The legal framework
The FMC's powers come from Parliament. We make and enforce rules within the limits set by primary and secondary legislation, and our decisions can be challenged before an independent tribunal and the courts.
The Commission operates within a layered legal framework. Understanding the hierarchy helps firms and consumers see where a particular obligation comes from and how much weight it carries.
Regulations & Rules
The FMC rulebook sets out the obligations of licensed firms, from conduct and disclosure to the safekeeping of client funds.
The Handbook is organised into thematic parts. Each part contains binding rules (which a firm must follow) and guidance (which explains how to comply):
| Part | Subject | Applies to |
|---|---|---|
| Part 1 — Authorisation | Eligibility, applications, threshold conditions, and conditions of registration | All applicants |
| Part 2 — Conduct of Business | Fair dealing, suitability, best execution, and marketing standards | All firms |
| Part 3 — Client Assets | Segregation, custody, and daily reconciliation of investor money | Firms holding client money |
| Part 4 — Prudential & Reporting | Minimum capital, own-funds, liquidity, and periodic financial returns | All firms |
| Part 5 — Senior Managers | Individual accountability, fitness, and certification of key staff | All firms |
| Part 6 — Financial Crime | Anti-money-laundering, KYC, sanctions, and market-abuse controls | All firms |
| Part 7 — Consumer Duty | Outcomes firms must deliver: products, price, understanding, and support | Consumer-facing firms |
| Part 8 — Enforcement | Investigations, decision-making, sanctions, and appeals | All firms |
The Commission's powers
To give effect to the rulebook, Parliament has granted the FMC a range of statutory powers:
- Grant, vary, restrict, suspend, or cancel a firm's permission to do regulated business.
- Require information, documents, and reports, and compel attendance at interview.
- Appoint a skilled person to report on a firm at the firm's expense.
- Impose financial penalties and issue public censures.
- Make a person subject to a prohibition order, barring them from the industry.
- Apply to court for injunctions, asset freezes, and restitution orders.
- Issue warnings and publish consumer alerts about unauthorised firms.
Register Notices
Official notices of proposed and adopted rules, orders, supervisory notices, and other regulatory determinations are published in the FMC register and, where required, in the London Gazette. Each notice records the legal basis for the decision and any rights of appeal.
| Notice type | Purpose |
|---|---|
| Warning notice | Tells a firm the FMC proposes to take action and invites representations |
| Decision notice | Sets out the action the FMC has decided to take and the reasons for it |
| Final notice | Confirms the action once it takes effect; published in full |
| Supervisory notice | Imposes or varies a requirement, often with immediate effect |
Rulemakings
The FMC does not make rules behind closed doors. Before a new rule takes effect we publish a consultation, weigh the costs and benefits, and respond to the feedback we receive.
How a rule is made
Discussion paper
For significant or novel issues, we first publish a discussion paper to gather early views.
Consultation paper
We publish draft rules with a cost-benefit analysis and a clear deadline for comments — usually 8 to 12 weeks.
Analysis of responses
Every response is read and considered. Material points are addressed in a feedback statement.
Policy statement & final rules
We publish the final rules alongside a statement explaining what changed and why.
Implementation
Firms are given a transition period to comply before the rule comes into force.
CP24/3 — Enhanced disclosure of withdrawal terms
Would require firms to disclose withdrawal processing times and any conditions before onboarding. Closes in 10 weeks.
CP24/2 — Marketing of high-risk derivatives to retail clients
Proposes risk warnings, appropriateness tests, and a ban on incentives. Closes in 6 weeks.
PS24/1 — Strengthened client-money segregation
Tightens the conditions under which client money may be held and requires daily reconciliation.
PS23/4 — Consumer Duty implementation
Introduces an outcomes-based standard of care for consumer-facing firms.
Commission Actions
Orders, decisions, and settlements issued by the Commission are published for transparency and to establish precedent. Contested cases are decided by an independent Regulatory Decisions Committee rather than by the case team that investigated them, keeping investigation and judgment separate.
Appeals & the Financial Markets Tribunal
A firm or individual that disagrees with a decision notice may refer the matter to the independent Financial Markets Tribunal, which hears the case afresh and can uphold, vary, or quash the FMC's action. A point of law may then be appealed onward to the Court of Appeal and, ultimately, the Supreme Court. This independent oversight is a key safeguard of fairness and due process. See Enforcement for how cases are investigated. Enforcement. lw_b89_after
Public Comments
How to respond to a consultation
- Read the consultation paper and note the question numbers you wish to address.
- Set out your evidence — data and real examples carry more weight than general views.
- Submit before the published deadline using the response form or by email.
- Tell us if any part of your response is confidential and should not be published.
Frequently asked questions
Where can I find the full rulebook?
The complete FMC Handbook is published online and updated whenever rules change. Each provision is marked as a binding rule or as guidance, with its commencement date.
What is the difference between a rule and guidance?
A rule creates a binding obligation — breaching it can lead to enforcement. Guidance is not binding; it explains how the FMC interprets a rule and what it expects, and following it is a reliable way to demonstrate compliance.
Can the public really influence the rules?
Yes. Consultation responses regularly change the final rules. We publish a feedback statement explaining which points we accepted, which we did not, and why.
Can I appeal an FMC decision?
Yes. Recipients of a decision notice may refer the matter to the independent Financial Markets Tribunal, with an onward route to the courts on points of law.