What does it mean to be regulated by the Financial Conduct Authority?

When choosing a bank, building society, credit union or insurance company, it’s crucial you are confident in their abilities and that they deliver a fair service.

For UK financial markets to work well, competitively and fairly, they need to be regulated (keep reading to find out what this means). Stringent regulation benefits consumers and competitors alike.

Here, we explore the role of the Financial Conduct Authority (FCA) - you’ve likely heard their name being mentioned at the end of adverts for banks or credit providers - and its rules, to better understand its role and importance.

First, let’s explore why it’s important to be regulated by the FCA…

Why is it important to be regulated by the FCA?

Being regulated by the FCA offers you peace of mind that an organisation is compliant with the regulations the FCA sets out.

Essentially, when looking for a new bank, credit lender or insurance, you should expect to see that an organisation is regulated by the FCA (and keep an eye out for those that aren’t).

What is the role of the financial conduct authority?

In 2013, the FCA was set up to ensure:

• Consumers are protected from bad conduct

• The integrity of the UK financial system is protected

• Effective competition in the interests of consumers is promoted

The FCA now regulates around 50,000 businesses to ensure that financial markets are honest, competitive and fair.

How does the FCA protect consumers?

One of the main benefits of being regulated by the FCA is the legitimacy it gives to financial institutions. Almost every adult in the UK is a consumer of some type of financial service (from phone contracts to mortgages), so ensuring a fair playing field is crucial to millions of people’s lives and finances.

To protect consumers, the FCA’s rules and regulations ensure:

1. Customers are treated fairly

2. Financial firms deliver appropriate products and services

3. Firms prioritise customer protection above profits and income

Firms are required to comply with these standards in order to receive the FCA’s stamp of approval and to remain authorised too. If a company isn’t following the rules, the FCA may impose fines, stopping the organisation from trading or getting compensation for consumers.

Ultimately, this approach intends to guarantee that consumers receive the information they need in the right way - enabling people to make the best decisions for themselves.

Another benefit of FCA regulation is that consumers can complain and report any wrongdoing to the Financial Ombudsman Service (FOS). The FOS was set up by Parliament to resolve complaints between consumers and financial institutions, with the aim of…

• Treating customers well and respecting their needs

• Doing what they say they will do

• Being inquisitive and building everyone’s knowledge

• Doing the right thing

Are buy now pay later firms regulated by the FCA?

The FCA does not currently regulate all buy now pay later (BNPL) schemes; however, in June 2022, the Government announced plans to regulate all BNPL firms from mid-2023.

Why do BNPL firms need to be regulated?

The FCA reviewed the terms and conditions in the contracts of Clearpay, Klarna, Laybuy and Openpay, and discovered:

• Contract cancellation terms

• The firms’ ability to terminate or suspend accounts

• Continuous payment authority terms

Upon finding these things, the FCA contacted the companies, who initiated changes in terms to make them fairer and easier for consumers to understand. This change exemplifies the importance of the FCA.

Read more about BNPL firms, including how Fair for You is different from them and how using these loans could affect your credit score in our blog.

Is Fair for You regulated by the FCA?

Yes, we’re proud to be regulated by the FCA and to have our customers’ best interests at the heart of everything we do.

Fair for You is a not-for-profit organisation that is owned by the Fair Credit Charity. We believe that all people should be able to access fair credit, regardless of their background and financial circumstances.

FCA regulation helps us to ensure we keep working towards our vision and mission and offers customers peace of mind that credit from Fair for You works for them.

For more information on how Fair for You is run, explore our blog. We’re committed to ensuring transparency and have articles explaining how our Food Club Card works and what a community interest company is.

As well as explaining how we operate, you’ll also find actionable tips for managing your money, including:

If you’re looking for new appliances, like washing machines, dishwashers, and more, with flexible repayment options, browse our selection of products. You can even see what your repayment plan might look like by using our loan calculator.

More guidance & support from Fair for You

The financial support we offer doesn’t stop at credit for your everyday essentials, the Fair for You blog includes actionable tips and information on all things money management.

As part of our ongoing mission to support disadvantaged people and those with difficult financial circumstances, the Fair for You blog consists of handy guidance and budgeting tips.

From How to Talk to Children about Money to advice on what loan sharks are and how to deal with them and even the hidden bills you had no idea you were paying.

*Please note we’ve used links to external websites. Although we make every effort to ensure these links are accurate, up to date and relevant, Fair for You Enterprise CIC cannot take responsibility for pages maintained by external providers. Views expressed on external sites we link to are not necessarily those of Fair for You Enterprise CIC. If you come across any external links that don’t work, we would be grateful if you could report them to the web content team.

The content of this blog does not constitute personal financial advice, and the views expressed in it are those of the contributor or author, which may not necessarily represent or reflect the views expressed by Fair for You Enterprise CIC.