1. The Financial Conduct Authority (FCA); and
A Consumer Council guide to:
The Financial Conduct Authority (FCA); and
The Prudential Regulation Authority

2. 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

3. 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.
Refer to: for more information on The Financial Conduct Authority.

4. Aims www.fca.org.uk 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.

5. 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.
Definition of Prudential Standards:
The regulation of deposit-taking institutions and supervision of the conduct of these institutions and sets down requirements that limit their risk taking.

6. 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.

7. 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.
Refer to:

8. 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.
Talking Points:
The FCA will build on the progress already made by:
Bringing more enforcement cases and pressing for tough penalties for infringements of rules to reset conduct standards;
Pursuing more cases against individuals and holding members of senior management accountable for their actions;
Pursuing criminal prosecutions, including for insider dealing and market manipulation;
Taking action to tackle unauthorised business; and
Continuing to prioritise getting compensation for consumers.

9. 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.

10. 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?
Answers:
Financial Conduct Authority and the Prudential Regulation Authority
They are accountable to the Treasury and, through them, to Parliament.
Their aim is to protect consumers, ensure the industry remains stable and promote healthy competition between financial services providers.
Both the industry and the consumer
By the financial services firms they regulate.

11. The Prudential Regulation Authority

12. 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.

13. 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.

14. 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
Definition:
Firms dealing as principal;
Principal Trading Principal trading occurs when a brokerage buys securities in the secondary market, holds these securities for a period of time and then sells them
Source:

15. 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.

16. 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?
Answers:
Prudential Regulation Authority
The Bank of England
1700 approx
By the firms they regulate