A guide to the Financial Conduct Authority UK

What is the FCA? And what does FCA stand for?

Established in April 2013, the Financial Conduct Authority (FCA) is an independent public body that regulates the actions of businesses and individuals in the UK’s financial services industry. It offers protection to customers in the UK by ensuring products and services provide a fair deal while remaining competitive.

What does the FCA do?

The FCA sets standards for businesses that allows them to carry out regulated financial activities.

Examples of regulated financial activities include:

• Accepting deposits into savings and current accounts.
• Dealing with and managing investments.
• Issuing any form of electronic money.
• Offering a form of credit, such as mortgages, credit cards and personal loans.
• Giving financial advice on regulated mortgages and investments.

Any business that fails to meet its standards could be investigated by the FCA and potentially penalised. This can include being fined, prosecuted, banned from conducting regulated activities and/or having to pay compensation.

Should a regulated firm or individual go bust and be unable to pay compensation, the Financial Services Compensation Scheme (FSCS) may step in to protect consumers, up to certain limits. While this scheme was set up by the Government, it’s still overseen by the FCA.

You can find out more about the FSCS here: FSCS explained: Are my UK savings safe?

What does the FCA aim to protect against?

The FCA works to safeguard consumers from harm caused by misconduct or bad practices. This can include:

• Firms selling unsuitable products or restricting a consumer’s access to products or services.
• Giving bad financial advice.
• Discrimination and bullying, including the mistreatment of vulnerable consumers.
• Losing a consumer’s assets or funds.
• Whether a financial service provides a fair deal for consumers. This may include the price, suitability of a product for the consumer as well as the quality of customer service being offered.
• Failing to provide support against financial scams.

How does Consumer Duty protect customers?

Consumer Duty was introduced by the FCA on 31 July 2023 to cover all open financial products and services. As of 31 July 2024, the Duty was extended to additionally cover closed products which are no longer available to new customers but may still be held by some consumers.

The purpose of the Duty is to further protect consumers by asking firms to evaluate whether their products offer a fair deal.

This includes providing accessible customer support and presenting financial information that is clear and easy to understand, as well as whether the product or service itself provides good value. Businesses also need to consider how they engage with consumers who may be vulnerable or struggling financially.

As part of the Duty, firms or individuals must act if data suggests customers are suffering poor outcomes from a particular product or service.

Who has to comply with the FCA?

The majority of financial businesses in the UK are regulated by the FCA, including:

• Banks
• Building societies
• Mortgage brokers
• Lenders
• Investment management firms
• Pension providers
• Financial advisers

After successfully registering with the FCA, a business must follow the authority’s regulations outlined in the FCA handbook. These firms are closely monitored to ensure standards are being upheld.

How do I check if a company is FCA regulated?

All firms that are regulated by the FCA are listed on the Financial Services Register. This public record allows consumers to search for a firm or individual’s contact information, and what activities they’re permitted to carry out.

You can also use the register to view details about clone firms. These are unauthorised businesses that falsely claim to be a regulated firm. What’s more, the FCA’s ScamSmart campaign helps alert people to potential scams – both from clone firms and organisations pretending to be part of the FCA itself.

Exemptions from authorisation

In certain circumstances, firms can carry out regulated activities without needing FCA authorisation.

Solicitors and accountants, for instance, may not require authorisation from the FCA, as well as public authorities such as county and district councils. However, keep in mind other regulations apply.

Businesses offering payment by instalments can also sometimes be exempt, although this relies on a credit agreement for a specific service and the amount being repayable in no more than 12 instalments. Furthermore, it must not be a conditional sale, to buy land or contain additional charges or interest.

What services are classed as unregulated financial services?

As a consumer, you may come across certain financial products and services that are not regulated by the FCA. This doesn’t necessarily mean businesses providing these services are illegitimate; it may simply mean the service itself falls outside of the FCA’s remit and, as a result, companies are not required to be authorised in this circumstance.

In some cases, a company can undertake both regulated and unregulated activities, meaning there are times when you could use an unregulated financial service from an authorised firm. It’s therefore important to understand what kinds of services are classed as unregulated by the FCA.

Examples of unregulated financial activities may include:

• The majority of buy-to-let mortgages – This is because most of these products are considered business transactions, and are therefore not covered by the FCA’s consumer regulations.
• Buy now, pay later services (BNPL) – Currently, the FCA doesn’t regulate BNPL services though it’s finalising legislation to begin doing so. These services allow you to defer payment or spread the cost of a purchase in instalments over time. However, keep in mind some buy now, pay later firms offer other services that are regulated by the FCA.
• Unregulated investment products – These include investments in gold, diamonds and cryptocurrency. Cryptocurrency in particular is an area that’s still developing, and the FCA is currently working with the Government to supervise businesses in this field.
• Commercial activities – A commercial customer in this case refers to businesses such as restaurants, retail establishments, hotels etc. Again, these wouldn’t be subject to the FCA’s consumer rules. However, there can be exceptions. For example, while a firm offering credit to another business may be unregulated, lending to a sole trader, a partnership with fewer than four partners or an unincorporated association will usually require FCA authorisation.

Does the FCA deal with complaints?

It’s important to note the FCA does not investigate complaints made about the firms under its supervision. If you’re unhappy with the services being provided to you as a consumer, you’ll need to make a complaint to the firm directly.

If you’re not satisfied with the firm’s decision, you can also contact the Financial Ombudsman Service. It’s a free, independent service that works to resolve complaints between financial services firms and consumers. However, you must contact the Ombudsman within six months of receiving a final response from the firm.

That being said, the FCA will deal with complaints about itself (and other regulators such as the Prudential Regulation Authority (PRA) or the Bank of England), but it won’t consider complaints about its rules or guidance.