Financial Conduct Authority (FCA)
The Financial Conduct Authority (FCA) is the United Kingdom’s conduct regulator for financial services. It authorizes firms, supervises how they treat customers and behave in markets, and enforces against those that fall short. It is funded by levies on the firms it regulates rather than by government, and it sits alongside the Prudential Regulation Authority, which supervises the financial soundness of the largest institutions.
| Established | 2013, when the Financial Services Authority was replaced |
| Jurisdiction | United Kingdom |
| Focus | Conduct — how firms treat customers and behave in markets |
| Counterpart | The Prudential Regulation Authority, part of the Bank of England, covering financial soundness |
| Funding | Levies on regulated firms, not the public purse |
| Core powers | Authorization, supervision, rule-making, enforcement, and the power to withdraw permissions |
| Money laundering role | Supervises AML compliance for the firms it regulates under the UK Money Laundering Regulations |
| Notable recent obligation | The Consumer Duty, requiring firms to deliver good outcomes for retail customers |
What it does, and what the PRA does
The UK operates a split model that causes persistent confusion, and the division is worth stating clearly.
| FCA | PRA | |
|---|---|---|
| Question asked | Is this firm treating customers and markets fairly? | Is this firm financially sound? |
| Scope | All regulated financial services firms | Banks, insurers and major investment firms |
| Sits within | An independent body accountable to Parliament | The Bank of England |
| Typical concerns | Mis-selling, unfair terms, financial crime controls, market abuse | Capital, liquidity, resolvability |
Most firms deal only with the FCA. The largest are dual-regulated and answer to both, on different questions.
Where identity verification enters
Three routes, and they pull in different directions — which is the most useful thing to understand about operating under this regulator.
Financial crime supervision. The FCA supervises AML compliance for the firms it authorizes, under the UK Money Laundering Regulations. Customer due diligence obligations there parallel those described under customer due diligence — identify the customer, verify the identity, understand the relationship, and keep it current.
Authorization. A firm seeking permission must satisfy the regulator that its systems and controls are adequate before it operates, which puts identity and financial crime controls in scope at the gateway rather than only at supervision.
Consumer outcomes. The Consumer Duty requires firms to deliver good outcomes for retail customers, and this is the route people underestimate. A verification process that fails disproportionately for some customer groups, or that blocks access without a workable route to resolve it, is a conduct question rather than only a performance one. Under this regulator, excluding legitimate customers is not merely a commercial cost.
Those two pressures — strong financial crime controls and good outcomes for customers who are hard to verify — point in opposite directions, and reconciling them is a design problem rather than a policy one. Identity document verification with broad document coverage and a proportionate step-up path is what allows a firm to tighten controls without excluding people, and KYC and AML obligations under the UK regime look very similar in substance to their U.S. equivalents while differing in supervision and enforcement.
What the FCA doesn’t do
It does not guarantee firms or products. Authorization is not endorsement, and compensation for failure is the Financial Services Compensation Scheme’s function.
It does not resolve individual complaints. That is the Financial Ombudsman Service. The FCA acts on patterns rather than individual cases.
It does not supervise prudential soundness for most large banks. That is the PRA.
Its remit stops at the UK border. A firm operating across Europe faces separate national regimes; post-Brexit passporting no longer applies.
Frequently asked questions
What does the Financial Conduct Authority do?
It regulates the conduct of financial services firms in the United Kingdom — authorizing them to operate, supervising how they treat customers and behave in markets, making rules, and enforcing against firms that fall short. It is funded by levies on the firms it regulates.
What is the difference between the FCA and the PRA?
The FCA regulates conduct across all authorized financial services firms. The Prudential Regulation Authority, part of the Bank of England, supervises the financial soundness of banks, insurers and major investment firms. The largest institutions are dual-regulated and answer to both on different questions.
Does the FCA regulate anti-money-laundering compliance?
Yes, for the firms it authorizes, under the UK Money Laundering Regulations. Customer due diligence, ongoing monitoring and reporting obligations all fall within its supervision, alongside its conduct responsibilities.
How does the Consumer Duty affect identity verification?
It requires firms to deliver good outcomes for retail customers, which brings verification failure rates into scope as a conduct matter. A process that disproportionately blocks particular customer groups, or offers no workable route to resolve a rejection, is a regulatory question rather than only a commercial one.
Related reading
- Customer due diligence — the obligation in substance, under UK and U.S. regimes alike
- Compliance — the function that operates these obligations day to day
- CFPB — the nearest U.S. analogue, and how differently it has fared
- GDPR — the other regime constraining how UK verification data is handled
