Which Industries Are FCA Regulated?

Many firms working in the financial services industry are required to be authorised and/or regulated by the Financial Conduct Authority (FCA). The FCA is bound by the Financial Services and Markets Act 2000, which requires the body to regulate various different financial activities.

The financial services sector is an important part of how the UK operates, and affects the lives of many throughout the country. The FCA runs on the firm belief that financial markets need to be run fairly and therefore help to regulate it. Established in 2013, the FCA regulate over 59,000 businesses, helping to protect consumers, protect financial markets and promote competition. Of these 59,000 businesses, the FCA is the prudential regulator for over 18,000 of them.

Recent changes to FCA regulations now mean that senior managers within financial service companies must take on a larger portion of governance and accountability through the Senior Managers and Certification Regime (SMCR) and so there is now a range of learning and development packages which must be utilised within the industry.

It is therefore important to ensure that when looking for services in the finance industry, you pick a firm that abides by the UK’s rules and regulations surrounding these services. This will ensure that the firm is reputable, trustworthy, and abiding of the laws surrounding their financial product. It will also ensure that customers using the firm are protected if they stop abiding by FCA regulations.


Do Insurers Have to be FCA Regulated?

Insurance companies are indeed regulated by the both the FCA and the PRA (Prudential Regulatory Authority). These two regulatory bodies ensure that insurance firms are being fair to their customers, by being both financially secure and providing those insured with an acceptable levels of protection.

Insurance brokers are also monitored by the FCA. The regulatory body have developed a framework for insurance brokers to structure their business by. This helps to promote integrity within the insurance industry, and thereby helps to provide products and services that have the customer’s best interests in mind. When looking for the best insurance provider, it’s important to ensure that they are following the rules and regulations upheld by the FCA. This is to ensure that the insurance provider upholds reputable and trustworthy attitudes instilled by the FCA.


Do Lenders Need to be FCA Regulated?

Loans and consumer credit lenders are also regulated by the FCA. Consumer credit companies must either have full or limited permission to conduct their business’s financial activities. The following types of firms all have to be regulated by the FCA, and thereby follow its rules and regulations:

  • Credit brokers
  • Credit card issuers
  • Pawnbrokers
  • Logbook lenders
  • Payday loan companies
  • Debt management firms
  • Peer-to-peer lenders
  • Collection firms

The FCA have a list of firms that have permission (or ‘interim permission’) to offer credit and loans. This list is called the Consumer Credit Register. A lender should either have interim permission or authorisation to operate.

If something goes wrong, and the lending firm is not regulated by the FCA, customers using this company will not be protected by the Financial Ombudsman Service. When applying for consumer credit, borrowers should always check that the lending firm they are wanting to borrow from is FCA approved. If it is not, this should be reported to the regulatory body.


What Other Financial Services Should be FCA Regulated?

It’s vital to check FCA authorisation for any type of firm offering financial services (more information about becoming FCA Authorised). Without this authorisation, customers cannot ensure that the financial service is safe to use, or that protection will be offered when this is not the case. The following types of firms require regulation from the FCA (as per the Regulated Activities Order 2001):

  • Benchmark-related activities
  • Consumer credit activities
  • Designated investment business
  • Electronic money
  • Funeral plan contracts
  • Insurance (both business and distribution)
  • Home finance
  • Dormant account funds

Click here to see a full detailed list of the types of companies that must be regulated.

Companies offering other types of financial services (i.e. electronic money, payment services and collective investment schemes) will not be included on the Consumer Credit Register, and rather have their own list; the Financial Services Register.