The Financial Conduct Authority (FCA) is a financial regulatory body in the United Kingdom, but operates independently of the UK Government, and is financed by charging fees to members of the financial services industry.^[3] The FCA regulates financial firms providing services to consumers and maintains the integrity of the financial markets in the United Kingdom.^[4]

It focuses on the regulation of conduct by both retail and wholesale financial services firms.^[5] Like its predecessor the FSA, the FCA is structured as a company limited by guarantee.

The structure of the FCA's regulatory authority takes in the Bank of England's Prudential Regulatory Authority (another FSA successor), and the Financial Policy Committee. The FCA is responsible for the conduct of around 58,000 businesses which employ 2.2 million people and contribute around £65.6 billion in annual tax revenue to the economy in the United Kingdom.^[4]

On 19 December 2012, the Financial Services Act 2012 received royal assent, and it came into force on 1 April 2013.^[6] The Act created a new regulatory framework for financial services and abolished the Financial Services Authority.^[6]

Specifically, the Act gave the Bank of England responsibility for financial stability, bringing together macro and micro prudential regulation, created a new regulatory structure consisting of the Bank of England's Financial Policy Committee, the Prudential Regulation Authority and the Financial Conduct Authority.^[6]

The authority has significant powers, including the power to regulate conduct related to the marketing of financial products. It is able to specify minimum standards and to place requirements on products.^[7] It has the power to investigate organisations and individuals.^[8] In addition, the FCA is able to ban financial products for up to a year while considering an indefinite ban; it will havethe power to instruct firms to immediately retract or modify promotions which it finds to be misleading and to publish such decisions.^[7]

Further, the FCA is able to freeze assets of individuals or organisations under investigation before they are found guilty. ^[9] The authority has been responsible for regulating the consumer credit industry since 1 April 2014, taking over the role from the Office of Fair Trading.^[10]

In April 2015, the FCA created a separate body, the Payment Systems Regulator (PSR), in accordance with section 40 of the Financial Services (Banking Reform) Act 2013.^[11] The PSR's role is "to promote competition and innovation in payment systems, and ensure they work in the interests of the organisations and people that use them".^[12]

On 20 June 2017, the PSR announced its final decision regarding reforms to the infrastructure of the payment systems in the United Kingdom in order to encourage “better and more innovative services for customers”.^[13] The regulator's review from December 2016 found that the central infrastructure for the main retail payment systems in the United Kingdom – Bacs, Faster Payments (FPS) and LINK – do not offer effective competition. Two main changes are required:

The Financial Services Act of 2012 set out a new system for regulating financial services in order to protect and improve the UK's economy.^[14]

The FCA will supervise banks to:

There are more than 10,000 mutual societies in the United Kingdom. The FCA are responsible for:^[15]

Rules came into force in 2012 for Independent Financial Advisers (IFAs) following the Retail Distribution Review (RDR) rules.^[16] To be classed as an IFA, businesses need to:

In October 2014, the FCA launched Project Innovate^[17] to help firms overcome the regulatory barriers and promote innovation in UK^[18]. Following this initiative, in 2017 they launched a Regulatory Sandbox^[19] an environment allowing innovative firms such as Fintech and Regtech to test drive their products or services before operating in the financial market. The FCA opened their applications to join their first cohort in February 2017.^[20][21][22]

In February 2011, it was confirmed that the new head of the FCA would be Martin Wheatley, formerly chairman of Hong Kong's Securities and Futures Commission.^{[7][23][24][25]}

Wheatley's appointment, however, was not approved by the Treasury Select Committee. "The Government did not accept the case for a pre appointment hearing with the Chief Executive, on the grounds of supposed market sensitivity." ^[26] In July 2015, Wheatley resigned his post at the FCA following a vote of no confidence by George Osborne.^[27] In September 2015, Tracy McDermott took over from Wheatley as acting FCA chief.^[28]

Current FCA chief Andrew Bailey was appointed chief executive on 26 January 2016.^[29] In June 2012, it was confirmed that John Griffith-Jones would become the non executive chair of the FCA once the FSA ceases operations in 2013.^[25][30][31] Griffith-Jones joined the FSA board in September 2012, as a non executive director and deputy chair.^[30][31]

Griffith-Jones retired from KPMG, where he was chairman of the division in the United Kingdom, in August 2012.^[30][31] In December 2013, it was announced that head of asset management supervision Ed Harley had left the regulator to take up a role at Goldman Sachs Asset Management.^[32]

In June 2013, the Financial Conduct Authority was criticised by the Parliamentary Commission for Banking Standards, in their report "Changing Banking for Good", which stated:

The FCA was rebuked by the Treasury Select Committee for lack of concern over the increase in mortgage interest rates of the Bank of Ireland's subsidiary of the United Kingdom.^[34][35]

There have been calls for the resignation of chairman John Griffith-Jones because of his responsibility for auditing HBOS as chairman of KPMG at the time of the financial crisis of 2007–08.^[36] There has also been criticism of chief executive Martin Wheatley because of his responsibility for the minibond fiasco in Hong Kong. There were not the customary pre-appointment hearings for either John Griffith-Jones or Martin Wheatley, so that people could not disapprove of these appointments by submitting evidence to these hearings.

On 10 December 2014, the FCA released a report from Simon Davis from Clifford Chance LLP inquiring into the events of 27/28 March 2014 relating to the press briefing of information in the FCA's 2014/15 Business Plan.

The report recommended:

On 16 December 2014, the Treasury Select Committee commenced taking evidence on the press briefing.

The "Consumer Protection Agency" (CPA) promised in 2009 by the Conservative Party^[37] became "Consumer Protection and Markets Authority" (CPMA), which was changed to Financial Conduct Authority (FCA) after the Treasury Select Committee pointed out that this name could mislead consumers.^[38]