Blog > What is the Financial Conduct Authority?

What is the Financial Conduct Authority?

By Clare Yates • 19th July 2023 • 5 min read

Explore what the FCA is and how it protects consumers

Written in line with our editorial policy.

The Financial Conduct Authority regulates and supervises UK financial services firms. It protects consumers by setting strict standards that firms must follow. 

It’s reassuring to know that strict standards and regulations are in place to protect you when dealing with the financial services sector – whether that’s equity release or everything from banking to insurance. 

In this guide we explain who the FCA is, and how it exists to protect customers of financial markets, including equity release.

  • What is the Financial Conduct Authority?
  • How does the FCA protect someone taking out equity release? 
  • The FCA equity release standards.
  • Are there any other protections in place for equity release customers?
  • Find out more about equity release.

Homeowners aged 55+ can unlock property wealth with equity release. For fully regulated advice on unlocking your property wealth, please speak to our selected advisers on 0808 178 3055, or request a call back for a time that suits you. Alternatively, check your eligibility and get an initial indication of how much tax-free cash you could release.

What is the Financial Conduct Authority?

The Financial Conduct Authority is the UKs financial services watchdog. It is an independent public body funded entirely by the fees they charge firms. The FCA was set up on 1 April 2013, when they took over conduct and regulation from the Financial Services Authority (FSA). 

They now regulate the conduct of around 50,000 firms across the UK to ensure that financial markets are honest, competitive and fair for consumers.

The FCA’s strategic objective is to make sure the relevant markets function well.  Their operational objectives are to: 

  • Protect consumers from bad conduct
  • Protect the integrity of the UK financial system
  • Promote effective competition in the interests of consumers

The FCA is accountable to the Treasury, which is responsible for the UK’s financial system, and to Parliament.

How does the FCA protect someone taking out equity release? 

Equity release is just one of many financial markets supervised by the FCA. Anyone offering you advice on equity release, or providing you with an equity release product, must be authorised and regulated by the Financial Conduct Authority.

As such, all equity release brokers, advisers and lenders must agree to follow strict rules and codes of conduct when providing you with information, advice or equity release products.

In fact, no lender, broker or adviser is able to operate in the UK without authorisation by the FCA. Equity release firms must demonstrate that they meet a range of requirements before they receive authorisation. The FCA then supervises these firms to make sure they continue to meet them, with a range of enforcement powers available if necessary.

FCA equity release standards

The FCA Handbook lists many considerable standards for advisers and equity release providers. These FCA equity release standards ensure that consumers only take out an equity release plan that is suitable for their needs and circumstances. 

Some specific considerations in their standards include:

  • Whether the benefits to the customer outweigh any adverse effect on their tax position or their entitlement to means tested benefits.
  • Whether alternative methods of raising the required funds would be more suitable.
  • The customer’s preferences for their estate, including whether leaving an inheritance is important to them. 
  • The customer’s future plans and needs, such as whether they are likely to move house in the future. 

When the team here at Equity Release Wise arranges appointments for our customers, we only do so with selected FCA-regulated equity release advisers. To talk to one of these regulated advisers, please call 0808 178 3055 or request a call back.

Are there any other protections in place for equity release customers?

Prospective equity release customers have the reassurance of other protections and safeguards when arranging an equity release plan. From your initial conversations with an adviser and at every step of the process, strict equity release regulations are in place.

In addition to the FCA, equity release customers benefit from protections and safeguards from the following bodies:

Equity Release Council

As the governing body for the industry, the Equity Release Council has a strict code of conduct that all members must abide by. These rules have protected customers for over 30 years, helping to ensure equity release horror stories remain a thing of the past. 

They also have a set of standards that its members must agree to, which include:

  • You have the right to live in your property until you pass away or move into long-term care.
  • You can move your plan to another property providing it meets the lender’s criteria.
  • The ‘no negative equity’ guarantee, so you’ll never owe more than the value of home.
  • You have the right to make voluntary, penalty-free partial loan repayments.

As members, our carefully selected advisers comply with Equity Release Council guarantees and standards. In addition, they will only recommend plans from providers who are members of the Equity Release Council to offer you as much protection as possible. 

Financial Services Compensation Scheme

The Financial Services Compensation Scheme (FSCS) enables you to claim compensation if you lose money as a result of dealing with a firm that has gone bust. An example might be if you were advised to take out a lifetime mortgage that was unsuitable for you at the time and the broker or adviser you dealt with has gone out of business. 

The FSCS offers protection specific to equity release customers who lose money due to:

  • Advice to take out a lifetime mortgage that was unsuitable (for advice given after 31 October 2004) 
  • Bad advice about home reversion plans (since 6 April 2007)

Read our guide to the Financial Services Compensation Scheme for more details.

Find out more about equity release

If you are a UK homeowner aged 55 or over then our friendly team is ready and waiting to help you find out more about equity release. 

For regulated equity release advice that puts your individual wants and needs for retirement first, please call us on 0808 178 3055, or request a call back for a time that suits you. We’ll arrange an appointment with one of selected advisers to help you find out more about the suitability of equity release. Alternatively, check your eligibility and get an initial indication of how much tax-free cash you could release.

Are you younger than 55 and in need of a cash boost? Read our blog here to explore how to release equity if you are under 55.

About Clare Yates. With over a decade’s experience writing about later life financial planning, Clare offers a wealth of knowledge about equity release, pension annuities, wills, LPAs and more. When she isn’t writing, Clare likes to spend her time baking and going on walks with her husband, two children and their rescue dog. Follow Clare on LinkedIn

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