FCA Regulation

The FCA

The FCA or Financial Conduct Authority is a private company that regulates the conduct of around 60,000 retail and wholesale firms. It is funded by the imposition of fees and fines on the financial services industry firms which it regulates.

As a regulator, the FCA has the power to impose sanctions and other controls, to investigate any potential breaches on a regulatory or criminal basis and to pursue criminal prosecution where appropriate. You can learn about the FCA investigation process on our blog.

There are a number of other regulators with the financial sector such as the Competition and Markets Authority (CMA) but the bulk of regulation is carried out by the FCA. Two other key regulators include:

• The Prudential Regulation Authority (PRA) is a division of the Bank of England and focuses on the micro-prudential regulation of around 1500 banks, building societies, credit unions, investors and insurers.
• The Financial Ombudsman Service (FOS) is an adjudicator between a consumer and a financial service firm.

The FCA’s objectives and regulatory principles are set out in the Financial Services and Markets Act 2000 (FSMA), as is the FCA power to make rules applying to authorised persons to promote the objectives. These rules are contained within the FCA Handbook which, despite its name, is very long and detailed.

FCA Resources

Within the FCA Handbook are high-level Principles for Business of general application to regulated firms and Perimeter Guidance to assist in understanding whether an activity falls within the FCA regulated sector. The FCA produces sourcebooks covering detailed business conduct requirements like the Conduct of Business Sourcebook (COBS). There are numerous statutory instruments which also have application, including the FSMA (Regulated Activities) Order 2001 and FSMA (Financial Promotion) Order 2005.

As a minimum in each area of financial sector activity, the relevant applicable law will be found within the statute, the FCA Handbook, the high-level guidance, a sourcebook and statutory instruments.

FCA barristers at St Pauls Chambers are experienced in advising in cases brought by the FCA. Our financial services barristers are able to assist throughout all stages of FCA regulation.

Financial Regulation Through the Years

The Financial Services Act 1986

The current regulation of the financial system is the result of reform, following a succession of scandals within the banking sector. The Financial Services Act 1986 created a ‘light touch’ regulatory regime of self-regulating organisations managed by the Security and Investments Board (SIB).

Financial scandal in the 1990s

Various high-profile financial scandals in the 1990s, including the Maxwell pension fund and the collapse of Barings Bank, ended light-touch regulation. The SIB was renamed the Financial Services Authority in 1997 with new powers granted by the Financial Services and Markets Act 2000 (FSMA).

2008 banking crisis

Again, financial scandals including the 2008 banking crisis, PPI mis-selling, and LIBOR, encouraged further regulatory reform. The FCA, PRA and FOS were created by the Financial Services Act 2012, which significantly amended the FSMA.

FCA Barristers

Members of chambers have wide-ranging interests as financial regulation barristers, including investment schemes or financial promotions. Our FCA barristers advise at all stages of FCA regulation:

• Authorisation and approval
• The investigation phase
• Criminal prosecution and/or civil enforcement or action

It is our experience that all clients benefit from obtaining legal advice from our financial services barristers at the earliest possible stage when dealing with any matter, whether or not it may require regulation by the FCA. To find out more, please read our blog post on fraud and financial misconduct in the UK. If you are interested in instructing our FCA barristers, please contact our clerking team today.