3.2: UK REGULATION

Question 1

The Financial Services Act 2012 amended what act to reform the UK financial services regulatory structure? (1)

Answer 1

Financial Services and Markets Act 2000 (FSMA)

Question 2

What is considered as the “macro-prudential” regulator? (1)

Answer 2

Financial Policy Committee (FPC)

Question 3

What are the current regulatory frameworks (implemented in 2013 set by the BoE? (3)

Answer 3

• establishing a macro-prudential regulator (FPC) to monitor systemic risk
• transferring prudential regulation responsibilities to the PRA (Prudential Regulation Authority
• creating a conduct of business regulator, to focus on wholesale and retail markets.

Question 4

What is the FCA? (2)

Answer 4

Financial Conduct Authority is the conduct of business regulator. Its main goal is to ensure that the relevant markets function well

Question 5

What are the objectives of the FCA? (3)

Protect, Enhance, Promote

Answer 5

• Protection of consumers
• Enhance integrity of markets
• Promote competition in regulated financial services

Protect, Enhance, Promote

Question 6

What is the scope of the FCA? (4)

Answer 6

• Regulator of conduct for all firms in retail and wholesale markets, including PRA authorised firms and firms passporting into the UK
• Lead regulator for firms other than the PRA-Authorised
• Markets regulation
• Regulatory oversight of the client assets and countering financial crime

Question 7

What is the Prudential Regulation Authority responsible for? (1)

Answer 7

Prudential supervision of banks, insurers and large investment firms

Question 8

What activities did the FCA take over from the Office of Fair Trading? (4)

Answer 8

Lending or brokering credit
Credit reference agency
Debt collection
Contracts of hire of good

Question 9

When misleading financial promotions are made, the FCA can… (2)

Answer 9

ban these financial promotions without going through enforcement process

Question 10

What is the core objective of the Prudential Regulation Authority? (1)

Answer 10

To ensure the the safety and soundness of the firms it regulates

Question 11

What is the function of the PRA? (2)

Answer 11

They monitor and regulates the firms resilience

If firms fail they are responsible for resolving this

Question 12

What kind of approach does the FCA take? (2)

Answer 12

Proactive led approach

In particular to consumer protection

Question 13

What kind of approach does the PRA take? (2)

Answer 13

Judgement led approach

The more risk a firm poses, the more supervision that happens

Question 14

What is the FPC tasked with and where is it situated? (3)

Answer 14

Situated in the Bank Of England, the FPC is tasked with monitoring the systemic risk in the whole financial system and identifies risk to stability

Question 15

The FPC can make recommendations and offer advice to the… (2)

Answer 15

… PRA and FCA

Question 16

What does the FPC do to show transparency? (1)

Answer 16

Publishes 2 financial stability reports each year

Question 17

How often does the FPC meet? (1)

Answer 17

At least quarterly

Question 18

The FCA and PRA share a single admin process for what? (1)

Answer 18

Dual regulated firms

Question 19

Dual regulated firms apply to the FCA or PRA? (1)

Answer 19

PRA

Question 20

Anyone who partakes in investment business in the UK is required to be… (2)

Answer 20

…an authorised person

…an exempt person

Question 21

What are the 2 main kinds of authorised person? (2)

Answer 21

Part 4A permission

Qualified for authorisation

Question 22

The _____ has the lead role in investigating and prosecuting authorised person violations. A person who commits this crime can be jailed for up to how many years? (2)

Answer 22

FCA

7

Question 23

Specified investments include all investment instruments excluding ________. (1)

Answer 23

Physical Assets

Question 24

Extended in 2016 and MiFiD, what was added to regulated investments? (4)

Answer 24

Provision of credit
Regulated mortgages (buy to let)
Structured Deposits
Emission Allowances

Question 25

Examples of regulated activity include: (4)

Answer 25

Accepting Deposits
Issuing electronic money 
contracts of insurance
managing investments 
Arranging a mortgage
MTFs and OTFs

Question 26

What is the PSR? (3)

Answer 26

Payment Systems Regulator

established in 2015 it is a subsidiary of the FCA

Question 27

Payment systems regulator do not regulate what types of systems? (1)

Answer 27

Payment systems embedded in securities trading systems, like clearing houses are central counter parties,

Question 28

What are the objectives of the Payment Systems Regulator? (3)

Answer 28

Promotes interests of business and consumers
Promotes competition
Promotes innovation

Question 29

What was the CMA established under? (1)

Answer 29

Enterprise and Regulatory Reform Act 2013

Question 30

What is the turnover test? (2)

Answer 30

When a firm with over £70m of turnover attempts to merger the CMA will investigate.

Question 31

What is the share of supply test? (2)

Answer 31

If merger causes and market supply of over 25%, the CMA will investigate.

Question 32

How many days has the CMA got to undertake initial (phase one)? (2)

Answer 32

40 days

Question 33

What is the Department for Business, Energy and Industrial Strategy? (1)

Answer 33

The BEIS intervene when there is a threat to public interests, like national security.

Question 34

What is the Panel on Takeovers and Mergers responsible of enforcing? (1)

Answer 34

The City Code

Question 35

How is the PTM financed? (1)

Answer 35

A levy on UK publicly quoted shares and charging fees. It is 100p per contracts where the investor is investing over 10k

Question 36

The PTM levy is payable on trades in: (4)

Answer 36

Equity share capital
Securities converting into equity
Transferable securities
US and global depositary receipts

Question 37

What is the role of the Panel on Takeovers and Mergers? (2)

Answer 37

To make sure that all share holders are treated fairly. Therefore they look at predator companies, and target companies

Question 38

Any bidder who acquires __% or more of voting rights, has to make a cash offer to all shareholders at the highest price they paid in the previous year. (1)

Answer 38

30%