The word regulated is something you’ll hear being thrown around quite a lot in business. Usually, companies will describe themselves as “authorised and regulated by” their industry authority.

In finance, you’ll hear lenders and brokers say that they’re regulated by the Financial Conduct Authority (FCA). But what does this mean?

What does a regulatory body do?

To explain the term regulated, we must first look at what a regulatory body does.

In any given industry, it is the job of the regulatory body to maintain the integrity of that industry. They will focus on maintaining the fair treatment of consumers and place minimum standards on products and services sold.

The regulatory body also has the power to investigate organisations and individuals. Following investigation, they may place bans on the sale of certain products or sanctions upon companies if they feel that they fail to meet the minimum standards.

What does it mean to be ‘regulated’?

By being regulated, you are essentially agreeing to comply with the standards set by your industry’s regulatory body.

As a regulated seller of physical products, you will need to ensure that they undergo the required testing to meet these standards. Equally, if you’re offering a service, you’ll need to ensure that your service complies with the required regulations.

If a business is unregulated, it essentially means that they are selling products or services without being authorised by their industry regulatory body. As a consumer, there are several risks to buying from unregulated firms including:

  • Inferior quality products or services
  • A lack of protection if anything goes wrong with your product or service
  • Poor aftersales and refund/returns policies

Therefore, it is always recommended that you check if a company is authorised and regulated if you’re in any doubt.

The financial services industry

As stated in the Financial Services and Markets Act (FSMA) 2000, all financial activities must be regulated by the FCA. As such, any company carrying out a regulated activity must be registered and authorised by the Financial Conduct Authority.

For a financial services firm to become regulated by the FCA they must carry out an application for authorisation. This takes between 6 and 12 months to complete and involves paying a fee.

Once you’ve been authorised by the FCA, you have several responsibilities. You must first pay a fee each year. Next, you’ll have to meet the minimum standards they set at all times. Finally, you’ll need to ensure that you comply with the relevant rules and principles outlined and send regular FCA reports.

There are still firms out there that operate without authorisation from the FCA. Often these firms will operate by scamming customers into unfair agreements.  If you’re in any doubt regarding the legitimacy of a firm, always check the unauthorised firms register on the FCA website or call their consumer helpline.

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We are aware of a current scam allegedly from Talk Loans Ltd (a fake company) who are charging fees and not providing loans. We have no association with this organisation at all. We have reported this to the FCA. If you have fallen victim to this or any other fee charging scam, you can register it here -