Background

The Financial Conduct Authority (FCA) is an independent organisation responsible for regulating financial services in the UK. The FCA has statutory powers given under the Financial Services and Markets Act 2000 (FSMA) which came into force in December 2001. Under Section 19 of FSMA, any person who carries on a regulated activity in the UK must be authorised by the FCA or exempt (an appointed representative or some other exemption). Secondary legislation under FSMA sets out the particular activities and investment types which are regulated and for which FCA authorisation is necessary. Breach of section 19 may be a criminal offence and punishable on indictment by a maximum term of two years imprisonment and/or a fine.

The FCA regulates most financial services markets, exchanges and firms, setting the standards that they must meet and the FCA can take action against firms if they fail to meet the required standards. It has a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives:

  • maintaining confidence in the UK financial system
  • contributing to the protection and enhancement of stability of the UK financial system
  • securing the appropriate degree of protection for consumers and
  • reducing the extent to which it is possible for a regulated business to be used for a purpose connected with financial crime

These objectives are supported by principles of good regulation. The FCA Handbook sets out the FCA’s legislative and other provisions made under powers given to it by FSMA.