How UK banks and building societies are authorised and regulated

Every bank or building society you see on the high street is there because a regulator has given it permission to take deposits, and two regulators then watch over it for as long as it holds them. The Financial Conduct Authority (FCA) regulates financial services in the UK¹, looking at how firms treat the people who use them. The Prudential Regulation Authority (PRA), which is part of the Bank of England, makes sure those firms do business safely and reduce their chances of getting into financial difficulty².

This split matters to you in two ways. First, it decides who you contact when something goes wrong: the FCA for checking a firm is legitimate or reporting a possible scam, the free Financial Ombudsman Service for an actual dispute with your bank. Second, it underpins the protection of your money, because the Financial Services Compensation Scheme (FSCS) follows rules set by these same two regulators, the FCA and the PRA³.

Two regulators share the job: the FCA and the Bank of England

A bank or building society in the UK is what is known as a dual regulated firm: two regulators supervise it at the same time, each with a different question in mind. The FCA asks whether the firm is treating its customers fairly. The PRA asks whether the firm itself is safe, whether it holds enough capital and whether it could survive a period of stress. The PRA is responsible for the prudential regulation and supervision of around 1,500 banks, building societies, credit unions, insurers and major investment firms⁴, though the Bank of England describes its own remit as about 1,300 financial institutions, including banks and insurance companies². The two figures differ because each body counts its population slightly differently; both are official statements of the same supervisory system.

The same arrangement reaches beyond banks. Credit unions in Great Britain and Northern Ireland are regulated by the FCA and the Bank of England's PRA⁹, and mutual organisations such as building societies that carry out deposit-taking are regulated by the FCA and the PRA under the Financial Services and Markets Act 2000¹⁰. So whether your money sits with a bank, a building society or a credit union, the same two regulators are behind the licence.

The Bank of England itself sits above and beside this system. It is the UK's central bank and a publicly owned body¹¹, and it regulates banks, though it does not regulate the mortgage market as such¹². Its statutory objective is monetary (price) and financial stability¹³, and the Government sets it a target of keeping inflation at 2%¹³. Setting Bank Rate, the core interest rate in the UK, is part of that job¹⁴. The Bank of England and the PRA are covered in more detail on the Bank of England and the PRA page, and the division of responsibilities between all the regulators on who regulates what.

The FCA oversees how banks treat customers

The FCA is the financial services regulator¹⁵, and its work touches almost everything a bank does with you: how it sells, how it communicates, how it handles complaints and how it treats people in difficulty. One of its responsibilities is ensuring fair practice in consumer credit, an area it has regulated since 2014¹⁶, when it took over responsibility for consumer credit regulation in April 2014¹⁶.

The FCA's authority in this area has deep roots. The Parliamentary Commission on Banking Standards concluded that banks have a responsibility to act in the best interests of their customers, and that the FCA now has a mandate under its consumer protection objective to enforce this responsibility¹⁹. In practice that mandate shows up in rules banks must follow day to day. Financial services firms carrying on regulated activities must establish, implement and maintain effective and transparent procedures for the reasonable and prompt handling of complaints²⁰. The FCA also publishes contact details for regulated financial businesses, so you can check who you are dealing with²¹.

The FCA is also the go-to contact if you want to check whether a firm is legitimate or report a possible scam². That is a practical point worth remembering: before you deal with any firm offering you a financial product, the FCA gives you the tools to verify it, which the next section covers. The FCA's own work, structure and consumer approach are set out on the Financial Conduct Authority page, and what it does and does not cover on regulated and unregulated activities.

What the Bank of England does to keep banks safe

The PRA, as part of the Bank of England, makes sure firms do business safely and reduce their chances of getting into financial difficulty². Its work is mostly invisible to customers but shapes how much a bank can lend and how much it must keep back. The Bank of England tests whether the largest banks can cope with big losses from unsecured debt²², and it has created rules to limit the riskiest type of mortgage lending²². These are the checks that sit behind the everyday question of whether your bank will still be there tomorrow.

Several other Bank of England functions bear on banking customers. Large banks in the UK have separated or "ring-fenced" some of their services from other parts of their business, to help protect your access to the systems we depend on every day²³. Ring-fencing is explained in full on the ring-fencing page. The Bank also sets Bank Rate, the core interest rate in the UK¹⁴, which flows through to the rates banks charge and pay, a relationship covered on Bank Rate, inflation and the UK economy. It has also proposed rules for stablecoins, aiming to make sure stablecoins always maintain a stable value, that payments continue without disruption, that digital wallets are safe and that legal rights are respected¹¹.

The Bank of England does not work alone on payments. The Payment Systems Regulator works alongside the Bank of England and the FCA to foster safe and reliable payment systems²⁴, and its role is covered on the Payment Systems Regulator page.

Checking a bank or firm is authorised

Before you hand over money to any firm, you can check it holds the permissions it claims. The FCA has launched a tool, the Firm Checker, to help consumers check whether financial services firms are authorised and have permission to sell products and services⁴. The Financial Ombudsman Service directs people to the same tool: use the FCA's Firm Checker to confirm the firm is authorised and help avoid scams, whether you are considering an investment, a pension opportunity, a loan or another financial service²⁵.

The checks work like this:

1. Search the firm by name in the FCA's Firm Checker or Financial Services Register.
2. Check the firm's status shows "Authorised" and that it has permission for the activity in question, for example "Lend you money on an unsecured basis" for a lender⁴.
3. Find out whether the particular activity the authorised firm is carrying out for you is regulated by the PRA or the FCA²⁷.
4. If you cannot find the firm, the FSCS protection checker can help; its results are based on the FCA's Financial Services Register, which you can search yourself²⁸.

The FSCS also publishes an "FSCS Protected" badge, which indicates that a PRA-authorised bank, building society or credit union is protected by the FSCS⁷. Which brands share a single banking licence, and so a single compensation limit, is explained on banking licences and the brands that share them.

Rules banks must follow when opening and closing accounts

Banks are generally free to decide who they bank, but that freedom is bounded by law, and the rules on closing accounts changed recently. Banks must provide at least 90 days' notice before terminating an account and provide a clear reason behind the action for accounts opened on or after 28 April 2026. For accounts opened before this date, banks have to provide at least 2 months' notice, and they have no obligation to give a reason⁵. The government had proposed requiring banks to give 90 days' notice before terminating an account²⁹, and that proposal is now the rule for new accounts.

On the opening side, certain banks are under a legal obligation, under the Payment Accounts Regulations 2015, to offer basic bank accounts to customers who are legally resident in the United Kingdom and do not have a bank account, or who are not eligible for a standard current account³⁰. Designated institutions must refuse to open a basic bank account for a consumer only where it would be unlawful for them to do so³¹. The detail of when a bank can say no is covered on can a bank refuse you a basic account.

Banks also carry duties that can force them to close an account. They are required to close bank accounts if they cannot complete "know your customer" checks required by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017⁵, and banks have to close accounts when they are unable to conduct those checks or are concerned about accounts potentially being used for financial crime²⁹. Banks are legally required to close accounts when they suspect they may be used for financial crime⁵. While banks are generally free to close customer accounts, they must not discriminate against customers based on protected characteristics outlined in the Equality Act 2010⁵.

Once an account is open, the bank owes you duties in how it runs it. Banks are expected to process payments a customer authorises it to make, in line with the Payment Services Regulations³². Banks and building societies must also protect access to cash, and the Government has chosen 14 banks and building societies and 1 coordination body to deliver cash access reviews³³, a regime explained on the access to cash rules page.

Fair treatment for disabled and vulnerable customers

Regulation of banks is not only about solvency and process; it sets standards for how people in difficult circumstances must be treated. Banks have to make their information and services as accessible as possible for their disabled customers³⁴. That can include practical provisions such as bank statements and other documents in Braille, large print and audio formats³⁴. Some banks will take a letter from a responsible person, such as a teacher or a social worker, or a benefits notification letter, as proof of identity or circumstances when standard documents are hard to provide³⁴.

Vulnerability has its own rule in the FCA Handbook. A firm must establish and implement clear, effective and appropriate policies and procedures for the fair and appropriate treatment of customers whom the firm understands, or reasonably suspects, to be vulnerable³⁵. The rule sits in the mortgage conduct rules but reflects the wider supervisory expectation on firms. Where appropriate, vulnerable customers may be offered more favourable treatment than non-vulnerable customers to account for their vulnerability, for example being provided with more time to make financial decisions³⁶.

In practice this means a bank is expected to notice when a customer may be vulnerable, record it appropriately, and adjust how it deals with them, rather than applying a one-size-fits-all process. Free, impartial help is available from MoneyHelper, which sets out how to make your money easier to manage yourself and what banks must do for disabled customers³⁴.

What your bank will never ask you to do

Knowing what a genuine bank will never do is one of the strongest protections you have, because impersonation scams depend on you believing the caller is real. Your bank, the police and regulators will never ask you to move money to a "safe" account⁸. Your bank will never ask you for your PIN or your online account password, and neither will any trustworthy online retailer³⁷.

Other public bodies give the same assurances. HM Courts and Tribunals Service states it will never telephone you to ask for your bank details or to make a bank transfer using your sort code and account number³⁸. The Payment Systems Regulator never contacts members of the public asking for money or bank account details³⁹.

If someone claiming to be from your bank, the PSR or another financial regulator like the FCA contacts you out of the blue, hang up and contact the organisation directly using publicly listed contact details, do not be pressured into sending money, and end the interaction³⁹. If you are worried about your account security, contact your bank directly using the number on your card or by calling 159; dial 159 and you will be connected to your bank's fraud department⁸. The many forms these scams take are set out on scams and fraud.

Complaining about a bank: eight weeks, then the Financial Ombudsman

If something goes wrong, the process is fixed and free. Complain first to the bank's customer services, then make a formal complaint: the bank has eight weeks to investigate and give a final response⁶. There are rules that financial businesses must follow when they investigate a complaint: they should consider what has happened quickly and fairly and keep you updated throughout the process²¹. If the bank's final response does not satisfy you, or the eight weeks pass without one, you can take the complaint to the Financial Ombudsman Service, which is free to use⁶.

The ombudsman is not a regulator but an adjudicator of individual disputes. It follows rules set by the industry regulator, the FCA⁴², and it can look at complaints across banking and payments, insurance, pensions and annuities, and fraud and scams²⁶. Its decisions are binding on the firm if you accept them. How the ombudsman compares with going to court is set out on Financial Ombudsman or court, and how firms' complaint figures are published on complaints data.

Where the FCA cannot help you

The FCA supervises firms and writes the rules, but it does not adjudicate your individual dispute or pay compensation. That is the ombudsman's job for disputes and the FSCS's job when a firm has failed. The division of labour is deliberate: the view taken in Parliament's review of the FCA's remit is that the FCA, not Parliament, should be responsible for setting rules governing the sector, as far as is practical⁴³, which keeps rule-making with the expert regulator rather than with legislation for every detail.

There are also areas where no regulator can help because the activity is outside regulation altogether. The FSCS can only compensate where a set of conditions is met: the firm was authorised, it carried out a regulated activity for you, you lost money, and it owes you a legal liability³. If the firm was never authorised, or the activity was not regulated, neither the ombudsman's jurisdiction nor FSCS protection may reach it. What falls inside and outside the perimeter is explained on regulated and unregulated activities and regulated or unregulated investments. If you have a complaint about the FCA itself, rather than about a firm, that is a separate route, covered on complaining about the FCA.

FSCS protection if a bank fails

If a bank, building society or credit union fails, the FSCS pays compensation within seven working days of the failure, though more complex cases, including temporary high balance claims, take longer⁷. The "FSCS Protected" badge is a quick and easy way of finding out whether a PRA-authorised bank, building society or credit union is protected by the FSCS⁷.

To claim, all of the following must apply: the firm was authorised, it carried out a regulated activity for you, you lost money, and it owes you a legal liability³. Two limits on the protection are worth knowing:

• Shared licences count as one bank. Money held in multiple accounts with multiple banks that are part of the same banking group, and share a banking licence, is treated as one bank⁴⁴. Spreading money across two brands of the same group does not double the protection.
• Aggregators. If an aggregator deposited your money with a regulated bank that then fails, it is likely that the FSCS will protect it⁴⁴.
• Payments firms. The FSCS may "look through" a payments firm to compensate its customers if the firm's UK safeguarding bank fails, but it does not cover cases where the payments firm itself fails⁴⁵.

The comparison between the FSCS and the ombudsman, and which to approach in a given situation, is set out on FSCS or Financial Ombudsman, and the wider protections around your money on consumer protection in UK financial services.