FSA, also known as the Financial Services Authority is a leading financial services regulator for the UK. The FSA is responsible for rule making, investigation and enforcement powers to fullfill the statutory objectices of the Financial Services and Markets Act 2000, FSMA. The FSA is an independent authority on an operational level and is funded by the financial firms the FSA regulated. The FSA is accountable to the Ministry of Treasury and thus the Parliament.
What is the Financial Services and Markets Act
The FSMA’s statutory objectives are outlined as follows:
To maintain market confidence in the UK’s financial system and to provide stability by contributing to the protection and enhancement of the stability of the UK’s financial system. The FSMA’s objective also provdes for consumer protection, which is to secure the appropriate level of protection of the consumers.
The FSMA also actively follows up on reducing and monitoring of finance related crimes. The FSMA act provides for political and public accountability and is closely scrutinized by the Parliamentary committee.
Role of FSA Regulation
The FSA regulates the financial services markets, exchanges and firms and set high standards that financial firms must meet. The FSA supervises financial firms based on the risks and the scale it effects the consumers and the financial markets in the event they happen.
The FSA conducts risk management assessment at regular intervals for the financial firms registered with the FSA. This ensures that the firms, or in this case the forex brokers registered with the FSA are in full compliance with FSA’s statutory objectives as mentioned earlier.
Important factors of the FSA
The FSA registered forex brokers should adhere to the various policies outlined by the regulatory authority. Some of these policies include:
Company Notifications: The FSA must be notified in case of any changes to the financial firm’s business, change of the management and so on.
Advertising/Marketing: FSA regulated firms and forex brokers brokers ensure that any marketing message or promotions that are issued are fair and not misleading the consumers in any way.
Consumer Protection: FSA registered forex brokers and firms are required to trade their customers fairly and must follow the best practices in the process.
Unfair contract terms: The FSA can enforce its powers based on the unfair Terms in the Consumer Contract Regulations Act of 1999 which relates to the terms in standard consumer/client contracts.
Advantages of trading with an FSA regulated forex broker
Needless to say, FSA regulated forex brokers are more transparent and adhere to the strict protocols outlined during the regulatory process. As a forex trader, company transparency, audits, the general health of the forex broker is of utmost importance. When trading with an FSA regulated forex brokers, forex traders in the UK can rest assured that they are dealing with a forex broker who strictly adheres to the FSMA policies and the FSA guidelines.
How to check if your forex broker is FSA registered?
The FSA has a general register that allows anyone to access information. So if you wish to do a background check on a potential forex broker that you wish to trade with, then click on this link to see if the forex broker is indeed truly registered with the FSA or not. Visit our ECN Forex Broker Reviews for more details on the forex broker.