Understanding Financial Regulation in the UK

The UK has one of the most comprehensive regulatory frameworks for financial services in the world. Understanding how regulation works helps you make informed choices and know what protections are available if something goes wrong.

The Regulatory Landscape

Following the 2008 financial crisis, the UK restructured its regulatory system. Today, three key bodies oversee financial services:

Financial Conduct Authority (FCA)

The FCA is the primary regulator for financial services firms in the UK. It was established in 2013 under the Financial Services Act 2012 and is responsible for the conduct regulation of approximately 42,000 firms.

Objective 1

Consumer Protection

Securing an appropriate degree of protection for consumers

Objective 2

Market Integrity

Protecting and enhancing the integrity of the UK financial system

Objective 3

Competition

Promoting effective competition in the interests of consumers

Source: FCA — What we do

Prudential Regulation Authority (PRA)

Part of the Bank of England, the PRA is responsible for the prudential regulation of banks, building societies, credit unions, insurers, and major investment firms. While the FCA focuses on how firms treat customers, the PRA ensures firms are financially sound and do not pose a risk to the stability of the financial system.

Source: Bank of England — Prudential Regulation

Financial Ombudsman Service (FOS)

The FOS is an independent body that resolves disputes between consumers and financial services firms. If you have made a formal complaint to a firm and are not satisfied with the response (or they have not responded within 8 weeks), you can escalate to the FOS. Their service is free to consumers.

Maximum compensation award (for complaints referred on or after 1 April 2024):

£430,000

Source: Financial Ombudsman Service

What FCA Authorisation Means

When a firm is FCA-authorised, it means:

The firm has met the FCA's threshold conditions for authorisation, including adequate financial resources and competent management
Individual advisers within the firm are approved persons or certified by the firm under the Senior Managers and Certification Regime (SM&CR)
The firm must maintain professional indemnity insurance (PII) to cover claims for negligent advice
The firm must comply with FCA rules on conduct, including suitability of advice, clear fee disclosure, and fair treatment of customers
Consumers are eligible for FSCS protection if the firm fails

The FCA Financial Services Register

The FCA Financial Services Register is a public database of every firm and individual authorised to provide financial services in the UK. You can search by firm name, individual name, or Firm Reference Number (FRN). The register shows:

Whether the firm is currently authorised, and since when
What activities the firm has permission to carry out
The names and roles of approved individuals
Any regulatory actions, restrictions, or requirements imposed on the firm
Whether the firm provides independent or restricted advice

The FCA strongly recommends checking the Register before engaging any financial services firm. approval.co.uk makes this easier by pulling data directly from the Register and presenting it alongside other information to help you compare advisers.

The Consumer Duty

In July 2023, the FCA introduced the Consumer Duty, a new standard that requires firms to act to deliver good outcomes for retail customers. The Consumer Duty sets higher expectations than the previous "Treating Customers Fairly" principles, with specific requirements around:

Products and Services

Products must be designed to meet the needs of the target market and distributed appropriately.

Price and Value

Firms must ensure that customers receive fair value for the price they pay.

Consumer Understanding

Communications must be clear, fair, and not misleading, enabling consumers to make informed decisions.

Consumer Support

Firms must provide support that meets customers' needs, including making it as easy to switch or cancel as it was to buy.

Source: FCA — Consumer Duty

Financial Services Compensation Scheme (FSCS)

The FSCS is the UK's compensation scheme of last resort. If an FCA-authorised firm goes out of business and cannot pay claims against it, the FSCS can step in to compensate eligible claimants.

FSCS Protection Limits

Type	Limit
Deposits (savings, current accounts)	£85,000 per person per institution
Investments (bad advice, mismanagement)	£85,000 per person per firm
Insurance (long-term, e.g. life)	100% of claim, no upper limit
Insurance (general, e.g. home, motor)	100% of first £2,000 + 90% remainder
Mortgage advice	£85,000 per person per firm

Joint accounts are protected up to £170,000. Temporary high balances (e.g. from a house sale) may be covered up to £1 million for 6 months. Source: FSCS — What we cover

What to Do If Something Goes Wrong

If you believe you have received unsuitable advice or have been treated unfairly:

Complain to the firm first

Put your complaint in writing. The firm must acknowledge it promptly and provide a final response within 8 weeks.

Escalate to the Financial Ombudsman

If the firm rejects your complaint or does not respond within 8 weeks, you can refer the matter to the Financial Ombudsman Service. There is no cost to you.

Claim from the FSCS

If the firm has gone out of business and cannot pay, check if you are eligible for compensation from the FSCS.

Report to the FCA

If you suspect a firm is operating without authorisation or engaging in fraudulent activity, you can report it to the FCA. While the FCA cannot resolve individual complaints, reports help them identify problem firms.

Check Any Adviser on the FCA Register

Every adviser on approval.co.uk is verified against the FCA Financial Services Register. Search by postcode to find regulated advisers near you, complete with their authorisation status, permissions, and disciplinary history.

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