How are banks regulated in the UK?
UK banks are regulated under a twin-peaks model: the Financial Conduct Authority (FCA) oversees conduct — how firms treat customers, market integrity, and competition; and the Prudential Regulation Authority (PRA), part of the Bank of England, oversees financial stability and safety of deposit-taking institutions. All UK banks must be authorised by the PRA and regulated by both the FCA and PRA. The Bank of England acts as lender of last resort.
What are the main rules UK banks must follow?
Key regulatory requirements for UK banks include: holding sufficient capital and liquidity buffers (PRA requirements), treating customers fairly under the FCA Consumer Duty (2023), implementing Strong Customer Authentication for online banking, maintaining open banking APIs if mandated by the CMA, complying with anti-money laundering (AML) regulations, and participating in the FSCS to protect depositor funds up to £85,000.
What new banking regulations are coming in the UK?
Key upcoming regulatory developments include: the ongoing implementation of Basel 3.1 capital standards (PRA), the expansion of open banking under the JROC’s 2023 roadmap, the replacement of Open Banking Ltd with a new Future Entity, and the UK’s review of its post-Brexit payments and financial services regulatory framework. The FCA’s Consumer Duty, effective July 2023, is also driving significant changes in how banks design and deliver products.
Open Banking in Practice: The FCA and PRA share information and coordinate supervision of dual-regulated firms. The Financial Policy Committee (FPC) — another Bank of England body — oversees macro-prudential risks to financial stability. The Payment Systems Regulator (PSR) specifically oversees payment systems including Faster Payments, which underpins open banking. Read our guide to UK financial regulation on openfuture.world.
FAQ
What is the difference between FCA and PRA regulation?
The FCA regulates conduct (customer treatment, market integrity); the PRA regulates prudential safety (capital, liquidity, resilience) — both apply to licensed banks.
What is the new banking law in the UK?
Recent key legislation includes the Financial Services and Markets Act 2023, which updates the UK’s post-Brexit regulatory framework and gives regulators new powers for digital assets and open banking.
Is the UK a FSA or FCA regulated market?
The FSA (Financial Services Authority) was replaced by the FCA and PRA in 2013; the UK is now regulated under the twin-peaks FCA/PRA model.