Unless you’ve been an advocate of the cash-under-the-mattrass approach to financial planning, you'll have heard of the Financial Conduct Authority (FCA).

But what does the FCA mean to you if you're considering equity release?

If you’re thinking about following the lead of the UK's countless equity release beneficiaries, the last thing you'd want to deal with is an unscrupulous financial provider. 

Fortunately, this is where the Financial Conduct Authority (FCA) has you covered.

At SovereignBoss, our team has spent hours gathering all the latest information to answer your burning questions about the FCA and equity release.

Keep reading to find out what you need to know.

What’s the Financial Conduct Authority (FCA)?

The Financial Conduct Authority (FCA) is a regulatory body that ensures firms in the UK financial sector operate in a fair, honest, and competitive way.¹

What Does the Financial Conduct Authority Do?

The Financial Conduct Authority ensures the honest, fair, and effective operation of the UK's financial markets by regulating the conduct of financial services providers, prudentially supervising firms, and setting stringent standards that must be adhered to.²

What Are the 3 Main Objectives of the FCA?

The 3 main objectives of the FCA are:

• To protect consumers against bad financial practices. 
• To enhance market integrity and support the health of the financial system. 
• To promote competition in the interests of consumers.

How Does the Financial Conduct Authority Operate?

The Financial Conduct Authority regulates services within the financial industry in the UK, alongside the Prudential Regulatory Authority (PRA).

The core purpose of its operations is to protect customers from unscrupulous firms.

Service providers need to pay a membership fee to be added to the financial services register, where regulated firms are listed.

The FCA ensures that its members adhere to the stringent guidelines and standards it sets to avoid suspension, fines, or legal action.

What Powers Does the Financial Conduct Authority Have?

The Financial Conduct Authority’s powers are all aimed at protecting consumers from unscrupulous and unregulated firms that don't meet FCA standards.

The FCA’s powers include:

• Revoking a firm's authorised status.
• Banning individuals from 'carrying on regulated activities'.
• Excluding companies and individuals from 'undertaking regulated activities'.
• Fining firms and individuals who breach FCA rules or 'commit market abuse'.
• Fining firms that 'breach competition laws'.
• Notifying the public when it initiates disciplinary action.
• Making available the details of 'warnings, decisions, and final notices'.
• 'Applying to the courts for injunctions, restitution orders, winding-up, and other insolvency orders.'
• Initiating criminal prosecutions to stop financial crime, which can include 'insider dealing, unauthorised business, and false claims to be FCA-authorised'.
• Warning consumers about 'unauthorised firms and individuals', and requesting that any websites associated with such firms and individuals be deactivated³.

What Are the Functions of the Financial Conduct Authority?

The functions of the Financial Conduct Authority include rule-making, investigating, and enforcing corrective measures to protect consumers.

Who Finances the Financial Conduct Authority?

The Financial Conduct Authority’s financed through fees it charges the firms it regulates. The FCA functions independently of the UK Government and is accountable to the Treasury and to Parliament.⁴

What Can the FCA Do If There’s an Allegation of Wrongdoing?

If there’s an allegation of wrongdoing, the FCA can start by appointing investigators to gather the relevant information and documentation relating to the allegations.

The team will notify the firm in question, review the merits of the allegations, and take the most fitting action against the alleged perpetrator.⁵

The formal action taken against the firm may include withdrawal of its authorisation, suspension, or prohibition from continuing with regulated activities, among other remedies.⁶

How Does the FCA Regulate Equity Release?

The FCA regulates service providers in the equity release market to prevent customers from being taken advantage of.

Most firms in the financial industry must register to be listed on the financial services register in order to operate.

To protect consumers, the FCA maintains a list of firms that are not regulated but may be posing as firms that are.⁷

FCA Contact Details

The FCA’s contact details are as follows:

• +44 (0)20 7066 1000
• firm.queries@fca.org.uk
• 12 Endeavour Square, London E20 1JN.

Common Questions

In Conclusion

Equity release has been gaining in popularity over recent years.

If you're considering a lifetime mortgage or home reversion plan, it’s vital to deal with a regulated provider so you'll be treated fairly.

The FCA exists to safeguard you from potentially dealing with fraudulent and suspicious firms.

To make sure the equity release provider you're considering is a reputable service provider, verify its credentials on the Financial Conduct Authority's Financial Services Register before proceeding.⁸