The Financial Conduct Authority (FCA) is an independent governmental authority that collects fees to the companies it supervises. The FCA receives the majority of the cash it needs to carry out its statutory obligations from periodic fees paid to companies. In order to calculate these fees, criteria such as the sort of regulated activities carried out by a business, the magnitude of such activities, and the regulatory expenses spent by the FCA are taken into consideration.
Industry Sectors and Business Enterprises
Banks
The Financial Services Act of 2012 established a new structure for regulating financial services with the goal of protecting and improving the economy of the United Kingdom.
The Financial Conduct Authority (FCA) will monitor banks in order to:
• Make certain that they handle consumers fairly.
• Encourage the development of new ideas and healthy competition.
• Assist the FCA in identifying potential hazards as early as possible so that they may take steps to mitigate the risks.
Mutual aid organizations (MAAs) are a kind of mutual aid organization that helps those in need. In the United Kingdom, there are more than 10,000 mutual societies to choose from.
The FCA is in charge of the following:
• Creating new mutual societies and registering them
• Keeping public documents is important.
• Obtaining yearly tax returns
Financial advisors are those who provide financial advice.
Independent financial advisors (IFAs) will be legally required to comply with Retail Distribution Review (RDR) standards as of December 31, 2012, unless they opt out.
In order to be classified as an IFA, a company must meet the following requirements:
• Provide a diverse selection of retail investing products.
• Make impartial and unfettered recommendations to customers on the basis of thorough and fair market research.
Leadership
The CEO is in charge of everything.
In February 2011, it was revealed that Martin Wheatley, the former chairman of Hong Kong’s Securities and Futures Commission, will be appointed as the next head of the Financial Conduct Authority.
Wheatley’s nomination was not brought before the Treasury Select Committee for a pre-appointment hearing, as was the case with other nominees. Wheatley and future chief executives will instead be subjected to a pre-commencement hearing, which will take place after they have been legally nominated but before they begin their duties in their new positions.
Wheatley resigned from his position as chairman of the Financial Conduct Authority in July 2015, after a vote of no confidence by George Osborne. The position of acting chief executive was filled by Tracey McDermott, who took over from Wheatley in September 2015.
Andrew Bailey was named chief executive officer on January 26, 2016, effective immediately. Following Bailey’s promotion to the position of Governor of the Bank of England, it was announced that Christopher Woolard will take over as Interim CEO. The announcement that Woolard will be permanently replaced by Nikhil Rathi was made in June of 2020.
List of Chief Executives
# Name Tenure
1 Martin Wheatley 2013-2015
– Tracey McDermott (interim) 2015-2016
2 Andrew Bailey 2016-2020
– Christopher Woolard (interim) 2020
3 Nikhil Rathi 2020-
Chairperson
In June 2012, it was announced that John Griffith-Jones will take over as non-executive chairman of the Financial Conduct Authority (FCA) after the Financial Services Authority (FSA) stops operating in 2013. Griffith-Jones was appointed to the Financial Services Authority (FSA) board in September 2012 as a non-executive director and deputy chair.
Criticism
The Financial Conduct Authority was criticized by the Parliamentary Commission on Banking Standards in their report “Changing Banking for Good,” which was published in June 2013. The study noted that:
• Small companies have suffered greatly as a result of the interest rate swap scandal. Many were completely unaware of the instrument they were being compelled to purchase. As much as standalone items, integrated swaps are subject to the same restrictions. The Financial Services Authority and the Financial Conduct Authority (FCA) have responded insufficiently. If, as they allege, the regulators lack the authority to deal with these abuses, it is the responsibility of the Government and Parliament to guarantee that the regulators have the authority they need in order to allow restitution for this gross mis-selling to be carried out. Parliamentary Commission on Banking Standards report, published jointly by the House of Lords and the House of Commons, titled “Changing Banking for Good.”
• According to the Treasury Select Committee, the Financial Conduct Authority (FCA) showed a lack of concern about a rise in mortgage interest rates at the Bank of Ireland’s affiliate in the United Kingdom. A number of people have called for the resignation of HBOS chairman John Griffith-Jones because of his role as head of KPMG during the financial crisis of 2007–2008, which included responsibility for auditing HBOS.
As a result of his involvement in the minibond debacle in Hong Kong, Chief Executive Martin Wheatley has also come under fire from certain quarters. Because neither John Griffith-Jones nor Martin Wheatley were subjected to the regular pre-appointment hearings, persons were unable to express their disapproval of these nominations by presenting evidence at such hearings.
On 10 December 2014, the Financial Conduct Authority (FCA) published a report by Simon Davis of Clifford Chance LLP, who investigated the events of 27/28. March 2014 pertaining to the press briefing of material from the FCA’s 2014/15 Business Plan on the 27/28 March 2014.
The following recommendations were made in the report:
• A significant improvement in the methods for identifying, controlling, and disseminating price-sensitive information; and
• In order to avoid market disruption, the final version of the FCA’s Business Plan should only be made accessible to all market players at the same time.
• When considering whether to conduct a thematic review, it is important that the appropriate review team consider if price-sensitive material should be included.
• That the FCA put in place price and volume monitoring procedures as soon as possible, along with an action plan for the effective management of the FCA’s response to any issues involving the uncontrolled release of price-sensitive information originating from or involving the FCA, in order to prevent further price-sensitive information from being released.
A press briefing was held on 16 December 2014, and the Treasury Select Committee began receiving testimony on it on 17 December 2014. Soon after, committee head Andrew Tyrie said that it seemed as if the FCA had made an “extraordinary error” and had caused a “disorderly market” as a result of its actions.
When the Financial Conduct Authority (FCA) spent £66,000 on a new design that was hardly distinguishable from their prior emblem in 2017, MP Chris Philp, who served on the Treasury Select Committee, expressed concern.