5A.3

Question 1

FCA 3 main areas of responsibility?

Answer 1

• Authorisation
• Supervision
• Enforcement

Question 2

FCA authorisation

Answer 2

• The individual, firm or market that is granted Part 4a permission (authorised person)
• Up to 6months for complete applications for FCA to turn around (12 months incomplete)

Question 3

Fixed portfolio firms

Answer 3

• smaller population of total FCA regulated firms
• largest and highest risk firms

Question 4

Flexible portfolio firms

Answer 4

• Most firms
• do not carry significant risk
• potential to move to fixed portfolio if pose a greater risk

Question 5

3 pillar supervision model

Answer 5

• Proactive
• Event driven
• Thermatic

Question 6

Pillar 1: Proactive

Answer 6

• Applied to fixed portfolio firms
• Assess conduct risk
• firm culture and business model
• issues that could damage consumers/markets

Question 7

Pillar 2: Event driven

Answer 7

• Applied to flexible portfolio firms
• issues emerging/have already occurred
• FCA resources to highest risk firms

Question 8

Pillar 3: Thematic

Answer 8

• Applied to flexible portfolio firms
• FCA to review product related issues and reasons for poor customer outcomes

Question 9

What is a civil offence?

Answer 9

• disputes between private parties
• sanctions likely to result in damages :
  
  • injunctions
  • restitution payments to repay profits
  • grant insolvency orders

Question 10

What is a criminal offence?

Answer 10

• deliberate or reckless act that causes harm to another person/property
• sanctions include:
  
  • jailtime
  • unlimited fines
• processed through the crown prosecution service (CPS)
• max 7 years jail time + unlimited fines

Question 11

Money laundering offence

Answer 11

• 2 years + fines

More serious cases:
- 14 years imprisonment
- unlimited fine

• failing to report suspicions can lead to 5 years prison sentence

Question 12

Market abuse

Answer 12

• both civil and criminal action

Insider dealing = taking advantage of your position for personal gains

Market manipulation = manipulation of a market for personal gain

Question 13

Market abuse sanctions

Answer 13

Maximum Prison term:
- failure to comply 2 years
- failure to report 5 years
- misleading statements/conduct/insider dealing 7 years
- POCA 2002 offences 14 years

Question 14

Banking Act 2009

Answer 14

• increased powers of the BoE
• gave it an objective relating to financial stability (oversight of the UK’s payment systems)

Question 15

Financial services act 2010

Answer 15

• gave the old FSA a new objective (financial stability - carried over to the FCA)
• FCA must have financial stability strategy