What is the Financial Conduct Authority?
14 June 2022
Whether you’re interested in starting a career in finance, have recently completed a financial qualification, or currently work in the financial services industry, you’ve probably heard of the Financial Conduct Authority (FCA). However, as a newcomer to the sector, it’s only natural that you may be unaware of what exactly the FCA is and the role it plays in finance.
In this blog, we explain the importance of the FCA, how much influence it has over modern UK finance and the financial courses you can take, and how it’s controlled by the UK government.
What does the FCA do?
The role of the Financial Conduct Authority is to regulate financial services in the UK and every individual, firm or company that it relates to. In essence, they focus on three key objectives: ensuring the continued standard of the UK financial system, checking that consumers are sufficiently protected and fairly treated, and encouraging fair competition in the financial industry to benefit consumers.
Regulation primarily affects the financial industry for individuals such as independent financial advisers and mortgage advisers, law firms and banks. However, it’s also applicable to other settings. For example, it applies to the retail sector, as a lot of highstreet and online shops now offer consumers the option to pay on store credit and store cards or even take out loans like they would at a bank.
What does FCA authorised mean?
In the UK, any firm that provides financial, banking or investment services, as well as consumer credit companies and those that provide financial qualifications, must be registered and authorised by the FCA. In order to become FCA authorised, a business must first meet the FCA’s required standards. These include completing a number of application steps, including:
Step 1: Preparing your application
This involves gathering all relevant documentation required to submit your application, such as copies of your business accounts and FCA-specific application forms.
Step 2: Completing ‘controller’ forms
Different types of businesses require different authorisation from the FCA – this is decided based on your business’ response to the specific ‘controller’ forms the FCA will ask you to complete. There are different controller forms for self-employed individuals, partnerships, trusts and corporations. If you are unsure which are needed for your business, simply contact the FCA.
Step 3: Submitting your application
Once all forms have been completed and relevant documents collected, it’s time to submit your application to the FCA. Typically, it will take around six months for the FCA to respond to you.
Even once authorised, a business or training provider can be investigated by the FCA if it is suspected that the firm is not meeting the standards required by the regulator. The FCA even has the authority to prevent authorised businesses from trading, prosecute them, and even win compensation for clients if an investigation uncovers certain regulatory breaches.
How many firms does the FCA regulate?
As of June 2022, the Financial Conduct Authority claimed to regulate the conduct of over 51,000 businesses. Alongside these duties, the prudential affairs of businesses are monitored by the Prudential Regulation Authority (PRA), overlooking 49,000 firms.
Often confused with the FCA, the PRA supervises financial businesses to ensure that their products and services are safe for consumers and don’t conflict with the standards outlined in government legislation. The FCA took over from the Office of Fair Trading in 2014 and the PRA replaced the Financial Services Authority in 2013 following the financial crash.
What powers do the FCA have?
Not only is the FCA a regulator for companies that handle and manage finances, but they’re also able to enforce powers over the individuals or companies that breach relevant legislation.
If an individual or company doesn’t comply with the standards set by the FCA, they possess powers to:
issue warnings, alerts and fines
restrict or suspend future activity
seek criminal prosecution in cases of financial crime
apply for restitution orders, insolvency orders, winding up orders and injunctions from relevant courts
publish detailed information when a warning, decision or final note has been made
request that web hosting companies deactivate websites of wrongdoers.
What is an FCA approved course?
Although the FCA does not create or actively accredit any of its own qualifications, they do provide guidance through a list of requirements that financial qualifications must meet in order for it to be recognised by the FCA. This is to say, the FCA approves of qualifications without actually being a qualification provider themselves. With this in mind, qualifications such as the Certificate in Mortgage Advice & Practice (CeMAP) and Diploma for Financial Advisers (DipFA) – both of which can be completed online with the help of Simply Academy – are examples of FCA approved courses.
List of FCA approved courses
There are thousands of FCA approved courses, offered by a range of accredited qualification providers. The best way to check if a course is FCA approved is to first ensure the provider itself is FCA authorised by searching for their name in the Financial Services Register (the Register) for firms and individuals. Next, simply read all available literature the provider can provide about the specific course you are interested in, and talk to a course leader about the status of the qualification.
Simply Academy, for example, is an FCA approved firm (FCA reference number 648205) and offer a range of different FCA approved courses including:
Certificate in Mortgage Advice & Practice (CeMAP®)
Certificate in Equity Release (CeRER®)
Diploma for Financial Advisers (DipFA®)
Who regulates the Financial Conduct Authority?
The purpose and approach of the Financial Conduct Authority is detailed in specific UK legislation. In the Financial Services and Markets Act 2000 (FSMA), the government is able to explain in specific terms what the FCA is, how it functions and all relevant legislation that applies to them.
As the FCA abides by specific rules outlined in UK legislation, they are required to operate in a transparent way and provide detailed information to parliament, law firms and individual consumers when necessary.