FAQS
What’s the difference between FCA and PRA?
The FCA (Financial Conduct Authority) and PRA (Prudential Regulation Authority) regulate financial firms in the UK but have different roles:
- FCA – Regulates how financial firms behave, ensuring they treat customers fairly and follow ethical business practices.
- PRA – Oversees the financial stability of banks, insurers, and large investment firms, ensuring they have enough capital to withstand financial crises.
What are PRA-designated investment firms?
PRA-designated investment firms are large financial institutions whose failure could impact financial stability. These firms:
- Take significant risks (e.g., investment banks, major trading firms).
- Must meet strict capital and liquidity requirements.
- Are regulated by both the PRA (for financial stability) and the FCA (for conduct and consumer protection).
What are the four main areas into which FCA-regulated activities fall?
The FCA regulates financial services in four key areas:
- Banking (e.g., retail and commercial banks).
- Investments (e.g., fund management, stock trading).
- Insurance (e.g., life insurance, general insurance).
- Consumer credit (e.g., loans, mortgages, credit cards).
How much does it cost to be FCA regulated?
FCA regulation costs vary based on business type and revenue. Key fees include:
- Application fee: £1,000 – £25,000 (depending on firm size).
- Annual FCA fees: Can range from £1,000 to £500,000+, depending on business activity and income.
How to calculate FCA fees?
FCA fees are based on:
- Firm type and regulatory category.
- Annual income from regulated activities.
- Minimum and variable fees (set by the FCA each year).
Firms can estimate costs using the FCA fee calculator on the FCA website.
Does my business need to be FCA regulated?
Your business must be FCA regulated if it:
- Provides investment advice or manages client funds.
- Offers consumer credit (e.g., lending, credit broking).
- Sells or advises on insurance products.
- Operates in financial trading or fund management.
If unsure, check the FCA’s Perimeter Guidance Manual (PERG).
Who pays FCA fees?
- Firms that are FCA regulated must pay the fees.
- Costs may be passed to customers through higher service charges.
Do you need to be FCA regulated to lend money?
Yes, if you are lending money as a business (e.g., payday loans, personal loans, or credit agreements), you must be FCA authorized.
- Exceptions: Some business-to-business (B2B) loans and private lending arrangements may not need FCA regulation.
Do you pay VAT on FCA fees?
No, FCA fees are exempt from VAT.
Do traders need to be FCA regulated?
It depends on the type of trading:
- Retail traders (individuals) – Do not need FCA regulation.
- Proprietary trading firms – May need FCA regulation if offering services to clients.
- Investment firms and brokers – Must be FCA regulated if they manage client funds or execute trades on behalf of clients.