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Financial Conduct Authority (Powers of the FCA (FSMA and Financial…
Financial Conduct Authority
Originally given statutory powers and objectives by the FSMA, but this was emended by the Financial Services Act 2012
General Duties
The Financial Services Act 2012 provides that the FCA must, so far as is reasonably possible, act in a way which is compatible with its strategic objective and advance one or ore of its operational objectives
Strategic objective:
Ensuring the relevant markets function well
Operational Objectives:
Consumer Protection:
Focuses on securing an appropriate level of degree of protection for consumers. In considering this, the FCA have regard to:
Integrity Objective:
Aims to protect and enhance the integrity of the UK financial system
Competition Objective:
Focuses on promoting effective competition in the interests of consumers. This applies to markets for regulated financial services, as well as services provided by a recognised investment exchange when carrying out regulated activities
Consumer Protection Objective:
In considering what degree of protection may be appropriate for consumers, the FCA have regard for:
The differing degrees of risk involved in different kind of investment or other transaction
The differing degrees of experience and expertise that different consumers may have
The needs that consumers may have for the timely provision of information and advice that is accurate and fit for purpose
The general principle that consumers should take responsibility for their decisions
The general principle that those providing regulated financial services should be expected to provide consumers with an appropriate level of care, while having regard to the degree of risk involved in relation to the investment or other transaction and the capabilities of the consumers in question
The differing expectations that consumers may have in relation to different kinds of investment or other transaction
Any information with the consumer financial education body has provided to the FCA in the exercise of the consumer financial education function
Integrity Objective:
The integrity of the UK financial system includes:
Its soundness, stability and resilience
Not being used for a purpose connected with financial crime
Not being affected by behaviour that amounts to market abuse
Orderly operation of the financial markets
Transparency of the price formation process in those markets
Competition Objective:
The FCA may have regard to the following matters when considering the effectiveness of competition in the market:
The needs of different consumers whose or may wish to use those services,inclduing their need for information that enables them to make informed choices
The ease with which consumers who may wish mouse those services can access them, including consumers in areas affected by social or economic deprivation
The ease with which consumers who obtain those services can change the person from whom they obtain them
The ease with which new entrants can enter the market
How far competition is encouraging innovation
Powers of the FCA
FSMA and Financial Services Act 2012 give the FCA a wide range of powers that it may use to achieve its objectives
Power to grant an authorisation to conduct a regulated activity
Power to vary any granted authorisation
Power to withdraw an authorisation
Rule making powers
Powers to investigate and gather information in order to assess whether an authorised person is abiding by any such rules or regulations
Enforcement power
Can appoint a person to hold an inquiry
Issue prohibition order
Holds disciplinary powers
Can impose penalties
General functions
Making rules
Preparing and issuing codes
Giving of general guidance
Determining the general policy and principles by reference to which it performs its functions