6. Development Of Regulation Flashcards
What was the main impact of Financial Services and Markets Act 2000?
Financial Services Authority became single regulator
Specified certain activities that could only be done by authorised persons/firms
What was the main impact of Financial Services Act 2012?
Created PRA and FCA
What was the main impact of Bank of England and Financial Services Act 2016?
Moved PRA from subsidiary to part of Bank of England, under newly-created Prudential Regulation Committee
What was the main impact of Financial Services Act 2021?
Dealt with EU regulations/proposals not in force at withdrawal so not covered by European Union (Withdrawal) Act 2018
Who has ultimate responsibility for oversight of regulation?
HM Treasury
What is the main function of the Financial Policy Committee and what 2 main powers does it have?
Macroprudential supervision
- Make recommendations to PRA or FCA
- Direct regulators to adjust tools:
- increase capital in good times (Counter-cyclical buffer)
- change capital requirements for specific sectors (sectoral capital requirements)
What is the structure and role of FCA?
Ltd company with statutory powers
Board appointed by Treasury
Manages conduct of wholesale and retail markets
Prudential supervision of less significant firms not covered by PRA
What are the 3 main exemptions of PRA/FCA authorisation?
Employees of authorised firms
BoE / investment exchanges / clearing houses are “recognised”
Executors and trustees
What are the 7 threshold conditions for PRA/FCA authorisation?
Legal status
Location
Adequate resources to measure/monitor/manage risk
Adequate capital & liquidity
Suitability of firm & staff
Business model
Effective supervision
What are the 6 FCA & PRA principles of regulation?
Efficient and economic use of resources
Proportionality of regulation
Desirability of sustainable economic growth
Consumer responsibilities
Firms’ senior management responsibilities to comply
Openness, transparency and disclosure
What is the role of the Competition and Markets Authority?
Independent government department
Investigate corporate mergers
Investigate markets for competition or consumer issues
Prevent anti-competitive behaviour
Protect consumers from unfair trading practices
What are the 3 main objectives of the Pensions Regulator?
Protect benefits of members
Promote good administration
Reduce risks of situations leading to claims from Pension Protection Fund
What are the 3 broad categories of powers the Pensions Regulator has?
Investigating schemes
Remedial action: recovering unpaid employer contributions, disqualifying trustees, fines/prosecution
Act against avoidance
- contribution notice; require employer to settle debt with scheme or Pension Protection Fund
- financial support direction for under-funded schemes
Who can make a complaint about a pension scheme? (5)
Prescribed persons:
Members
Surviving spouse/dependents
Eligible employees incl those in waiting period
People who ceased to be in a category (must claim within 6 months)
People claiming to be in a category
What is the process for a pension scheme complaint?
Must be made to the trustees/administrator
They must have Internal Dispute Resolution Procedure in place
Trustees must acknowledge receipt and issue a response within 4 months
The complainant must be notified of the decision within 15 working days
If complainant is not satisfied, they can go to Pension Ombudsman
