The UK Financial Conduct Authority

There is one facet of betting not regulated by the UK Gambling Commission—spread betting. Instead, spread betting is regulated by the Financial Conduct Authority, a massive regulatory body in the UK market. This page was developed to focus entirely on the Financial Conduct Authority and has background information on the organization as well as regulatory information pertaining to spread betting in the United Kingdom.

What Is The Financial Conduct Authority?

The Financial Conduct Authority is a large organization that regulates the conduct of over 56,000 different businesses and serves as the prudential regulator for over 18,000 businesses. The FCA was established in 2013 and took over the Financial Services Authority. Their aim is to ensure financial markets are fair, honest and effective in regards to consumers, businesses and the overall economy. Financial markets have a huge impact on the lives of citizens, even if they are not aware of it. The United Kingdom is considered a major financial hub and achieved that reputation through its legal and fair inner workings. The FCA is responsible for keeping everything in check in England.

The FCA has 3 main objectives:

  1. Consumer Protection
  2. Financial Market Protection
  3. Promotion of Healthy Competition

It is an independent entity that is funded by the firms they regulate. The FCA is overseen by the English Treasury and Parliament. They work with a wide array of groups and businesses both domestic and have a strong reputation for exceptional service.

How Does The FCA Licence Operators?

There are multiple points required for an operator to be endorsed by the Financial Conduct Authority. They must pursue the consumers’ best interests while maintaining the integrity of English financial markets. Any firm offering services must possess authorisation from the FCA in order to be considered legal. The FCA reviews their business plans, budgets, resources, risks, controls and even checks into their staff to make sure they are qualified. This in-depth vetting process begins once an applicant fills out the necessary forms.

What Is Spread Betting?

Spread betting is when consumers bet on the moving prices of a stock or commodity. Essentially, you are betting on the financial markets themselves. Sportsbooks offering these types of wagers have you betting on the difference between the buy and sell points of a particular commodity. It is separate from trading because bettors do not actually own any investment in the stock or commodity. It is possible for bettors to own stock that they are wagering in, but this could tiptoe into insider trading if the bettor has knowledge that sportsbooks do not have regarding the stock itself. Spread betting is a volatile industry because British financial markets can shift rapidly several times over the course of an hour. However, the upside is the large amounts of money you can make with a minimal investment.

How Does The FCA Regulate Spread Betting Firms?

The Financial Conduct Authority regulates spread betting firms just like they would with any other firm servicing the UK financial markets. They ensure that the business is conducting itself within legal and ethical bounds—paying out customers, reporting accurate spread data, etc. They also make sure spread betting firms are advertising responsibly. Firms will try anything to get more business, even going so far as to promoting exponential gains with minimal investments. However, the FCA is there to make sure bettors know the risk of getting involved with spread betting. The task of providing information falls to the firms themselves, but the FCA acts as overseer.

What Does The FCA Look For In Businesses?

The FCA has a list of items they deem necessary in order to be a legitimate entity in the British financial markets. These include several things pertaining to the companies themselves, how they do business and how they treat their consumers. We’ve provided a list of the items below:

  • Integrity
  • Skill, care, and diligence
  • Management and control
  • Financial prudence
  • Market conduct
  • Customers’ interests
  • Communications with clients
  • Conflicts of interests
  • Relationships of trust with customers
  • Client’s assets
  • Relations with regulators

What Can The Financial Conduct Authority Do As Far As Enforcement Of Regulations?

The Great Britain Financial Conduct Authority has a lot of power when it comes to enforcing its regulations. First and foremost, they can revoke a firm’s authorisation, thus stripping it of its legal status. They can prohibit certain individuals from carrying out regulated activity, suspend firms or individuals, issue fines against whole firms or individuals for market abuse or breaking competition laws, go public with their disciplinary action protocols (essentially tarnishing the name of a business), take legal action in the form of restitution orders, injunctions, etc., launch criminal prosecutions against violators (insider trading would be an example of when this action is needed) and petition web hosts to take down business sites. There are notices and warnings to businesses if found to be in violation, however, the enforcement is on a case-by-case basis and is determined by the extent of the crime. Fines are also a major part of their enforcement. For this reason, we stress the importance of understanding a country’s governing bodies relating to gaming activities, visit our homepage.

FAQ’s

How Does Spread Betting Work?

Spread betting involves betting on the rise and fall of financial markets. The “spread” is the difference between the buy and sell price of a stock or commodity.

Why Does The UK Gambling Commission Not Regulate Spread Betting?

Spread betting is more complex than fixed odds betting or pool betting. There are lot more parties involved and the financial markets themselves are a tough task to regulate. Parliament deemed it better to have a financial regulator focus on spread betting over the UKGC.

How Do I Know If A Spread Betting Source Is Legitimate?

The Financial Conduct Authority has a directory of firms that it has authorised.  Using firms outside of this list of approved enterprises is not advisable or legal.

Resources

The United Kingdom Financial Conduct Authority Website