FCA Regulation
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What is the Financial Conduct Authority?
The Financial Conduct Authority (FCA) is the UK’s independent financial regulator. It is funded by charging fees to members of the financial services industry. It regulates financial firms who provide services to consumers and maintains the integrity of the financial markets. The Prudential Regulation Authority, which is an independent subsidiary of the Bank of England, is also responsible for micro prudential regulation of financial institutions that manage significant risks on their balance sheets.
Jeremy Barnett is the lead authority in Chambers for this area of work. For four years Jeremy sat on the Board of the AADB. Jeremy has conducted numerous cases before the ICAEW and ACCA.
Jeremy has advised and represented professionals on collective Investment Scheme, fit and proper person rules for scheme members and advice regarding unregulated investments.
Jeremy has also advised on Client Account Rules for P2P Crowdfunding Platform [Article 36H of the Regulated Activities Order] & CASS 7 [Client Account Sources book]
FCA Regulation
The FCA has substantial powers, including the regulation of the marketing and promotion of financial products, which includes the ability to ban products for up to a year whilst considering an indefinite ban.
FCA regulation also operates a compensation scheme (The Financial Services Compensation Scheme) for consumers whose bank accounts are adversely affected by a financial crash up to the sum of £85,000. It also covers investors in of customers of authorised financial services firms. It is funded by levies on firms authorised by the Prudential Regulation Authority and Financial Conduct Authority, and budgets for claims of around £2 billion per annum.
Furthermore, the Financial Conduct Authority regulations are responsible for countering financial crime, where the emphasis is on credible deterrence. It participates in the National Crime Agency Joint Money Laundering Intelligence Task Force with a number of other bodies to combat high-end money laundering. Other areas of particular interest are terrorist financing and sanction risks in trade finance.
The powers of the FCA are wide and varied. There are extensive powers to regulate both the marketing of financial products and also the conduct of both advisers and organisations. This includes the power to issue warning notices in respect of conduct.
The enforcement division works closely with other divisions of the FCA and has Criminal, Civil and Regulatory powers to take action against firms and individuals. Powers include.
- Withdrawing a firms authorisation
- Prohibition of carrying out a regulated activity
- Suspension
- Issuing fines against firms and individuals
- Applying to the courts for injunctions
- Bringing criminal prosecutions e.g for insider dealing, LIBOR, unauthorised business or false claims to be regulated.
An individual who has had a warning notice issued can make representations to the Regulatory Decisions Committee (the RDC). If a decision notice is issued, the individual has the right to refer the matter to the Upper Tribunal, which would reach an independent decision on appropriate action for the FCA to take – if any.
Notices such as supervisory notices, requirement notices, cancellation notices and decision notices are published in accordance with the publication scheme. All fines recovered are paid to the Exchequer.
The Financial Services Handbook contains detailed provisions, which are contained in Rules, Guidance and Legal Instruments. The Conduct of Business (COB) forms part of the Handbook.
The FCA also issue detailed guidance for consumers, for example the publication on Unregulated Collective Investment Schemes (UCIS) which was last updated in August 2017, Crowdfunding, Exchange Traded Products, Traded Life Policy Investments (TLPIs) and Cryptocurrencies.
