Who are the FCA?
What is the Financial Conduct Authority?
The Financial Conduct Authority (FCA) is a financial regulatory body in the UK. It took over from the Financial Services Authority (FSA) in 2013.
It regulates the conduct of over 58,000 businesses. Its role is to ensure that the financial markets work well, not just for businesses but for individuals, too. As well as loans, financial markets include everything from pensions and credit cards to investments and ISAs.
The FCAs three objectives are to:
protect financial markets
promote competition (in the interests of consumers)
The FCA sets and enforces rules which consumer credit firms must abide by.
What does FCA registration mean?
Most financial service organisations need to be authorised by the FCA.
Consumer credit firms who carry out regulated financial activities, such as consumer lending, have to apply to the FCA for full or limited permission.
The FCA has a Financial Services Register, which is available for the public to view online. Consumers can search this register to check if a lender is authorised by the FCA or has interim permission to offer consumer credit. You should also be able to see a list of the regulated activities the firm can offer, as well as its contact details and trading name.
Firms who are providing services or products for which they have not been authorised by the FCA, now also appear on this register, with a warning next to their name. As do those firms who are running scams. However, they will only appear on the register in this instance if the FCA have been informed about them. It is not an exhaustive list of unauthorised firms.
What does it mean if a financial service provider is not authorised by the FCA?
If a finance provider which should be authorised by the FCA is not, this means that you may not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if you have any issues with the company.
If you find out that a company has been offering consumer credit without FCA authorisation (or interim permission), report this to the FCA as there is a high chance the firm is acting illegally.
How does the FCA operate?
Although it is accountable to the government, the FCA is an independent public body, funded by the firms it regulates.
It works with a number of different stakeholders, including consumer groups, EU legislators and trade associations, to ensure the UK’s financial markets work well.
The FCA can bring in new regulations to this end. For example, in 2015, the FCA introduced new price cap rules for the high-cost short-term credit sector
What will happened if the FCA discovers that a company is not compliant?
If companies do not abide by the rules, the FCA has the power to order that a lender pay compensation to its customers.
The FCA is also able to remove a firm’s permissions in some circumstances.
Compensation claims via the Financial Conduct Authority
In recent years, there have been a number of instances where financial service firms have been ordered to pay compensation to their customers.
One of the more recent cases involved credit card lender, Vanquis. The FCA found that Vanquis had failed to disclose the full price of an add-on product to its customers. Vanquis was fined £1,976,000 and had to repay around £169 million in compensation.
Consumers who are not happy with a firm or the financial product they have received from that company, should first make a complaint to the finance provider itself.
FCA regulated firms must respond to you within 8 weeks. If you are not satisfied with the response you receive or you do not hear back within the 8 week timeframe, you can get in touch with the Financial Ombudsman Service. This service is there to settle disputes between consumers and financial services companies.