Having chosen a career within the mortgage industry, you will have committed to undertaking the CeMAP training and passing the end exams in order to become a qualified adviser. However, part of your studying will look at the main regulatory bodies that oversee the financial services market.
When you undertake the role of mortgage adviser, along with your employer’s processes and procedures, you are required to comply with the regulations set by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).
The main purpose of the FCA is to make sure that the markets continue working effectively and that a fair deal is given to all consumers. The Financial Services Act of 2012 states that this responsibility was set by the Government for the FCA.
The organisation is funded by the same firms that it regulates and reports to the Treasury, which has responsibility for the financial system within the UK and Parliament. The FCA, however, is independent and receives no funding from the Government.
The FCA’s main objectives are:
• Consumer protection
• To improve the reputation of the financial system here in the UK
• To ensure that the market remains competitive in the best interests of customers
Part of the Bank of England, the PRA was created as a component of the Financial Services Act 2012. It works very closely with the bank’s departments, including the Financial Policy Committee.
The PRA’s main objectives are:
• To encourage soundness and safety within financial organisations
• To make sure that policy holders have a sufficient level of protection, with regards to the insurance element of the financial services industry
However, this organisation also has three defined ways that it approaches regulations. The first is based on judgement, which is used to establish if an organisation is safe and sound, and if the right level of protection is offered to policy holders. The second is designed to look forward in order to assess current and possible future risks, as well as intervening where necessary. The last is to maintain a consistent approach, while focusing on firms and any issues that potentially may pose the biggest risk to the financial system in the UK and its policy holders.
As you progress through your studies, you will look at these two regulatory bodies in greater detail, as well as the implications for you and your employer if you do not comply with the regulations that they set out.