Glossary

Financial Conduct Authority (FCA)

The Financial Conduct Authority is a regulatory body that operates independently of the government. It oversees financial bodies in the United Kingdom and receives funding through fees paid by its members. It partners with the Financial Policy Committee and the Prudential Regulation Authority to set regulations. The FCA’s activities generate billions in tax revenue for the British government.

The History of the Financial Conduct Authority

From 2001 to 2013, the Financial Services Authority regulated financial entities in the United Kingdom. After the 2008 market crash, which also affected the United Kingdom, the British government started working to abolish the agency. In 2013, the government succeeded and split the FSA’s functions between two agencies:

  1. The newly established Financial Conduct Authority
  2. The Bank of England’s Prudential Regulatory Authority

The Role of the Financial Conduct Authority

The main objective of the FCA is to create and maintain fair markets that serve the best interests of all parties involved. This includes the rights of consumers, the growth of the economy, and the profitability of businesses.

To this end, the organization engages in three main activities:

  1. Setting regulatory standards that affect roughly 18,000 firms
  2. Supervising roughly 49,000 firms
  3. Overseeing the activities of approximately 51,000 businesses

The FCA regulates all financial activities in the market. Even non-profit organizations need to meet financial requirements. Before regulated entities can receive authorization, they must first show that they meet established requirements. The FCA then continues to supervise the entities to ensure they continue to uphold those standards.

How To Apply for FCA Authorization and Registration

The FCA estimates that the entire process can take anywhere from six months to a year. It starts with filling out an application, paying the fee, and submitting it to the FCA. Companies must ensure immediate readiness to abide by the requirements when they apply. There is no grace period to get in line.

Once approved, companies receive six-digit Firm Reference Numbers. The FCA also has unique identifiers to track funds and products. The organization has successfully registered so many firms that it estimates it will need to move to seven-digit identifying numbers by 2023.

The Enforcement Powers Granted to the FCA

When companies fail to abide by the regulations, enforcement can be swift and expensive. Consequently, companies should read the rules carefully and prioritize compliance throughout business operations. These are some of the many enforcement powers granted to the FCA:

  • Issuing fines against individuals or firms who attempt to abuse the market or fail to abide by the rules
  • Making public announcements about entities that do not abide by the regulations and the disciplinary actions that will follow
  • Leveraging the court system to apply for restitution orders, injunctions, and other actions
  • Issuing warnings and alerts when unauthorized financial entities attempt to do business
  • Working with prosecutors to bring charges against persons suspected of criminal activities, such as making false claims, faking FCA authorization, or engaging in insider trading
  • Canceling an entity’s authorized status for serious violations

Examples of Financial Conduct Authority Fines

Most financial entities operating in the UK have two main FCA-related fears. The first is losing the right or authorization to conduct lawful business. Next in line is the potential for high fines. In 2021, financial entities faced fines totaling £567,765,219.95. Here are some of the most significant individual fines making up that total:

  • National Westminster Bank Plc – £264,772,619.95
  • Credit Suisse International, Credit Suisse Securities (Europe) Ltd, and Credit Suisse AG – £147,190,200
  • Lloyds Bank General Insurance Limited, St Andrew’s Insurance Plc, Lloyds Bank Insurance Services Limited, and Halifax General Insurance Services Limited – £90,688,400
  • HSBC Bank plc – £63,946,800
  • Sunrise Brokers LLP – £642,400
  • Sapien Capital Limited – £178,000

How Message Capturing and Archiving Can Help With FCA Compliance

One way in which UK businesses must comply is by archiving all messages sent and received by employees. This helps companies keep track of communications, monitor employee activity, and meet record-keeping requirements.

Businesses need to choose a message archiving solution that meets FCA compliance requirements. These standards vary depending on the type of business and its specific regulatory obligations, but there are some general best practices that all companies should follow:

  • Keep archived messages in a secure and tamper-proof format.
  • Ensure that only authorized personnel have access to the message archive.
  • Make sure that messages cannot be deleted or altered.
  • Ensure that messages get archived in real-time.
  • Ensure that you back up the archived messages and that you can restore them in the event of data loss.

The LeapXpert team is constantly reviewing changes in regulations worldwide. This helps us determine how best we can continue to serve clients through message and call capturing and archiving services that tick all the boxes. Book your demo today to see what we can do for you.