What Does the FCA Do?
They make sure that consumers get a fair deal from the financial firms and makes sure that the UK’s financial markets are efficiently regulated. It also makes sure that the behaviour of both retail and financial services firms are in line with the standards that the consumer expects.
FSA v FCA
The FCA was launched on the 1st April 2013 to replace the Financial Services Authority (FSA), which had been the regulating authority throughout the near collapse of the industry in the years before this and had been called out on numberous failings, including the mis-selling of PPI.
Martin Wheatley, who was appointed head of the FCA at the time of the change, promised to address the key errors which had come about under the previous regime and engage much more closely with consumer groups in order to make its decisions with the best interests of the general public in mind.
The three objectives of the FCA were set out in the Financial Services Act of 2012. Those aims are:
- To protect consumers.
- To protect financial markets.
- To promote competition.
It is important to remember that the FCA employs a proportional approach, prioritising their work on the areas and firms that pose a higher risk to the objectives set out in the 2012 Act.
The three main action plans of the FCA are Authorisation, Supervision and Enforcement.
Authorisation allows the FCA to measure how well they believe a firm or a particular individual will meet the expectations of the organisation, and if they run a risk to any of the key policies. If standards are not met, the firm or individual are not allowed to enter the market.
Supervision allows the body to make sure that consumers are the focus of any firm’s business interests. The FCA make judgements about the business model of accompany and makes sure that it is fair to consumers whilst maintaining market integrity and remaining financially sound.
Enforcement occurs when the FCA find poor practice, and they utilise their power to ensure that firms and individuals who do not meet the standards set down do not damage the integrity of the financial markets and the consumer interests and confidence in these markets!