5A.1

Question 1

Financial Conduct Authorty (FCA)

Answer 1

• Independent regulator
• Responsible (conduct of all firms)
• Consumer protection, integrity, competition
• Day to day activities

Question 2

Financial Policy Committee (FPC)

Answer 2

• Part of the BoE
• Concerned with the financial system stability
• Early identification of risks
• Reduce and remove systemic risk (macro prudential responsibilities mainly)

Question 3

Prudential Regulation Authority (PRA)

Answer 3

• Part of the BoE
• Monitoring financial stability of the UK’s largest firms
• Promoting the safety and soundness of firms
• Judgement based
• Forward looking
• Focused

Question 4

Prudential regulation (involvement)

Answer 4

• Bank of England
• PRA
• FCA

Question 5

Conduct regulation (involvement)

Answer 5

• FCA

Question 6

FPC 3 macro prudential tools

Answer 6

• Counter-cyclical capital buffers
  (Greater capital reserves)
• Variable risk weights
  (Company’s capital reserves required higher/lower based on types of risks)
• Leverage limits
  (Limit the use of higher risk financial tools - E.g. derivatives)