The FCA stands for the Financial Conduct Authority, representing an important independent financial regulatory body. It is based in the UK and its main responsibility is to regulate and examine the operation of financial institutions in the UK.
With that in mind, the main aim of the FCA is to ensure that the code of conduct is fair and that all the firms in the UK operate accordingly. The question that naturally follows is: how does the FCA regulate Forex brokers?
Understanding How the FCA Operates
It’s critical to note that the FCA is entitled to revoke licenses if the situation asks of it, as well as oversee the materials created for marketing and promotional purposes, to ensure their legitimacy. In addition to that, the FCA is involved in auditing company financials. This is essential in order to establish the reliability index of each company. This way, consumers can be confident that they get a decent deal whenever they collaborate with financial companies.
So, when it comes to the firms that work under the FCA, the obvious conclusion is that these firms are legitimate, and they address the needs of the client, not the other way around.
With that in mind, you might wonder whether the same high standards apply in the regulation of Forex brokers. Yes, according to the law, all the trading brokerage houses that function in the UK must get a license from the FCA.
Aside from this, the FCA must provide them a regulation. This is primarily why one might think that the FCA regulated Forex brokers are reliable. The code of conduct entails a wide range of specifications the brokers must abide by. The code of conduct is the result of the prescription by the Financial Services Act of 2012.
When the situation asks of it, the FCA will resort to these laws, in order to protect the rights of the consumer.
Does the FCA Work for the Benefit of the Consumer?
Essentially, the FCA actually oversees the way in which financial companies work with their customers. Hence, it could be said that the FCA actually works in the benefit of the consumer, focusing on promoting healthy competition in the marketplace.
Nevertheless, considering that the FCA is actually a regulatory body, this means it doesn’t facilitate help or mediation services when it comes to issues between FCA regulated Forex brokers and customers.
In spite of this, it is highly advisable to check whether a broker is regulated by the FCA, specifically if you want to assess the authenticity or reliability of a regulation. Another idea would be checking with the FCA warning list.
The Bottom Line
On a final note, even if some of the most renowned FCA regulated Forex brokers are based abroad, the majority have been regulated by other bodies, as well. As the trading industry develops, it is critical to develop a critical spirit in this respect to assess the reliability of a broker before funding an investment.