Chapter 1 Flashcards
What are the name of the 3 bodies made after financial crisis by Financial Services Act 2012
- FCA
- PRA
- FPC
FCA
Conduct of business for all financial firms including intermediaries
FCA’s Objectives
- Ensure relevant markets function well
- Consumer protection
- Integrity
- Competition
What other bodies does the FCA oversee
- Financial Ombudsman Service (FOS)
- Money Advice Service (MAS)
- Financial Service Compensation Scheme (FSCS)
How pillars in FCA’s approach
- Firm systematic Framework
- Conducting event driven work for emerging issues
- Reviewing issues as they happen (products and promotions can be banned by FCA)
RISK BASED APPROACH
PRA objective
Within BOE
Promote safety and soundness of PRA-regulated persons
Firms must meet threshold conditions
What PRA’s threshold conditions for firms to carry out regulated activity
- Head office in UK
- Conduct business in prudent manner
- Adequate resources
- Fit and proper
- Appropriately staffed
PRA
Supervisory framework to see gross risk exposure , what is in place to mitigate
PRA: Judgement based approach
- Forward looking
- Not only insurance firms
- Approach differs for each industry
Insurance Regulators
Dual regulated: PRA + FCA
PRA in Insurance
Focuses on outcomes and adequate measures
- mgmt and governance
- culture and competence (Board takes responsibility)
- Risk mgmt and controls
- Financial resources
- Resolvability
FPC
Emerging and systemic risk
- provide strategic direction to the regulatory set up
How do PRA + FCA impact UW functions (5)
- Principles of business (PRIN)
- Training and competence (TC)
3.Fair treatment of customers - Monitoring and auditing
- Complaint and dispute resolution
FCA Handbook (PRIN) 11 principles
- Integrity
- Skill, care and diligence
- mgmt and control
4.financial prudence - market conduct
- customers interest
- Comms with client
- conflict of interest
- customers - relationship of trust
- client’s assets
- relationship with regs
PRA threshold categories
Cat 1 - 5
1 = significant capacity to cause disruption to large number of policyholders
2 = significant
3 = minor
4 = very little
5 = almost no