The Financial Services Authority (FSA)
The Financial Services Authority (FSA) has now been replaced with the Financial Conduct Authority (FCA) however it operated as a regulatory body between 2001 and 2013 where it was a specific government body for the regulation of all companies operating in financial sectors.
In 1985 the FSA was started under the name ‘The Securities and Investment Board ltd’. A decision was reached that the board should not be self-regulated following a series of scandals in the 90’s and as such the body was consolidated into one.
It was named the Financial Services Authority in 1997 and in 2000 it was given power under the ‘Financial Services and Markets Act. The body took responsibility for the regulation and supervision of the shares trade by also accommodating the Securities and Futures Authority (SFA).
Over the years, the body amassed a variety of roles and concerns and had overall responsibility for the regulation and supervision of banks, financial services, mortgages and insurance companies. When the UK economy came crashing down in the recession of 2007 under the care of the Financial Services Authority, it was decided to reorganise the body and the Financial Conduct Authority FCA was born in April 2013.
The Financial Conduct Authority (FCA)
Operating since 2013 the Financial Conduct Authority also known as the FCA has overall responsibility for all of the banks, mortgage companies, insurance and any other type of financial service in the UK. Martin Wheatley, former head of Hong Kong’s Securities and Futures is the Head of the FCA whose role is to protect consumers from varying forma of misconduct within the industry.
The FSA became the FCA following royal assent in 2012 and respectively the abolition of the FSA in 2013. As a result, the act gave the Bank of England economic responsibility for the UK’s economy and combines three bodies, the Bank of England’s Financial Policy Committee, Prudential Regulation Authority and the Financial Conduct Authority.
This act gives the Bank of England direct responsibility for the financial stability of the economy in the United Kingdom. The new regulatory structure brings together the Financial Conduct Authority, the Bank of England’s and the Prudential Regulation Authority. Additionally in April 2014, the FCA received responsibility for the consumer credit industry and this was transferred from the Office of Fair Trading (OFT).
The Financial Conduct Authority Main Responsibilities
The financial industry is fully regulated by the FCA and this includes the payday loans industry, which has grown in recent years. The aim of the FCA is to offer comprehensive and all-encompassing protection for consumers across a wide range of financial products and services.
Ultimately the FCA controls the standards and ethics which all companies within the financial industry have to follow and guidelines set out for all products. In January 2015 the FCA set a new price cap for the payday loans industry, effectively freezing the amount of APR and interest customers pay back on their loan. For more information, here is the FCA’s article.
In case of misconduct or rules are not being followed, the FCA has the power to open an investigation where their decision is final. They have the authority to act on their judgement and in severe cases, ban or bar financial products where they feel the needs of the consumer are not being met.
The Financial Policy Committee (FPA)
The Financial Policy Committee (FPA) is the chief regulatory arm of the Bank of England and has ultimate responsibility for observing the UK’s economic stability and the progression of it. This was taken from the Financial Service Authority in 2012.
The Prudential Regulation Authority (PRA)
When the Financial Services Authority closed in 2012, the Prudential Regulation Authority (PRA) was formed with the intention of regulating and standard setting for the financial services industry and in particular, insurance. The PRA is owned by the Bank of England and has full responsibility to watch over the economy and to make changes or adaptations where possible to maintain and grow the economy.
Within the payday loans industry, the PRA and the FCA work together to regulate and set new standards of consumer protection. There are additionally non-regulatory bodies who impact on the payday loans industry.
The Consumer Credit Association (CCTA)
The Consumer Credit Association (CCTA) is one of the longest running trade bodies in the UK and very often the role of the CCTA is to act as a liaison or intermediary between the relevant government bodies to ensure that the new rules and regulations are feasible in force and to provide feedback on behalf of its members to parties affected by new legislation.
Stepchange is a charity to provide assistance to consumers who fall into unmanageable debt. Consumers can find a wealth of information and support with Stepchange to help them to recover their financial position and get out of debt. They provide a variety of debt solutions such as Debt Management Plans, Individual Voluntary Agreements (IVA) and Debt Relief Orders (DROs). For more information please visit the link above to Stepchange.