We’re big on giving companies the advantage in managing risks and compliance. Since the 2008 economic crisis, there’s been a shakedown of the financial industry. Regulators were given extra powers and new watchdogs came on the scene. This is all in the hope that people queuing up to remove every last penny from a bank, (as in the case of Northern Rock) will be a thing of the past.
We’ve given you the low-down on what CEOs should know about compliance. Take heed because if one of the regulators come knocking and your financial practices are found wanting, there’ll be a hefty price to pay. We’ll list the regulators that have the job of keeping business and financial institutions in check to make sure that consumers get a fair deal.
Financial Conduct Authority (FCA)
The FCA was previously known as the Financial Services Authority (FSA). It underwent a major make-over during the financial crisis. The Financial Services Act of 2012 gave the FCA new powers to:
- Stamp-out ‘shady’ practices in the financial markets.
- Control financial service companies, so that consumers get what’s fair.
- Keep the financial services market competitive.
Overall, the FCA’s main aim is to protect the consumer from being ripped-off by financial service companies. The FCA oversees over 70,000 businesses.
Although the FCA’s powers and responsibilities are set out in legislation, they are not a government organisation. They are independent with accountability to the Treasury.
Bank of England (BoE)
One instance where referring to an old lady isn’t rude is when talking about the BoE. The BoE’s nickname as the ‘Old Lady of Threadneedle Street’ is well deserved as it’s been around since 1694.
The BoE’s job is to keep financial stability. The most well-known BoE responsibility is to issue cash. It makes sure that bank notes and coins are of the best quality and are difficult to forge.
‘Making’ money is just the tip of the iceberg when it comes to regulation. The BoE is responsible for protecting the value of the UK’s currency. It aims to provide stable prices, which are defined by the inflation target set by the government.
The Financial Policy Committee, which is part of the BoE was started in 2013 to:
- Identify and manage risks to protect the UK’s financial system.
- Support the government’s economic policy.
Prudential Regulation Authority (PRA)
The PRA works alongside the BoE and is responsible for regulating roughly 1,700:
- Credit unions.
- Investment firms.
- Building societies.
It’s tasked with making sure insurers provide adequate protection for policyholders. It also ensures fair competition and that companies operate in a safe way.
The PRA assesses the financial companies above, to make sure that any risks to its aims are appropriately dealt with to prevent future financial crisis.
Financial Ombudsman Service (FOS)
If a consumer feels like they’ve suffered loss at the hands of a financial company and they are not satisfied with how it’s been dealt with, then the FOS steps in. The FOS will give the business eight weeks to deal with the complaint. Where the customer is still aggrieved, the FOS will try to sort it out.
The FOS is an impartial and independent service that listens to both sides of a complaint and examines the facts before making a decision.
Consumers can use the FOS free of charge. It deals with most cases of financial complaints, including:
- Credit cards and store cards.
- Payment protection insurance (PPI).
- Payday lending.
To some businesses, the regulators can be seen as the ‘big bad wolf’. It’s worth remembering that their job is ultimately to protect both the consumer and business as they were both casualties of the last recession.