FAQS
How is the UK financial system regulated?
The UK financial system is regulated by two main authorities:
- Financial Conduct Authority (FCA) – Regulates consumer protection, conduct, and financial markets.
- Prudential Regulation Authority (PRA) – Oversees banks, insurers, and large investment firms to ensure financial stability.
- Bank of England (BoE) – Maintains monetary and financial stability.
- HM Treasury – Sets financial policies and oversees regulation.
What is the 50% rule for sanctions in the UK?
The UK’s 50% Rule (under OFSI sanctions regulations) states:
If a sanctioned entity owns 50% or more of a company, that company is also sanctioned, even if not directly listed. This prevents businesses from bypassing sanctions.
What is the most important source of law for financial regulation in the UK?
The main sources of financial regulation include:
✅ Financial Services and Markets Act (FSMA) 2000 – The foundation of UK financial regulation.
✅ Banking Act 2009 – Covers bank resolutions and financial stability.
✅ Money Laundering Regulations 2017 – Rules to combat money laundering.
✅ UK GDPR & Data Protection Act 2018 – Governs financial data security.
What regulations do UK banks have to comply with?
UK banks must comply with:
- FCA and PRA rules
- Basel III Framework (capital & risk management requirements)
- Anti-Money Laundering (AML) laws
- Consumer Credit Act (for lending rules)
- Payment Services Regulations (PSR) (for electronic payments)
Which banks are not regulated by the UK?
- Foreign banks with no UK operations (unless offering services in the UK).
- Cryptocurrency exchanges (unless FCA-registered).
- Some private or offshore banks (regulated by their home country).
What’s the difference between FCA and PRA?
- FCA regulates conduct & consumer protection (applies to all financial firms).
- PRA regulates financial stability & risk (applies to banks, insurers, and investment firms).
- Both are part of the Bank of England’s oversight framework.
What is Section 11 of the Banking Regulation Act?
- This applies mainly to India, not the UK. It sets banking business restrictions, ensuring that only licensed institutions conduct banking activities. The UK follows the Financial Services and Markets Act (FSMA) 2000 instead.
What are the new banking rules?
New banking rules in the UK include:
✅ Basel III Reforms – Stricter capital & liquidity requirements.
✅ Consumer Duty (2023) – Stronger consumer protection measures.
✅ Stronger Anti-Fraud & AML rules – More controls on financial crime.
✅ Crypto Regulations – Tighter FCA oversight on crypto firms.
What is Section 46 of the Banking Regulation Act?
This is from India’s Banking Regulation Act, which covers penalties for violating banking laws. In the UK, penalties are governed by the FSMA 2000 and FCA rules.
Do banks need to be regulated?
✅ Yes! Banks must be regulated to:
- Protect customer funds.
- Maintain financial stability.
- Prevent fraud & money laundering.
- Ensure fair lending & transparency.