15.) Regulation Flashcards
Describe the significance and purpose of the Financial Services and Markets Act 2000 (FSMA 2000)
The FSMA 2000 created a single regulator, the FSA (Financial Services Authority), which has a range of statutory responsibilities and powers, changing the UK financial sector radically.
It became fully operational on 30 November 2001
Before this days, the Financial Services Act 1986 was in force, under which the there had been number out regulators for different activities, and some areas in which there was no regulation at all
Define and describe the significance and purpose of the Financial Services Act 2012
The Financial Services Act 2012 (The “Act”) is a Bill amending the:
Bank of England Act 1998
The Financial Services and Markets Act 2000
The Banking Act 2009
The Act came into force on 1 April 2013
In reaction the shortcomings exposed by the 2007-08 financial crisis, the U.K. Government undertook a significant reform of its financial services regulatory structure.
This resulted in the introduction of the Financial Services Act 2012
The Act implemented a new regulatory framework for the financial system, and financial regulators in the UK.
The Act replaced the Financial Services Authority (FSA) with two new regulators:
FCA (Financial Conduct Authority)
PRA (Prudential Regulation Authority)
The Act also created the Financial Policy Committee of the Bank of England
Define the regulators that the Financial Services Act 2012 replaced the FSA (Financial Conduct Authority)
The Act replaced the Financial Services Authority (FSA) with two new regulators:
FCA (Financial Conduct Authority)
PRA (Prudential Regulation Authority)
Define the legislation that the Financial Services Act 2012 amended
The Financial Services Act 2012 (The “Act”) is a Bill amending the:
Bank of England Act 1998
The Financial Services and Markets Act 2000
The Banking Act 2009
Define when the Financial Services Act 2012 came into force
The Act came into force on 1 April 2013
Define on which the Financial Services and Markets Act 2000 (FSMA 2000) became fully operational
30 November 2001
Define when the Financial Services Act 2012 (The “Act”) came into force
1 April 2013
Define and describe the fundamental changes that the Financial Services Act 2012 (The “Act”) made to the way that financial services firms, like banks, are regulated
The Financial Services Act 2012 (The “Act”) made significant changes to the way that financial services firms, like banks, are regulated by:
Giving the Bank of England responsibility for oversight of the U.K. financial system as a whole, via the establishment of a new Financial Policy Committee within the Bank, with powers to monitor and respond to risks
Setting up a new regulator of safety and soundness in the financial services sector, the Prudential Regulation Authority (PRA), working under the Bank of England, to supervise all firms that manage significant risks as part of their business - banks and other deposit takers, insurance companies and large investment banks
Establishing a new business regulator for financial services, the Financial Conduct Authority (FCA), which will protect consumers, and supervise all firms to ensure that business across financial services and markets is conducted in a way that advances the interests of all users and participants
Clarifying the government’s responsibilities in a financial crisis by giving the Chancellor of the Exchequer powers to direct the Bank of England where public funds are at risk, and there is a serious threat to financial stability
Define the acronym FCA
Financial Conduct Authority
Define the FCA and its role
The Financial Conduct Authority
The FCA regulate the financial services industry in the UK.
Its aim is to protect consumers, ensure the industry remains stable, and promote healthy competition between providers of financial services
Define the acronym PRA
The Prudential Regulation Authority
Define the PRA and its role
The Prudential Regulation Authority
The PRA is a part of the Bank of England, and is responsible for the prudential regulation of and supervision of:
Banks
Building societies
Credit unions
Insurers
Major investment firms
The PRA sets standards and supervises financial institutions at the level of the individual firm
Define supervision, in terms of the differences in regulation (of the U.K. financial sector) between the FCA and the PRA, the two new regulators established as a result of the Financial Services Act 2012
Firms that are ‘dual regulated’, e.g. banks, insurers and major investment firms, are supervised by two independent groups for prudential (PRA) and conduct (FCA).
These groups work to different objectives and act separately with firms, but coordinate internally, in order to share information and data
All other firms are supervised by one supervision area for both prudential and conduct issues
The supervision models differ for the PRA and FCA:
Prudential supervision (PRA) continues to have dedicated resources supervising firms
Conduct supervision (FCA) focuses on thematic work, and less on firm-specific work
Define the 2 pieces of legislation (and their respective orders) that govern the establishment and operation of Collective Investment funds in Jersey
(Think Law and Order)
Legislation -
Borrowing (Control) (Jersey) Law 1947 (Borrowing Law)
Collective Investment Funds (Jersey) Law 1988 (CIF Law)
Order -
Control of Borrowing (Jersey) Order 1958 (COBO)
Collective Investment Funds (Recognised Funds) (Rules) (Jersey) Order 2003 (the Order)
Note that a collective investment fund with a limited number of investors, I.e. offer made to 50 or less persons, will be governed by the Borrowing Law only. These funds are often referred to as COBO funds
Also note that, as the issue of shares or units in a collective investment fund, and the circulation of a prospectus and sales literature requires the consent of the JFSC, most collective investment funds in Jersey will be supervised under the Borrowing Law, as well as the CIF Law.
Define the CIF Law
Collective Investment Funds (Jersey) Law 1988 (CIF Law)
