Financial Conduct Authority (FCA) – is responsible as follows:
1. That the market operates with integrity.
2. Promote effective competition.
3. Requires firms to put the wellbeing of their customers at the heart of how they run their firms.
The Financial Services Act 2012 requires:
1. The Financial Policy Committee (FPC) using its macro prudential tools to the regulators (PRA & FCA) for
the purposes of protecting and enhancing financial stability.
2. The Prudential Regulations Authority (PRA) regulates PRA authorized firms such as banks and
3. The FCA must also manage the Soundness, Stability & Resilience of the UK financial system.
The FCA 3 regulatory Pillars:
a. Firm Systematic Framework – involves preventative work through a structured assessment of firms
b. Event driven work – Dealing with problems that have emerged or happened and securing them
with customer redress or alternative remedial work.
c. Issues and Products – Campaigns in relation to market sectors or products or may put customers at
The focus of the FCA is to ensure that clients assets are protected and that relevant market function well.
1. The supervisory system originally covered risk categories (C1 large banking and insurance groups with
very large number of retail customers) through to C4 (smaller firms including most intermediaries).
2. In September 2015, as part of its New Strategy announced changes to its monitoring of firms.
3. It will continue to monitor how firms and individuals behave but in addition, how the market work on a
whole with greater emphasis on sector and market- wide analysis.
4. Firms will now be considered as fixed portfolio or flexible portfolio. No longer termed C1 to C4 firms.
This change will affect about 70 firms being reassigned either as fixed or flexible.
5. Fixed portfolio firms require the highest levels of supervision; they are the smallest number of
regulated firms. The FCA also considers, the size market presence or footprints of these firms.
6. Flexible portfolio firms (majority of firms). These firms are proactively supervised through a
combination of market based thematic work and programmes of communication, engagement and
activity aligned with the key risks identified with the sector in which the firm operates. Finally, they do
not have an individual supervisor but are served by a call Centre.