Every credible financial services hub in the world has a watchdog to oversee its activities. The London-based Financial Conduct Authority (FCA) is the body responsible for regulating financial services across the UK. It is a quasi-judicial organisation with a board of directors appointed by the UK Treasury. Under the name of the UK listing authority, the FCA is also the authority responsible for the listing of shares on stock exchanges, for example the London Stock Exchange.
The consolidation of the FCA in 1997 followed a number of steps by the UK government to abolish the self-regulation nature of the industry which had been loosely overseen by multiple regulatory bodies, particularly following the catastrophic collapse of Barings Bank in 1995.
Since then the FCA has formulated a list of statutory objectives and regulatory principles developed through regulatory experience of the UK financial services industry. Currently the FCA’s five statutory objectives are to: uphold market confidence, increase public awareness of the financial system, consumer protection and the protection of client monies (client money held by under trust by a firm – i.e. a client account), reduce financial crime and, more recently to protect and enhance the stability of the UK financial system.
FCA rules stipulate that client money cannot be used by a business in the course of its activities. And, unlike banks, investment firms, including spread betting and CFD providers must separate client money from their own business resources.
Since protection of client monies is one of the FCA’s main objectives, spread betting and CFD speculators you should always choose a provider that is FCA registered. As well as fines, some crimes have also lead to prison sentences for the perpetrators involved.
There are also a number of other financial crimes that FCA is responsible with investigating. One of the most common of these is the intentional misuse of confidential information to profit or avoid losses in the stock markets, known as insider trading.
Other types of crime include a variety of frauds: trade secret fraud i.e. theft of business plans, or ideas to benefit another business; securities or investment fraud – tricking investors through practices including manipulation and misrepresentation for financial gain, and antitrust fraud, which refers to price fixing and using monopolies to gain an unfair market advantage.