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R01 2023 > 6 : FCA Handbook > Flashcards

6 : FCA Handbook Flashcards

1
Q

What is first section of FCA handbook contain:

A

Regulatory obligations of all firms, senior management and approved persons:

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2
Q

What are threshold conditions (there are 5) firms must satisfy to retain Part 4a permissions?

A
  1. Cond 2.2-: If a person is a corporate body constituted under UK Law. Head office and registered office should be in UK
  2. Cond 2.3: Can be capable of being supervised by FCA.
  3. Cond 2.4: Resources must be appropriate in relation to regulated activity they wish to carry out.
  4. Cond 2.5: Firms must be fit and proper
  5. Cond 2.7: Business model must be suitable.
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3
Q

HLS: Principles of Business (PRIN)

Definition

A

General statement of fundamental obligations of all authorised firms

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4
Q

What is SYSC 2:

A

Firms should appoint individuals to controlled functions

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5
Q

What is SYSC 3:

(8)

A

They should appropriate, regularly reviewed and should cover:
* Reporting lines
* Compliance function
* Risk assessment
* Mi
* Honesty and competency of employees
* Remuneration
* Business continuity
* Record Keeping

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6
Q

What is SYSC 4:

A

Firms must have robust governance arrangements and reputable management.

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7
Q

What is SYSC 5:

A

Employees must have appropriate skills to carry functions.

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8
Q

What is SYSC 6:

A

Firms must maintain policies to comply with regulatory responsibilities.

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9
Q

What is SYSC 7:

A

Firm must manage maintain risk management policies.

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10
Q

What is SYSC8:

A

Firms must ensure to not take any additional operational risks through outsourcing.

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11
Q

What is SYSC9:

A

Firms must have orderly records to be keep of business and compliant with FCA

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12
Q

What is SYSC10:

A

Firms must have systems to identify conflicts of risks.

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13
Q

What is SYSC 10a?

A

Firm must take reasonable steps to record telephone conversations.

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14
Q

What is SYSC 18?

A

Whistleblowing; workers should be protected if aware of suspicious or criminal activity.

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15
Q

What is SYSC 19

A

firms must ‘establish, implement and maintain remuneration policies, procedures and practices that are consistent with and promote effective risk management’

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16
Q

How many remuneration principles are there to promtote effective risk management?

A

Twelve

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17
Q

What is SYSC 21?

A

Additional risk controls

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18
Q

What is SYSC 22?

A

Firms giving, getting references for staff

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19
Q

1.

What is SYSC 23-27?

A

Senior Managers and Certification Regime

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20
Q

What is FINMAR

A

Financial Stability and Market Confidence

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21
Q

What does FINMAR 2 part state?

A
  1. Protecting consumers
  2. Enhancing Financial integrity

In relation to short selling to protect FCA objectives

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22
Q

Training and Competence (who does it apply to?)

A

Apply to those who provide advice, those who supervise them and those who overseers them. It is a HLS

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23
Q

Main regulatory obligations for individuals?

A
  • APER – FCA Code of practice for approved individuals
  • FIT – Fit and proper test
  • COCON: Code of conduct
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24
Q

How long can an individual cover for senior manager if not approved in an emergency situation

A

No more than 12 weeks

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25
Q

Statutory Status Disclosure: What must firms do

A

Disclose statutory status in every letter

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26
Q

Insurance against financial penalties: What must firms not do

A

Firms can not claim or enter under insurance contract to indemnify firm against financial penalties under FCA or FSMA

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27
Q

What is application free to FCA:

A

£2,500

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28
Q

What about Variation of Permission; applicaiton fee

A

If your firm wants to change or add to its regulated activities,

50% of equivalent application fee new firm would pay. A flat fee of £250 applies to all other VoP positions.

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29
Q

When are fees payable for application to FCA

A

Final fee rates in May, except those in March. Firms should expect periodic fee in June/July. Can also pay in instalments with Premium Credit ltd.

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30
Q

MIFIDPRU

Definition

A

Prudential Sourcebook for investment firms – non-MIFID-exempt firms have to have in place

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31
Q

MIPRU

A

**Prudential sourcebook for mortgage and Home Finance Firms **– rules about financial safeguards firms have to have in place

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32
Q

IPRU-INV

A

**Interim Prudential Sourcebook for Investment businesses

requirements for non-MIFIDPRU investment firms unless they are a collective portfolio management firm

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33
Q

INSPRU

A

Sourcebook for Insurers

34
Q

Capital Adequacy for MIFIDPRU Firm

A

£75,000 - £25% of fixed overheads
As long as not holding client money or assets with AUM of less than £1.2 billion

35
Q

Capital Adequacy of: Exempt MIFID firm

A

Exempt MiFID firm – £20,000, 5% Variable

36
Q

Who oversees capital requirements?

A

PRA

37
Q

Who calculates capital requirements?

A

FCA

38
Q

How many capital tiers are there

A

3
Tier 1 most absorbent and permanent capital to tier 3 - not loss absorabant and temporary capital

39
Q

MIFIDPRU - what does it deal with

A

Deals with investment firms subject to IFPR, covers elements relating to capital resource calculations.

40
Q

What does MIFIDPRU 6 relate to

A

Liquidity: Firms must be self sufficient and cover a proportion of guarantees provided to clients

41
Q

What Block 3 business standards apply to investment advice firms:

A

COBS

42
Q

Who does COBS apply to?

A

The COBS rules apply to all regulated life and pension and investment businesses,

43
Q

COBS 3

A

Types of Clients

44
Q

COBS 4:

A

Communicating with clients, including financial promotions

45
Q

COBS 6:

A

Information about the firm

46
Q

COBS 8:

A

Client agreements

47
Q

COBS 9:

A

Advice and know you customer rule

48
Q

COBS 11:

A

Dealing and managing

49
Q

COBS 13:

A

Product Disclosure

50
Q

COBS 15:

A

Cancellation

51
Q

COBS 16:

A

Reporting and record-keeping

52
Q

How long do records of any benefits must be kept for under COBS

A

5 years

53
Q

ICOBS

A

Insurance conduct of business. Sale of insurance products and some protection products.

54
Q

What are 3 products of ICOBS:

A
  1. GI products
  2. Pure Protection
  3. PPI
55
Q

ICOBS how many chapters

A

Nine

56
Q

What is Cancellation period for GI products

A

14 days

57
Q

What is cancellation period for Protection and PPI

A

30 days

58
Q

When are there no cancellation rights ICOBS

A

travel or similar short-term policies lasting less than one month; or
policies where performance has already been completed.

59
Q

What is MCOB

A

Mortgage conduct of business rules: Regulatory rules on home finance advice

60
Q

What are 4 categories of mortgage firms under MCOBS?

A
  1. Lenders
  2. Administrators
  3. Arrangers
  4. Advisors
61
Q

How can MCOB apply to firms:

A
  1. Direct Authorisation
  2. Appointed Representative
  3. Introducer status
62
Q

When does FCA regulate mortgage contracts: Regulated Mortgage contracts (FCA)

A
  • Lender provides credit to an individual (or trustees)
  • Obligation is secured by a legal first mortgage on land in UK.
  • At least 40% of property is used as dwelling by borrower or related person
63
Q

What type of info should clients receive before equity release?

A

Clear, concise and consistent information including risk warnings

64
Q

What regulations protect consumers for sale and rent back schemes?

A
  • Ensure have security of tenure of at least 5 years
  • Non advised sales aren’t allowed
    14 days cooling off period
  • Banned cold calling
  • Banned emotive terms
  • Independent valuation must be carried out
65
Q

What changed in MMR

A

Mortgage Marked Review
Affordability assessment
Lenders required to ensure do not treat “trapped borrowers”.

66
Q

Mortgage Credit Directive – who does it apply to?

A

Applies to first and second charge mortgages.

67
Q

What were the changes to MCOB as a result of mortgage credit directive?

A
  • Need to provide a binding mortgage offer with a min 7 day reflection period
  • New disclosure requirements
  • Adequate explanation of products essential features
  • Clients can ask commission paid by different lenders
68
Q

Under CASS rules what must firms do (Clients assets and client money)

A

Separate clients assets from its own
(Must create a resolution pack to promote speedier return of client assets and money to client upon failure of firm)

69
Q

Who is exempt from a CMAR?

A

CASS small firms.

70
Q

What does Market Conduct (MAR) rules prohibit?

A
  • Disseminating false or misleading information
  • Giving a false or misleading impression
  • Making artificial transactions
71
Q

What does Block 4: Regulatory Processes Describe:

A

Operation of the FCA supervisory and disciplinary functions

72
Q

What are the notification requirements under block 4 regulatory processes?

A

FCA is required to notify any person who is subject to investigation and must state reasons and provisions under which hhad begun and further tell them if scope changes. Unless insider dealing, market abuse, misleading statements.

73
Q

Who is the Upper Tribunal and what are they responsible for

A

The Upper Tribunal is an independent judicial body which hears references arising from certain decisions and supervisory notices issued by the FCA. The Upper Tribunal is part of HM Courts & Tribunals Service, an executive agency of the Ministry of Justice

74
Q

What does Block 5: Redress-complaints and compensation set out

A

FCA has appointed complaints commissioner to investigate and report to FCA. Complaints can be made by anyone directly affected by FCA action or inaction.

75
Q

What are the time frame of complains in FCA?

A

Within 4 weeks, or arrange a timetable for complaint.

76
Q

What is Block 6 of FCA handbook?

A

Specialist sourcebooks applying to individual business sectors

77
Q

What is Block 7 of FCA handbook?

A

Listing, prospectus and disclosure rules

78
Q

What is Block 8 of FCA?

A

What is Block 8 of FCA?

79
Q

What is in block 9 of FCA?

A

Regulatory Guides
Enforcement Guide
Financial Crime guide
Perimeter Guidance model
Wind-Down Planning Guide

80
Q

Consumer Credit Act

Who does it affect

A

This Act affects persons, individual or corporate, who provide any form of credit or advice on the obtaining or repayment of debt.

81
Q

What were the main changes made by consumer credit act 2006:

A
  • Definition of individual was changed to include sole traders, small partnerships and unincorporated associations
  • Extended the jurisdiction of FOS
  • £25,000 limit given exemption of purpose of business and high net worth individuals
  • Debt administration services and credit information service now regulated.
82
Q

What is FCA responsible for under Consumer rights act 2015?

A

Under the Consumer Rights Act 2015, the FCA is responsible for considering the fairness of standard terms in financial services contracts issued by FCA-authorised firms, or appointed representatives of firms that undertake any regulated activity.

R01 2023 (11 decks)

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