Financial Conduct Authority (FCA)
The Financial Conduct Authority is the United Kingdom’s conduct regulator for financial services. It decides whether a payments or e-money firm may operate in the UK, authorizes or registers it, and supervises how it behaves afterwards.
Also called: UK FCA
The Financial Conduct Authority is the body that decides whether a UK payments business exists. It authorizes and supervises electronic money institutions and payment institutions, and it publishes the Financial Services Register, where anyone can read a firm’s exact permissions rather than take its word for them.
An application is a business review, not a form. The FCA examines the business model, the source and adequacy of capital, governance, the individuals who will run and own the firm, and the arrangements for keeping customer money apart from the firm’s own. Weak answers are refused, and firms are often asked to narrow the permissions they requested.
Authorization and registration are not the same
The FCA does both, and the words are not interchangeable. A small payment institution or small e-money institution is registered: lighter requirements, tighter limits, and a narrower permission than an authorized firm holds. Reading a register entry as “FCA approved” without reading which status it records is how buyers and partners misjudge a counterparty.
Supervision continues after the decision. Firms report regularly, notify changes of control and personnel, and can have permissions varied, restricted or cancelled.
In practice
The FCA authorizes and supervises firms. It does not operate payment systems, move or settle any money, and it does not guarantee customer funds — if an authorized e-money or payment firm fails, there is no deposit-style compensation scheme standing behind the balances.
Commonly confused with
| Term | How it differs |
|---|---|
| Prudential Regulation Authority (PRA) | The PRA prudentially regulates banks, insurers and large investment firms; payment institutions and e-money institutions are authorized and supervised by the FCA alone. |
| Financial Services Compensation Scheme (FSCS) | FSCS protection applies to failed deposit-takers and certain other firms; FCA authorization of an e-money or payment firm brings no such protection, only safeguarding obligations. |
See also
- Electronic Money InstitutionA firm authorized in the United Kingdom or in an EU member state to issue electronic money and to provide payment services. The e-money it issues is a claim its holders have against the institution, redeemable at par and expressly not a deposit, which is why the funds behind it must be safeguarded.
- Payment InstitutionA payment institution is a firm authorized in the United Kingdom or a European Union member state to provide payment services — transfers, acquiring, remittance, payment initiation — but not to issue electronic money. It may hold customer funds in payment accounts used only for payment transactions; those funds are neither deposits nor e-money.
- SafeguardingSafeguarding is the statutory requirement that an authorized payment or e-money firm keep customer funds apart from its own money, by a method the rules prescribe, so the funds are identifiable and returnable to customers if the firm fails. It is a licensing condition, not best practice.
- Appointed RepresentativeA UK firm that carries on regulated activities under FSMA as the representative of an authorized principal firm. The principal accepts regulatory responsibility for what the representative does, and the representative holds no authorization of its own.