
consumers to have access to financial
services products that meet their needs,
from firms they can trust.
Their overall aim is that markets and
financial systems are sound, stable and
resilient, with clear pricing information
that consumers can understand.
1.The FSA has now been separated into two
regulatory authorities. What are they?
2. Who are the Financial Conduct Authority
accountable to?
3. What is the aim of the FCA?
4. Who do the FCA protect?
5. How are they funded?
The Prudential Regulation
On 1st April 2013 the Prudential Regulation Authority (PRA) became
responsible for the regulation and supervision of banks, building societies,
credit union, insurers and major investment firms.
The PRA was created by the Financial Services Act (2012) and is part of
the Bank of England.
The PRA work alongside the Financial Conduct Authority creating a “twin
peaks” regulatory structure in the UK.
In total the Prudential Regulation Authority regulates around 1,700
financial firms.
Prudential regulation is the regulation of
deposit-taking institutions and supervision
of the conduct of these institutions, with
the aim of limiting their risk taking.
Categories of prudentially regulated firms:
• Deposit-takers
• Insurers (life)
• Insurers (general)
• Managing agents at Lloyds
• The society of Lloyds
• Firms dealing as principal
Prudential Regulation Authority (PRA) raise
fees from the firms they regulate, in order to
allow them to fulfil their statutory objectives.
Firms that could cause the greatest harm to the
stability of the UK financial system are the main
contributors to the PRA’s funding needs.
1. What does PRA stand for?
2. What institution is the PRA part of?
3. How many firms do the PRA regulate?
4. How are the Prudential Regulation Authority

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