It is hard to argue with the old saying that money makes the world go round. In fact, you could probably say that entrepreneurs know that better than anyone.
Whether they are seeking cash to get new ideas off the ground or looking take on new staff, pounds and pence are of course crucial. This is the reason why the health of the financial sector is so vital to all of our lives. We rely on it in so many ways, from setting up business banking to even getting insurance on new premises.
Unsurprisingly, the sector has grown to the point where it not only makes a massive contribution to the UK economy but is also thought to employ millions of people. With all of this in mind, it is vital that the industry operates appropriately and responsibly, with the ultimate aim of offering all of its customers the best possible level of support.
This is where the Financial Conduct Authority – or the FCA – comes in. Established in 2013, the organisation is responsible for providing regulation for the financial markets and, in turn, somewhere in the region of 58,000 businesses.
While it is involved in a number of areas, here we are going to take a look at six different ways that the work of the FCA specifically has an impact on business owners in the UK.
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1. Proper regulation
The FCA was launched to replace the Financial Services Authority, and its work covers areas that range from retail and wholesale firms, effectively covering all areas of the financial sector.
The aim is simple – to ensure that all customers, including entrepreneurs and business owners seeking access to products and advice, get the best possible support when it comes to financial issues.
2. Safe and sound
The FCA’s structure includes the Prudential Regulatory Authority, which regulates the conduct of 1,500 banks, insurers, building societies and similar bodies. The objective? To promote the ‘safety and soundness’ of such firms.
As part of its regulatory efforts, the FCA also asks businesses are entering the world of financial services to gain authorisation to operate. Firms have to apply, and the FCA then assesses them to ensure they can meet the necessary standard, with the process being a vital step that business owners looking to operate in this space should not ignore.
Of course, the fundamental benefit of all the above is that business owners – and customers in general – benefit from some level of protection when they interact or buy products and services from financial services firms.
Whether you’re seeking a loan to support expansion plans, a mortgage for an industrial unit or advice on setting up pensions, the FCA is ultimately working to ensure that customers are safe and do not fall victim to scams or other problems. Considering the high-profile issues which have impacted on the banking and financial sector in the not-so-distant past, this can only be a good thing.
4. Promotes competition
A high level of protection is all well and good of course, but business owners also want to know that they’re getting a good deal. Fortunately, the FCA has your back on this as it actively works to promote proper competition across the sector.
It is fair to say that financial services can be a complex area at times and it is vital that businesses and individuals be given a chance to make the decision that is best for them. Competition creates choice, allowing us to see different options and ultimately pick the right one. It also encourages firms to offer quality deals and embrace innovative ideas as they look to attract new clients.
It is an unfortunate truth but, sadly, in business, like in many other areas, things do not always go to plan. If your operations have suffered as a result of issues with a financial services firm, you can at least rest assured that the FCA works to hold such companies to account where necessary.
The body is able to step in and investigate when it is alleged that firms are not meeting the proper standards, while it can also use enforcement to ensure companies recognise the importance of playing by the rules.
6. Encouraging innovation
The FCA’s remit is about more than ensuring everything is running smoothly, however. The organisation also has an eye on the future and is keen to do what it can to boost innovation in the sector.
For example, its Sandbox initiative allows businesses to test new concepts by creating a small-scale customised environment with real customers who are protected by safeguards. The concept is a real positive step for business owners looking to support the financial services, with many of those currently involved in the campaign specifically looking at the use of blockchain technology.
A vital role
As each of the points above outlines, the FCA has an vital role to play in many different ways. Whether you are business owner seeking access to financial products or an entrepreneur looking to enter the sector, the FCA’s work will undoubtedly affect you in some way. Money may make the world go round, but the FCA is doing a vital job to keep the UK’s financial sector ticking over.