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A Consumer Council guide to : . The Financial Conduct Authority (FCA); and The Prudential Regulation Authority. Regulating Financial Services. On April 1 st 2013 the Financial Services Authority was split into two separate regulatory authorities: Financial Conduct Authority (FCA)

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Presentation Transcript
slide1

A Consumer Council guide to:

  • The Financial Conduct Authority (FCA); and
  • The Prudential Regulation Authority

www.consumercouncil.org.uk

slide2

Regulating Financial Services

  • On April 1st 2013 the Financial Services Authority was split into two separate regulatory authorities:
  • Financial Conduct Authority (FCA)
  • Prudential Regulation Authority

www.consumercouncil.org.uk

slide3

Financial Conduct Authority

(FCA)

The Financial Conduct Authority (FCA) regulates the financial services industry in the UK such as: banks, building societies, credit unions and financial advisers.

They are accountable to the Treasury and, through them, to Parliament. They are operationally independent of Government and funded entirely by the firms which they regulate.

www.fca.org.uk

slide4

Aims

  • The Financial Conduct Authority’s aim is to:
  • Protect consumers
  • Ensure the financial services industry remains stable and promote healthy competition between financial services providers.
  • They have rule-making, investigative and enforcement powers and ensure that they are fair and principled in their approach to regulation.

www.fca.org.uk

slide5

Regulation

The Financial Conduct Authority supervise the conduct of 26,000 financial firms and regulate the prudential standards of 23,000 of those.

FCA promote healthy competition between financial service firms, help them keep to the rules and maintain high conduct standards. The FCA intervenes when a firm treats consumers unfairly and behaves in ways that risk the integrity of the market.

www.fca.org.uk

slide6

Protection

  • The FCA regulate the financial services industry to ensure firms stick to the rules and consumers don't fall victim to scams or get tied to unfair contracts.
  • They ensure firms:
  • Take appropriate steps to protect themselves against
  • fraud
  • Can detect and prevent money laundering
  • Understand that FCA will take action against them if they
  • use corrupt or unethical methods.

www.fca.org.uk

slide7

Champion

  • The Financial Conduct Authority ensures the financial services industry treats consumers fairly and keeps to their rules and standards.
  • They:
  • Regulate financial service providers to ensure they
  • offer consumers the most appropriate products for their
  • personal circumstances
  • Set standards for financial advisers so they give
  • unbiased advice on a broad range of products
  • Expect firms to train their staff well so that they explain
  • products knowledgeably and behave ethically.

www.fca.org.uk

slide8

Enforce

  • The FCA make sure:
  • Firms put consumers at the heart of their business
  • Markets work well; and
  • Know there are real and meaningful consequences for those firms and individuals who don’t play by the rules.

www.fca.org.uk

slide9

Trust

The Financial Conduct Authority want consumers to have access to financial services products that meet their needs, from firms they can trust.

Their overall aim is that markets and financial systems are sound, stable and resilient, with clear pricing information that consumers can understand.

www.fca.org.uk

slide10

Quiz

1.The FSA has now been separated into two regulatory authorities. What are they?

2. Who are the Financial Conduct Authority accountable to?

3. What is the aim of the FCA?

4. Who do the FCA protect?

5. How are they funded?

www.fca.org.uk

slide11

The Prudential Regulation

Authority

www.bankofengland.co.uk/PRA

slide12

The Prudential Regulation Authority

On 1st April 2013 the Prudential Regulation Authority (PRA) became responsible for the regulation and supervision of banks, building societies, credit union, insurers and major investment firms.

The PRA was created by the Financial Services Act (2012) and is part of the Bank of England.

The PRA work alongside the Financial Conduct Authority creating a “twin peaks” regulatory structure in the UK.

In total the Prudential Regulation Authority regulates around 1,700 financial firms.

www.bankofengland.co.uk/PRA

slide13

The Prudential Regulation Authority

Definition:

Prudential regulation is the regulation of deposit-taking institutions and supervision of the conduct of these institutions, with the aim of limiting their risk taking.

www.bankofengland.co.uk/PRA

slide14

Who PRA regulate

  • Categories of prudentially regulated firms:
  • Deposit-takers
  • Insurers (life)
  • Insurers (general)
  • Managing agents at Lloyds
  • The society of Lloyds
  • Firms dealing as principal

www.bankofengland.co.uk/PRA

slide15

Funding

Prudential Regulation Authority (PRA) raise fees from the firms they regulate, in order to allow them to fulfil their statutory objectives.

Firms that could cause the greatest harm to the stability of the UK financial system are the main contributors to the PRA’s funding needs.

www.bankofengland.co.uk/PRA

slide16

Quiz

What does PRA stand for?

What institution is the PRA part of?

How many firms do the PRA regulate?

How are the Prudential Regulation Authority funded?

www.consumercouncil.org.uk