What is Financial Conduct Authority (FCA)?

The Definition of FCA

In the UK, the regulatory body responsible for overseeing financial markets and firms is the Financial Conduct Authority (FCA). In this blog post, we’ll talk about the FCA’s primary roles and how if helps keep the financial system’s integrity stable against crimes.

What Are the Responsibilities of FCA?

The FCA has many duties that ultimately aim to keep the UK financial system safe. The first responsibility we’ll mention is consumer protection; this regulatory body is there to help businesses treat consumers fairly. The FCA is also here to deal with market integrity; it monitors trading practices to make sure fraud and other financial crimes don’t occur and affect markets. Finally, the FCA is there to encourage healthy competition; this regulatory body encourages innovation while also aiming to prevent monopolistic practices that destroy other companies during the process.

If you as a consumer have concerns or complaints about a financial product or service, the FCA provides a platform for redress. According to Nice Actimize experts, filing a complaint with the Financial Conduct Authority can resolve issues and hold financial institutions accountable for any misconduct. 

Types of Firms Regulated by the FCA

Since it is dealing with regulations in the UK, the FCA oversees many sectors that may be more susceptible to financial crimes. The first sector is we’ll mention is banking; banks are risky because of their involvement with licensing financial institutions. They are monitored to make sure they are maintaining the AML compliance standards and adhering to capital requirements to ensure financial stability. Insurance companies are another example; these firms are watched closely to make sure they are properly pricing their services. These firms need to have effective risk management and the FCA is responsible with regulating them.

Those with investment firms as well as brokers and asset managers should comply with regulations like MiFID II to make sure their company is transparent and trustworthy. Cryptocurrency firms are new and growing rapidly; so naturally, the FCA has revised its regulations to include crypto companies as well. These firms should be registered to make sure they are reaching AML compliance and they should file Suspicious Activity Reports (SARs) when it is needed. Payment and e-money institutions are also regulated by the FCA; this regulation is done to ensure these firms are in compliance with PSD2 that demands security, competition, and innovation in digital payments. 

What Are the FCA’s Enforcement Powers?

The FCA can revoke your license when an extreme of financial crime occurs or may simply refuse to give you licensing if you’re not complying with its protocols. Similarly, fines that can go up to millions may be imposed when you’re not in compliance with FCA standards. Another consequence to face is the possibility of being prosecuted and possibly jailed for fraud charges. The FCA can also ban the sale or promotion of harmful products that don’t have the best in mind for the public. 

The FCA has fined Monzo Bank Ltd £21,091,300 for its inadequate anti-financial crime systems and controls between October 2018 and August 2020.

FCA and Anti-Money Laundering (AML)

The FCA enforces anti-money laundering (AML) regulations in the UK; it achieves this mainly by enforcing the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017). Through the FCA’s efforts, companies are tasked with implementing Know Your Customer (KYC) and Customer Due Diligence (CDD) measures to help them verify the identity of clients and monitor them for odd activity. Another duty the FCA enforces is sanctions screening; this act is there to help prevent companies from doing business with sanctioned parties. The FCA also asks companies to file Suspicious Activity Reports (SARs) when odd activities occur within their customers since these can lead to financial crimes.

FCA and Cryptoasset Regulation

Cryptocurrency has been rising in popularity and use; therefore, the FCA took proper precautions and started to extend its regulations to crypto firms since 2020. In the UK, all crypto firms should register with the FCA and implement AML compliance protocols accordingly. Some of the measures crypto companies need to take are transaction monitoring to make sure you miss nothing when it comes to suspicious activities, complying with the FATF Travel Rule that helps figure out the legitimacy of transaction details, and finally, filing SARs when an odd activity is discovered through monitoring to make sure the proper authorities are informed.

Risk-Based Supervision Model

A risk based approach is used by the FCA when it comes to dividing companies according to a certain category. This approach is used to spend more time and resources on riskier companies while also saving time and resources on low-risk companies. C1 and C2 firms are institutions like major banks and large insurers. These types of companies are high-risk and high-impact since one failure in their system could have bigger and more serious consequences. C3 and C4 firms, on the other hand, are mainly smaller business that are low-impact; therefore, they get a lighter version of the FCA’s supervision.

Recent FCA Regulatory Initiatives (2024–2025)

These regulatory initiatives were set forth by the FCA in 2024 and 2025 to help better the results of regulations. The first initiative is Consumer Duty; it is effective since 31 July 2024. This initiative aims to direct companies towards behaviours that are more positive for customers; some examples are offering products according to needs, providing helpful information that isn’t misleading, and giving an effective customer support service. APP Scam Refunds is another reinforcement of the FCA caused by the concern for Authorized Push Payment (APP) scams. This initiative was implemented in 7 October 2024 to make sure victims of APP scams are reimbursed. 

Another example is Cryptoasset Marketing; this has been implemented in 8 October 2023. According to this initiative, all cryptoasset promotions involving UK customers should be clear and fair. Promotions should also include risk warnings and shouldn’t give out false incentives to make people invest. The last initiative is Artifical Intelligence (AI) Guidance. This initiative was implemented in April 2025 and the FCA has announced its plans of launching an AI Live Testing service; according to the FCA, this service will help companies in their process of using AI tools while interacting with customers.

Key FCA Compliance Obligations for Firms

The first thing your company needs is the FCA authorization; without it, your company can’t operate in the UK. Afterwards, companies should comply with The Senior Managers & Certification Regime (SM&CR); it helps hold senior execs accountable. Ethical business practices should also be maintained to keep your company safe and fair, this is done by using conduct risk frameworks. 

We advise our readers to implement protocols that promote AML and KYC compliance, filing SARs is also included in this item on our list. Accurately reporting when suspicious activity occurs is also a must; requirements like REP-CRIM submissions and Payment Services Directive (PSD) returns should also be covered to help regulatory when they are monitoring suspicious activities. The Consumer Duty is promoted to help customers get fair treatment from companies. The last obligation we’ll talk about is maintaining capital adequacy by being strong against potential losses cause by the market to protect both your company and customers.

How to Get FCA Authorization?

The last step when looking to operate a company in the UK is getting your FCA authorization. You can be imprisoned and fined if you carry out regulated activities without being authorised.  You should submit your application via FCA Connect, giving details about what kind of permission you’re looking to get. Afterwards, the FCA’s review process starts and this part lasts about six to twelve months. 

The threshold conditions determine if your company is good enough to get authorized. The fitness and propriety of senior management is first evaulated to see whether they are appropriate for their role and possess the required expertise. The company’s financial stability is also checked. Finally, the FCA wants to know whether your company has effective systems set in place for different areas of management.