7.2 - Sustainable Financial Services

Question 1

What is the aim of the EU?

Answer 1

To deliver stable, secure and efficient financial markets

Question 2

How does the EU achieve its aim?

Answer 2

By means of the European System of Financial Supervision (ESFS)

Question 3

The European System of Financial Supervision includes:

Answer 3

• The European Systemic Risk Board
• The European Banking Authority (EBA)
• The European Securities and Markets Authority (ESMA)
• The European Insurance and Occupational Pensions Authority (EIOPA)

Question 4

What does the European Systemic Risk Board do?

Answer 4

Monitors the entire financial sector to identify potential problems that could lead to future crises and take action to prevent them

Question 5

What does the European Banking Authority do?

Answer 5

Ensures consistent prudential regulation across the European banking sector

Question 6

What does the European Securities and Markets Authority do?

Answer 6

Safeguards the stability of the EU’s financial system

Question 7

What does the European Insurance and Occupational Pensions Authority do?

Answer 7

Support the stability of the financial system as well as the protection of insurance policyholders and pension scheme members

Question 8

The member countries of the EU are not obliged to implement the changes initiated by the EU unless what?

Answer 8

They are presented in the form of directives or regulations

Question 9

What does Directive on Deposit Guarantee Schemes do?

Answer 9

Requires all EU member countries to offer a compensation scheme that would protect depositors should an institution fail.

Question 10

What is the minimum level of compensation under the Directive on Deposit Guarantee Schemes?

Answer 10

Initially set at a minimum of 20,000 euros per person, per institution but was raised to 50,000 euros and now 100,000 euros.

Question 11

What does the EU Gender Directive establish?

Answer 11

The principle of equal treatment between men and women in the access to and supply of goods and services

Question 12

What does the Transparency Directive apply to?

Answer 12

Storing and providing regulated information - makes it less likely that providers will be able to hide deficits in their balance sheets

Question 13

What does the Capital Requirements Directive (CRD) IV specify?

Answer 13

The liquid assets that providers must hold to ensure that they will be able to meet the withdrawal needs of their customers

Question 14

What does the Banking Conduct of Business Sourcebook (BCOBS) require banks to do?

Answer 14

To be fair, clear and not misleading in communication with customers

Question 15

What does the FCA operate?

Answer 15

• BCOBS
• Senior Managers Regime
• The Certification Regime
• The Conduct Rules

Question 16

What do the Senior Managers Regime, the Certification Regime and the Conduct Rules ensure?

Answer 16

That all senior bankers and certain staff providing regulated financial advice are fit and proper by assessing their:

• Honesty
• Capability
• Financial soundness

Question 17

Why was the FSCS established?

Answer 17

To operate the Deposit Guarantee Scheme

Question 18

What did the Financial Services and Markets Act 2000 do?

Answer 18

• Introduced the Financial Ombudsman Service

- Established the FSA

Question 19

What did the Banking Act 2009 do?

Answer 19

Allowed the Bank of England to close down a bank before it becomes insolvent to protect the rest of the financial services industry

Question 20

What did the Financial Services Act 2012 do?

Answer 20

• Established the FPC

- Replaced the FSA with the PRA and the FCA

Question 21

What does the FPC do?

Answer 21

Monitors risks to the UK financial system