In plain words
Think of the FCA as a combination of a driving test centre and the traffic police for UK finance. It decides who gets a licence to drive, writes the rules of the road, watches how people drive, and can take licences away from those who break the rules.
The Financial Conduct Authority is the UK regulator responsible for how financial firms behave: towards their customers, towards each other and in the markets. It was set up in 2013 and works independently of government, though it answers to the Treasury and Parliament. Its job, in its own words, is a fair and thriving financial services market for consumers and the economy, through three objectives: protecting consumers, keeping markets honest and promoting competition. 1
For a fintech founder, the FCA is usually the first regulator that matters. It authorises EMIs, payment institutions, lenders, investment firms and crypto businesses, and it keeps watching them for as long as they operate.
How it works
How the FCA works with a fintech
From the first application to life as a regulated firm.
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1
Authorisation
You apply for the permissions your product needs. The FCA checks your business plan, capital, people, controls and systems before saying yes.
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2
The register
Once approved, your firm appears on the public Financial Services Register, showing what you may do. Partners and customers check it. 2
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3
Supervision
You send regular reports, tell the FCA about incidents and changes, and answer its questions. It can review your firm at any time.
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4
Enforcement, if needed
If a firm breaks the rules, the FCA can restrict its business, fine it, or cancel its permissions.
What the FCA authorises
Different products need different permissions. These are the ones fintech founders meet most often.
| Activity | FCA status | Typical product |
|---|---|---|
| Issuing e-money | Authorised EMI or small EMI | Wallets, neobank accounts, prepaid cards |
| Moving money | Authorised or small payment institution | Remittance, merchant acquiring, bill payments |
| Account information only | Registered account information provider | Budgeting and data apps |
| Acting for a licensed firm | Agent, registered by its principal | Branded apps on a partner’s licence |
| Cryptoasset business | Cryptoasset registration for anti-money-laundering | Exchanges, custodial wallets |
| Lending, investments, insurance | Permissions under the main financial services law | Credit, investing and insurance apps |
For EMIs and payment institutions, the FCA must decide within three months of a complete application, or twelve months if it is incomplete. 3 Missing information is the most common reason applications take longer. We cover the usual mistakes in why UK neobanks fail FCA approval.
Using the register before you sign
The Financial Services Register is free and public. Before you sign with a banking partner, a card programme manager or a principal EMI, look them up. Check that their status is current, that their permissions cover what they are selling you, and whether they list agents or trading names. It takes a few minutes and avoids building on a partner that cannot legally do what you need.
FCA vs PRA
The UK has two main financial regulators. Which one you deal with depends on what kind of firm you are.
| FCA | PRA | |
|---|---|---|
| Focus | Conduct: how firms treat customers and markets | Prudential: whether firms are financially safe |
| Part of | Independent body | The Bank of England 4 |
| Who it covers | Almost all financial firms | Banks, building societies, insurers and major investment firms |
| EMIs and payment institutions | Sole regulator | Not involved |
| Banks | Regulates conduct | Authorises and regulates financial safety |
This is why a banking licence is a much bigger project than an EMI licence: a new bank applies to the PRA and the FCA together, and both must agree.
The FCA rules founders meet first
- Safeguarding. Customer money in payment and e-money firms must be kept separate and reconciled every working day.
- Consumer Duty. Firms must deliver good outcomes for retail customers, from product design to support.
- Financial crime. Anti-money-laundering controls, a named MLRO and checks on every customer.
- Operational resilience. Important services must keep running through outages, including those at your suppliers.
The FCA also runs a regulatory sandbox and other innovation services for firms testing new ideas.
Payments also have a second UK regulator, the Payment Systems Regulator, which oversees payment systems such as Faster Payments. The government has announced plans to fold it into the FCA, so expect payments regulation to sit increasingly with one body.
The FCA’s counterparts elsewhere
| Market | Who licenses payment and e-money firms |
|---|---|
| United Kingdom | The FCA |
| European Union | The national regulator of each country, such as the central bank or financial supervisor, coordinated by the European Banking Authority |
| UAE | The CBUAE on the mainland, the DFSA in the DIFC and the FSRA in ADGM |
| Saudi Arabia | SAMA, the Saudi Central Bank |
A key difference: on the UAE mainland and in Saudi Arabia the central bank licenses payment firms directly, while in the UK that job sits with a separate conduct regulator. See UK vs UAE fintech launch routes.
Example: from idea to the register
Hannah is launching a multi-currency account for UK small businesses.
- Which permission. Customers will hold balances, so she needs to issue e-money. That points to an EMI, not a payment institution.
- Before applying. She uses the FCA register to check her chosen banking and card partners, and that her competitors hold the permissions she expects.
- The application. She submits a complete application with policies that already work in her product, not just on paper. The FCA asks questions; she answers them quickly.
- Live. Her firm appears on the register. From then on, monthly safeguarding returns, incident reports and change notifications are part of the routine.
Common misconceptions
“FCA-regulated means my money is guaranteed.”
No. Regulation sets rules, it does not guarantee balances. E-money is protected by safeguarding, not by the FSCS.
“Once authorised, the FCA leaves you alone.”
Authorisation is the start. Reporting, notifications and reviews continue for as long as you hold permissions.
“The FCA regulates banks’ capital.”
That is the PRA’s job. The FCA regulates banks’ conduct, and both regulators must approve a new bank.
FAQ
What does the FCA do?
The Financial Conduct Authority regulates how financial firms in the UK behave. It decides which firms may offer regulated services, supervises them once they are live, sets rules on treating customers fairly, and can fine firms or remove their permissions.
What is the difference between the FCA and the PRA?
The PRA, part of the Bank of England, checks that banks, insurers and major investment firms are financially sound. The FCA regulates how all financial firms behave towards customers and markets. Banks are regulated by both; EMIs and payment institutions are regulated by the FCA alone.
How long does FCA authorisation take?
For EMIs and payment institutions, the FCA must decide within three months of a complete application, or twelve months if it is incomplete. For most other permissions under the main financial services law, the limits are six and twelve months. Preparation usually takes longer than the review.
How do I check if a company is regulated by the FCA?
Search the FCA's Financial Services Register online. It shows whether a firm is authorised or registered, what it is allowed to do, and whether it is an agent of another firm.
Does the FCA protect my money if a fintech fails?
Not directly. The FCA sets rules such as safeguarding that firms must follow to protect customer money. Deposit insurance comes from the Financial Services Compensation Scheme, which covers bank deposits but not e-money.
Who pays for the FCA?
The firms it regulates. The FCA is funded mainly by fees charged to authorised and registered firms, not by taxpayers.
Related terms
Sources
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1
FC
Financial Conduct Authority About us
https://www.fca.org.uk/about -
2
FC
Financial Conduct Authority Financial Services Register
https://register.fca.org.uk/s/ -
3
FC
Financial Conduct Authority Electronic money and payment institutions
https://www.fca.org.uk/firms/electronic-money-payment-institutions -
4
BO
Bank of England Prudential regulation
https://www.bankofengland.co.uk/prudential-regulation
