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FCA Information

The Financial Conduct Authority

The Financial Conduct Authority (FCA) is an independent non-governmental body, which superceded the FSA in April 2013. It was given statutory powers by the Financial Services and Markets Act 2000 (FSMA).

The Financial Conduct Authority (FCA) is the UK statutory regulator directly responsible for the authorisation and regulation of deposit taking (for instance banks), insurance (both the carrying out of insurance business and insurance mediation), mortgage (lending, administration and mediation) and investment business.

Its aim is to maintain efficient, orderly and clean financial markets and help consumers – particularly retail consumers - achieve a fair deal.

The FCAhas four statutory objectives under FSMA:

  • Maintaining confidence in the financial system
  • Promoting public understanding of the financial system
  • Securing the appropriate degree of protection for consumers
  • Reducing the risk of financial crime

 

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The FCA takes a radically different approach to regulation to that of its predecessors. It is moving towards a regime which focuses on the risks to the FCA's objectives arising from any source, be they individual institutions, particular market sectors, trends in consumer understanding and behaviour or macroeconomic factors.

Its approach is built on a clear statement of the realistic aims and limits of regulation; in particular it recognises that the FCA cannot aim to prevent all financial failure.

The FCA recognises the proper responsibilities of consumers themselves, and of firms' own managements founded on a risk-based approach to the regulation of all financial business; and uses the full range of tools available to the FCA under FSMA, including consumer education.

The FCA is accountable to Treasury Ministers and through them to Parliament. The FCA must report annually on the achievement of its statutory objectives to the Treasury, which is required to lay the report before Parliament.

Regulated Activities

Undertaking any of the regulated activities without proper authorisation or exemption is a criminal offence. It is also likely that any income derived from doing so will be forfeited.

Firms must apply for authorisation and seek and maintain permission(s) to conduct one or more of the following General Insurance mediation activities:

Advising on Insurance Contracts

Advising means giving a recommendation to buy (or sell) a particular insurance product. A firm can give advice even if it has only one product to sell.

Arranging (bringing about) Deals in Insurance Contracts

Arranging means broking and/or organising insurance cover, including submitting proposal forms.

Assisting in the Administration and Performance of Insurance Contracts

An example of an activity that is likely to amount to assisting a policyholder in both the administration and the performance of a contract of insurance is notifying a claim under a policy and then providing evidence in support of the claim, or helping negotiate its settlement on the policyholder’s behalf.

Dealing in Insurance Contracts as Agent

This is where an insurer allows an intermediary to accept a customer for insurance cover on behalf of the insurer.

Making Arrangements with a View to Transactions in non-Investment Insurance Contracts

This includes passing on information about a customer to an insurer, a finance house or another insurance broker. This activity will also catch many intermediaries that do not deal directly with the public – for example, wholesale brokers and underwriting agencies.

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