8.2 Regulators

Question 1

Regulation

Answer 1

Process of supervising the actions and business of Gina via providers
Safe and enhances financial stability and averting crises
Promote consumer confidence

Question 2

Financial Services Act 2012: FPC 2010

Answer 2

The Financial Policy Committee is part of the Bank of England
Formed in anticipation of regulatory changes
Monitore and responds to risks posed to the whole of the financial services market
(Also called a macro prudent authority)

Question 3

Financial services Act 2012: chancellor of the exchequer

Answer 3

In treasury has powers to direct the Bank of England and take action if there is a serious threat to stability of the market and public funds

Question 4

Financial services Act 2012: PRA

Answer 4

Part of Bank of England and Financial conduct authority (FCA) is an independent organisation
Responsible for micro prudential regulation- looks at risk that’s individual providers making present to the stability of the financial services market
Ensures all providers conduct their business in a way that benefits customers and the market

Question 5

Financial services authority

Answer 5

Recognised it was too slow to react to risks in the market and misconduct by providers
Sold PPI to people who couldn’t claim under it (scandal )
Replaced by PRA and FCA( supervisor of individual providers )

Question 6

Work of the regulatory system supplied by:

Answer 6

-Financial Ombudsman Service- handle customer complaints
- Financial services compensation scheme- compensate customers of their provider fails, rebuild trust in the industry
- money helper- customer info service set up by government to help people make informed decisions

Question 7

Uk regulatory system

Answer 7

|Parliament
|Chancellor of the exchequer and HM treasury
- can instruct Bank of England to take action if financial stability is threatened
| Bank of England
- Financial policy Committee (FPC) , monitors risks to whole financial services market
> PRA FCA

Question 8

The Prudential Regulation authority (PRA)

Answer 8

• responsible for the prudential regulation of banks, building societies, credit unions, insurers and major investment firms.
• part of the Bank of England
• the Board of the PRA reports to Parliament.
• It is funded by fees paid by providers

Question 9

The Financial Services Act (2012) identified two objectives for the PRA

Answer 9

◆ promoting the safety and soundness of providers, ensuring that the UK financial system is better able to cope in a crisis
◆ securing an appropriate degree of protection for insurance policyholders

Question 10

what does the pra set

Answer 10

standards and requirements that providers must meet to manage risk
including ‘threshold conditions’ for continuing in business (minimum required)

Question 11

threshold

Answer 11

◆ holding enough cash (also known as liquidity) and having enough capital (that is,
funds) to absorb a certain level of losses;
◆ having suitable management;
◆ being fit and proper
◆ conducting business prudently, that is, managing risk well to ensure the business is safe and sound

Question 12

how does the PRA assess risk

Answer 12

• judgement based approach
  -forward looking, taking into account risks that can arise in the future
• concentrating on the providers that pose the greatest risk to the
  stability of the UK financial system
• has powers to take action to reduce the risks
  it identifies.

Question 13

the financial policy committee (FPC)

Answer 13

can direct the PRA to investigate and take action to manage the
risks it has identified for the financial system as a whole

Question 14

FCA with PRA

Answer 14

PRA also works with Financial conduct authority
- focuses on preventing misconduct by providers

Question 15

Financial conduct authority fca

Answer 15

-independent body
-reports to the treasury
- can receive direction from the financial policy committee

Question 16

What do providers have to do if they are regulated by the FCA

Answer 16

Pay fees to cover running costs

Question 17

FCA aim

Answer 17

To make financial markets work well so that the consumers get a fair deal

Question 18

FCA single strategic objective

Answer 18

Ensure that the relevant markets function well

Question 19

Single strategic objective supported by 3 operational objectives FCA

Answer 19

• to secure an appropriate degree of protection for consumers
• the protect and enhance the integrity of the uk financial system
• to promote effective competition in the interests of consumers

Question 20

Since April 1 2013 (FCA)

Answer 20

Banks, Credit unions, and building societies have been regulated by the FCA and must be authorised by it before they can carry out activities

Question 21

1 April 2014 (FCA)

Answer 21

Regulation of all consumer credit moves to the FCA from the office of fair trading

Question 22

FCA also regulates

Answer 22

Independent financial advisers (IFAs) and providers that are not regulated by the PRA

Question 23

How FCA meets its objectives by

Answer 23

-Supervising providers to ensure they are conducting their business appropriately
-Sets out rules relating to the way they carry out their business activities

Question 24

Investigative Powers FCA

Answer 24

Gather info on providers and consumers

Question 25

Enforcement powers FCA

Answer 25

• imposing fines
• withdrawing/ suspending a provider’s authorisation to operate
• ordering providers to compensate customers