What is the difference between the FCA and PRA in the UK?
The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are the two main financial regulators in the UK, operating a twin-peaks model. The FCA focuses on conduct regulation — how firms treat customers, market integrity, and competition — and regulates all open banking providers. The PRA, part of the Bank of England, focuses on the financial safety and soundness of deposit-taking institutions, insurers, and systemically important firms.
Which banks are regulated by the FCA only and which by both FCA and PRA?
E-money institutions and payment institutions — such as Wise, Tide, and Revolut (before its banking licence) — are regulated by the FCA only. Fully licensed banks — including Barclays, HSBC, Lloyds, Monzo, Starling, and Revolut (post-licence) — are regulated by both the FCA for conduct and the PRA for financial safety. This dual regulation is a key reason why banks are considered safer than e-money institutions for deposit-holding.
What does FCA regulation mean for open banking providers?
Open banking providers — AISPs and PISPs — must be FCA-authorised or registered to operate legally in the UK. The FCA maintains the Financial Services Register, which consumers can use to verify any open banking provider. FCA regulation means the provider must meet standards for consumer consent, data security, complaint handling, and the FCA’s Consumer Duty. The FCA can withdraw authorisation or fine providers that breach these standards.
Open Banking in Practice: The FSCS — Financial Services Compensation Scheme — is separate from both the FCA and PRA. It is funded by the industry and compensates consumers if a firm fails. FSCS protection (up to £85,000 for deposits) applies to PRA-regulated banks. FCA-only regulated firms (e-money institutions) must safeguard funds but are not covered by FSCS. Read our guide to UK financial regulation and open banking on openfuture.world.
FAQ
Is the FCA the same as the FSCS?
No — the FCA regulates firms’ conduct; the FSCS is the compensation scheme that pays out to customers if a firm fails. They are separate organisations.
Does the PRA regulate open banking?
Not directly — the PRA regulates the financial stability of banks, which includes ensuring banks maintain their open banking API obligations; the FCA regulates open banking providers.
What is the difference between FCA-regulated and FCA-registered?
FCA-regulated firms hold full authorisation and must meet all FCA conduct standards; FCA-registered firms (mainly certain AISPs) have lighter-touch registration and fewer obligations.