2.2 The Principles for Business Flashcards
FCA’s Principles
Handbook - contains a number of sourcebooks or manuals, grouped in Handbook blocks. The high-level standards block of the handbook sets out 11 principles authorised firms must observe when carrying out their business.
If the firm violates these principles they will be liable to sanctions, although the FCA must prove this first
Integrity
A firm must conduct its business with integrity
Skill, Carre and Diligence
a firm must conduct its business with due skill, care and diligence
Management and Control
a firm must take care to organise and control its affairs responsibly with adequate risk management systems
Financial Prudence
Firm must maintain adequate financial resources
Market Conduct
Firm must observe proper standards of market conduct
Customers’ interests
firm must pay regard to the interest of its customers and treat them fairly. (Term client covers a variety of parties doing business with the firm, including professional counterparties. Customer applies very broadly to those clients who aren’t professionals and who may therefore need protection)
Communications with Clients
Must be aware of the information needs of clients and communicate information to them in a clear way
Conflicts of Interest
Firm must manage conflicts of interest fairly between itself and its customers, and between customers and other clients
Customers: Relationships of Trust
Firm must take care to ensure the suitability of its advice and discretionary decisions for any customer that is entitled to rely upon its judgement
Clients’ Assets
firm must arrange adequate protection for clients’ assets when it is responsible for them
Relations with Regulators
Firm must deal with regulators in an open and honest way, must disclose to the FCA anything relating to the firm of which the FCA would expect notice
