Financial Regulations: What you need to know about the FCA

by | 20th May 2020

Any business working in the financial sector, should be aware of the Financial Conduct Authority (FCA).

Ignoring the FCA and financial regulations is like a ship’s captain ignoring the weather – foolhardy. Take it for granted and your business will run aground.

So, to help maintain your business’s smooth sailing, we’re going to discuss what the FCA is and what it covers. We’ll also talk about some other important regulations and give you three practical steps you can take to achieve regulatory compliance.


What is the FCA and what does it cover?

The FCA is the UK conduct regulator for 59,000 financial services firms. It’s also the prudential regulator for more than 18,000 thousand of these firms.

The goal of the FCA is threefold:

  • To encourage healthy, effective competition between financial services providers.
  • To protect the interest of consumers dealing with financial services.
  • To protect and strengthen the integrity of the UK financial system.

The FCA has financial regulations that establish minimum standards across various financial services products.

Requirements cover areas such as:

  • Pensions
  • Credit cards
  • ISAs
  • Investments

FCA compliance is critical for every organisation in the financial services sector. Non-compliance leads to penalties, these can be criminal, civil or regulatory. They include, but aren’t limited to:

  • Suspension of firms and individuals from undertaking regulated activities.
  • Issuing fines against firms and individuals.
  • Bringing criminal prosecution to combat financial crime.

Other regulatory bodies you can’t afford to ignore

The FCA isn’t the only regulatory body you need to stay abreast of. There are many regulations to follow. In the financial sector, regulators include:

  • Bank of England (BoE).
  • Prudential Regulation Authority (PRA), a division of the BoE.

And, more widely, all businesses must follow regulations such as the General Data Protection Regulation (GDPR), or risk fines of up to 20 million euros.

Non-compliance with financial regulations such as these can be painstaking. But if you get it wrong, you could incur significant fines and penalties. Not to mention the reputational damage you may suffer.

For example, in 2019, the total amount of fines for breaching FCA regulations were 392 million pounds with the largest fine a staggering 102 million pounds. And, adding insult to injury, these businesses were named and shamed online.

To help make things a little easier, we’ve created a list of strategies that will help your business comply with relevant financial regulations.

3 essential ways to reach regulatory compliance

Regulatory compliance is a challenge that’s best tackled from multiple angles.

Here are three of the best ways:

  1. Educate your team. By attending the right seminars and consistent study, your staff will better understand the regulations your organisation needs to follow.
  2. Work with an IT consultant. Unless you’re well versed in financial regulations, it can be hard to identify what issues your firm has. With the stakes so high, it makes sense to talk to the experts. The right IT consultants can help you maintain regulatory compliance while guiding you towards a better business.
  3. Hire a compliance officer. If you’ve got a bigger budget, why not hire someone who’s sole responsibility is ensuring your business achieves regulatory compliance across the board.

Compliance with financial regulations requires strong IT security

With the potentially devastating consequences of non-compliance with financial regulations, it’s unwise to take risks when it comes to your compliance strategy.

Part of achieving this level of compliance is ensuring your business has watertight IT and data security.

If you have any doubts about your existing security policy (or worse, don’t have one), download our free guide now and get precise, step-by-step instructions for creating your own faultless IT security policy.

Other Posts from Chalkline