Financial Conduct Authority

The Financial Conduct Authority (FCA) is a financial regulatory body in the United Kingdom, but operates independently of the UK Government, and is financed by charging fees to members of the financial services industry.[3] The FCA regulates financial firms providing services to consumers and maintains the integrity of the financial markets in the United Kingdom.[4]

It focuses on the regulation of conduct by both retail and wholesale financial services firms.[5] Like its predecessor the FSA, the FCA is structured as a company limited by guarantee.

The structure of the FCA's regulatory authority takes in the Bank of England's Prudential Regulatory Authority (another FSA successor), and the Financial Policy Committee. The FCA is responsible for the conduct of around 58,000 businesses which employ 2.2 million people and contribute around £65.6 billion in annual tax revenue to the UK economy.[4]

Financial Conduct Authority
Financial Conduct Authority
Agency overview
Formed1 April 2013
Preceding agency
JurisdictionUnited Kingdom
Headquarters12 Endeavour Square
London
Annual budget£600.3m (2017/2018)[1]
Agency executives
Websitewww.fca.org.uk

History

On 19 December 2012, the Financial Services Act 2012 received royal assent, and it came into force on 1 April 2013.[6] The Act created a new regulatory framework for financial services and abolished the Financial Services Authority.[6]

Specifically, the Act gave the Bank of England responsibility for financial stability, bringing together macro and micro prudential regulation, created a new regulatory structure consisting of the Bank of England's Financial Policy Committee, the Prudential Regulation Authority and the Financial Conduct Authority.[6]

Powers

The authority has significant powers, including the power to regulate conduct related to the marketing of financial products. It is able to specify minimum standards and to place requirements on products.[7] It has the power to investigate organisations and individuals.[8]

In addition, the FCA is able to ban financial products for up to a year while considering an indefinite ban; it will havethe power to instruct firms to immediately retract or modify promotions which it finds to be misleading and to publish such decisions.[7]

Further, the FCA is able to freeze assets of individuals or organisations under investigation before they are found guilty. [9]

Asset freezing renders the defendant (who may in fact be innocent) helpless as they will be unable fund a significant defence to protect themselves, [10] breaking the traditional "innocent until proven guilty" rule (presumption of innocence).

The authority has been responsible for regulating the consumer credit industry since 1 April 2014, taking over the role from the Office of Fair Trading.[11]

Payment Systems Regulator

In April 2015, the FCA created a separate body, the Payment Systems Regulator (PSR), in accordance with section 40 of the Financial Services (Banking Reform) Act 2013.[12] The PSR's role is "to promote competition and innovation in payment systems, and ensure they work in the interests of the organisations and people that use them".[13]

On 20 June 2017, the PSR announced its final decision regarding reforms to the infrastructure of the payment systems in the United Kingdom in order to encourage “better and more innovative services for customers”.[14] The regulator's review from December 2016 found that the central infrastructure for the main retail payment systems in the United Kingdom – Bacs, Faster Payments (FPS) and LINK – do not offer effective competition. Two main changes are required:

  • To undertake a competitive procurement process for future central infrastructure contracts. With this, the PSR hopes to ensure fair, open and transparent procurement of the central payment systems infrastructure and enable new technology providers to enter the market.
  • To adopt a common international messaging standard (ISO 20022) for Bacs and Faster Payments. This change aims to lower barriers and encourage new entrants to the market.

Sectors and firms

Banks

The Financial Services Act of 2012 set out a new system for regulating financial services in order to protect and improve the UK's economy.[15]

The FCA will supervise banks to:

  • Ensure they treat customers fairly
  • Encourage innovation and healthy competition
  • Help the FCA to identify potential risks early so they can take action to reduce the risks

Mutual societies

There are more than 10,000 mutual societies in the United Kingdom. The FCA are responsible for:[16]

  • Registering new mutual societies
  • Keeping public records
  • Receiving annual returns

Financial advisers

Rules came into force in 2012 for Independent Financial Advisers (IFAs) following the Retail Distribution Review (RDR) rules.[17] To be classed as an IFA, businesses need to:

  • Offer a broad range of retail investment products
  • Give consumers unbiased and unrestricted advice based on comprehensive and fair market analysis

Leaders

In February 2011, it was confirmed that the new head of the FCA would be Martin Wheatley, formerly chairman of Hong Kong's Securities and Futures Commission.[7][18][19][20] Wheatley's appointment, however, was not approved by the Treasury Select Committee. "The Government did not accept the case for a pre-appointment hearing with the Chief Executive, on the grounds of supposed market sensitivity." [21] In July 2015, Wheatley resigned his post at the FCA following a vote of no confidence by George Osborne.[22] In September 2015, Tracy McDermott took over from Wheatley as acting FCA chief.[23]

Current FCA chief Andrew Bailey was appointed chief executive on 26 January 2016.[24] In June 2012, it was confirmed that John Griffith-Jones would become the non-executive chair of the FCA once the FSA ceases operations in 2013.[20][25][26] Griffith-Jones joined the FSA board in September 2012 as a non-executive director and deputy chair.[25][26]

Griffith-Jones retired from KPMG, where he was chairman of the division in the United Kingdom, in August 2012.[25][26] In December 2013, it was announced that head of asset management supervision Ed Harley had left the regulator to take up a role at Goldman Sachs Asset Management.[27]

Criticism

In June 2013, the Financial Conduct Authority was criticised by the Parliamentary Commission for Banking Standards, in their report "Changing Banking for Good", which stated:

The interest rate swap scandal has cost small businesses dear. Many had no concept of the instrument they were being pressured to buy. This applies to embedded swaps as much as standalone products. The response by the FSA and FCA has been inadequate. If, as they claim, the regulators do not have the power to deal with these abuses, then it is for the Government and Parliament to ensure that the regulators have the powers they need to enable restitution to be made for this egregious mis-selling.

— "Changing banking for good: Report of the Parliamentary Commission on Banking Standards", House of Lords, House of Commons[28]

The FCA was rebuked by the Treasury Select Committee for lack of concern over the increase in mortgage interest rates of the Bank of Ireland's subsidiary of the United Kingdom.[29][30]

There have been calls for the resignation of chairman John Griffith-Jones because of his responsibility for auditing HBOS as chairman of KPMG at the time of the financial crisis of 2007–08.[31] There has also been criticism of chief executive Martin Wheatley because of his responsibility for the minibond fiasco in Hong Kong. There were not the customary pre-appointment hearings for either John Griffith-Jones or Martin Wheatley, so that people could not disapprove of these appointments by submitting evidence to these hearings.

On 10 December 2014, the FCA released a report from Simon Davis from Clifford Chance LLP inquiring into the events of 27/28 March 2014 relating to the press briefing of information in the FCA's 2014/15 Business Plan.

The report recommended:

  • That there be substantial improvement in the procedures relating to the identification, control and release of price-sensitive information,
  • That the final version of the FCA's Business Plan should only be made available publicly to all market participants at the same time,
  • That the relevant review team address the issue of price-sensitive information in any assessment of a potential thematic review, and
  • That the FCA urgently put in place price and volume monitoring procedures, combined with an action plan for the effective management of the FCA's reaction to any issues involving the uncontrolled release of price-sensitive information originating from or involving the FCA.

On 16 December 2014, the Treasury Select Committee commenced taking evidence on the press briefing.

Name

The "Consumer Protection Agency" (CPA) promised in 2009 by the Conservative Party[32] became "Consumer Protection and Markets Authority" (CPMA), which was changed to Financial Conduct Authority (FCA) after the Treasury Select Committee pointed out that this name could mislead consumers.[33]

See also

References

  1. ^ "Annual Accounts and Reports 2017/2018". FCA. Retrieved November 3, 2018.
  2. ^ "Chief Executive - Andrew Bailey". Financial Conduct Authority. Retrieved 4 July 2016.
  3. ^ "First Chair of the new Financial Conduct Authority appointed". Retrieved 2 November 2012.
  4. ^ a b "What Is The Financial Conduct Authority (FCA)?". ComplyAdvantage. ComplyAdvantage. Retrieved 20 September 2018.
  5. ^ "Reform and regulation". HM Treasury. 17 June 2010. Retrieved 17 June 2010. Archived here.
  6. ^ a b c "Financial Services Bill receives Royal Assent". HM Treasury. 19 December 2012. Retrieved 4 January 2013.
  7. ^ a b c "The Financial Conduct Authority: What it Does and Who is Charge". Financial Times. London. 8 November 2011. Retrieved 20 August 2012.
  8. ^ "News and investigations". fca.org.uk. Retrieved 6 June 2015.
  9. ^ "News and investigations". fca.org.uk. Retrieved 27 February 2019.
  10. ^ "Frozen bank account QnA".
  11. ^ "OFT's work and responsibilities after 31 March 2014". Office of Fair Trading. 2014. Retrieved 27 March 2014. Archived here.
  12. ^ Financial Services (Banking Reform) Act 2013, accessed 13 May 2016
  13. ^ Market Review into the Supply of Indirect Access to Payment Systems, MR 15/1.2, March 2015, accessed 13 May 2016
  14. ^ "MR 15/2.5 Market review into the ownership and competitiveness of infrastructure provision: remedies decision". www.psr.org.uk. Retrieved 2017-07-05.
  15. ^ "FCA - Banks".
  16. ^ "FCA - Mutual Societies".
  17. ^ "FCA - Independent Financial Advisers".
  18. ^ "Regulatory Reform". FSA web site. FSA. Retrieved 20 August 2012.
  19. ^ "Wheatley to head new UK consumer regulator". The Financial Times. 2011-02-02. Retrieved 2010-02-02.
  20. ^ a b "First Chair of the new Financial Conduct Authority appointed". Newsroom & Speeches. HM Treasury. 11 June 2012. Retrieved 20 August 2012.
  21. ^ https://publications.parliament.uk/pa/cm201213/cmselect/cmtreasy/721/721.pdf
  22. ^ Phillip Inman (17 July 2015). "City watchdog chief quits after George Osborne vote of no confidence". The Guardian. Retrieved 31 December 2015.
  23. ^ http://www.fca.org.uk/about/structure/executive-committee/tracey-mcdermott
  24. ^ Anon., "Andrew Bailey appointed CEO of the Financial Conduct Authority", Bank of England website, Jan 26, 2016.
  25. ^ a b c "KPMG UK chairman John Griffith-Jones to head Financial Conduct Authority". The Telegraph. London. 11 June 2012. Retrieved 20 August 2012.
  26. ^ a b c Masters, Brooke (11 June 2012). "KPMG's UK boss to chair new watchdog". Financial Times. Retrieved 20 August 2012.
  27. ^ Alex Steger. "FCA asset management head to join Goldman Sachs AM". New Model Adviser. Retrieved 6 June 2015.
  28. ^ "Changing banking for good: Report of the Parliamentary Commission on Banking Standards". parliament.uk. Retrieved 6 June 2015.
  29. ^ "Correspondence published with FSA on Bank of Ireland". UK Parliament. Retrieved 6 June 2015.
  30. ^ "Rebuke for new FCA boss ahead of launch day". scotsman.com. Retrieved 6 June 2015.
  31. ^ Bowers, Simon (10 April 2013). "HBOS heat turns on head of new City regulator John Griffith-Jones". The Guardian. London.
  32. ^ "Plans for sound banking" (PDF). Conservative Party. Retrieved 6 June 2015.
  33. ^ Trotman, Andrew (17 March 2011). "What next for the FSA?". The Daily Telegraph. London.

External links

Andrew Bailey (banker)

Andrew John Bailey (born 30 March 1959) is a British central banker, who was Deputy Governor of the Bank of England from April 2013 to July 2016.

He had previously served as the Bank's Chief Cashier from January 2004 until April 2011. He is currently the Chief Executive Officer of the Financial Conduct Authority.

Charter Court Financial Services

Charter Court Financial Services Group plc (Charter Court) is a financial services company operating in the United Kingdom, which provides retail savings products, specialist mortgage products, mortgage administration services and credit analysis. Charter Court operates via three separate specialist brands: Charter Savings Bank for retail savings, Precise Mortgages for specialist mortgages and Exact Mortgage Experts for credit analysis and servicing of existing mortgage portfolios.Charter Court is authorised by the Prudential Regulation Authority (PRA) and regulated by the PRA and the Financial Conduct Authority in the United Kingdom. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

Forex scandal

The forex scandal (also known as the forex probe) is a financial scandal that involves the revelation, and subsequent investigation, that banks colluded for at least a decade to manipulate exchange rates for their own financial gain. Market regulators in Asia, Switzerland, the United Kingdom, and the United States began to investigate the $4.7 trillion-a-day foreign exchange market (forex) after Bloomberg News reported in June 2013 that currency dealers said they had been front-running client orders and rigging the foreign exchange benchmark WM/Reuters rates by colluding with counterparts and pushing through trades before and during the 60-second windows when the benchmark rates are set. The behavior occurred daily in the spot foreign-exchange market and went on for at least a decade according to currency traders.

Hottinger

Hottinger or Hottinguer is a surname. Notable people with the surname include:

Henri Hottinguer (1868–1943), first-born son of Rodolphe Hottinguer

Jay Hottinger (born 1969), Republican member of the Ohio House of Representatives

Jean–Conrad Hottinguer (1764–1841), Swiss-born banker who later became a Baron of the French empire

Jean–Henri Hottinguer (1803–1866), first-born son of Baron Jean-Conrad Hottinguer

Johann Heinrich Hottinger (1620–1667), Swiss philologist and theologian

Johann Jakob Hottinger (1652–1735), Swiss theologian and Church historian

Johann Jakob Hottinger (1783–1860), Swiss historian.

John Hottinger (born 1945), Minnesota politician and a former member and majority leader of the Minnesota Senate

Klaus Hottinger (1467–1524), first martyr of the Swiss Protestantism movement

Lukas Hottinger (born 1933), paleontologist, biologist and geologist.

Markus Höttinger (1956–1980), Austrian Formula Two driver

Rodolphe Hottinguer (1835-1920), first-born son of Baron Jean-Henri Hottinguer

Rodolphe Hottinguer (1902–1985), Swiss banker, fifth Baron

Rodolphe Hottinger (born 1956), Swiss banker, seventh Baron

LendingCrowd

LendingCrowd is an online peer-to-peer lending company, based in Edinburgh, Scotland. As the first Scottish based crowdlending firm, LendingCrowd has created a platform that enables investors to support small and medium-sized businesses by lending personal capital through small loans whilst earning a monthly interest payment.

Plus500

Plus500 is an international financial firm providing online trading services in contracts for difference (CFDs), across more than 2,000 securities and multiple asset classes. The company is headquartered in Israel and has subsidiaries in UK, Cyprus, Australia, Singapore and Bulgaria.

Plus500 is authorised and regulated by the Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC), the Australian Securities and Investments Commission (ASIC), the Monetary Authority of Singapore (MAS), and the Israel Securities Authority (ISA). It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

Seedrs

Seedrs is an equity crowdfunding platform for investing in startups and later-stage businesses throughout Europe.

Seedrs was the first equity crowdfunding platform to receive regulatory approval from a financial regulator – the Financial Conduct Authority (FCA, formerly the FSA) in May 2012. The company is based in East London’s Tech City.

This page is based on a Wikipedia article written by authors (here).
Text is available under the CC BY-SA 3.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.