Chapter 1 Flashcards
Who does T&C apply to?
Advisers of insurance, securities, mortgage and investment advice.
Supervisors or managers of these advisers
Those overseeing a back office function e.g. new business admin, fund switches or processing claims.
What roles does the certification regime relate to?
Advisors
Material risk takers / significant harm functions
Head of IT
Head of risk
Managers of certified individuals/Director
CASS oversight function
What is an information giver?
Introduced in Jan 18 under MiFID II - those providing information in a MiFID business such as a paraplanner who has direct client contact.
CII code of ethics
- Comply with the code & all relevant laws & regulations
- Act with the highest ethical standards & integrity
- Act in the best interest of the client
- Provide a high standard of service
- Treat people fairly regardless of age, sex, disability, race, etc.
Accredited bodies such as the CII to provide SPS, which includes adherence to the code.
7 areas of T&C
- Training needs
Assessment at outset and ongoing - appropriate training provided - firms should assess quality and effectiveness of training. - Assessment of competence
- Supervision
- Qualifications
- Maintaining competence
- CPD
- Notification requirements
What 4 things constitute competence?
Ethical behaviour
Skills
Knowledge
Expertise
What 4 things are included in the competent employee rule Fit & proper?
- Relevant industry knowledge
- Firm specific knowledge
- Relevant job specific knowledge and skills
- Demonstrate ethical behaviour
1st tier conduct rules (6)
- You must act with integrity.
- You must act with due skill, care & diligence.
- You must be open & cooperative with FCA, PRA & other regulators.
- You must pay due regard to the interests of customers and treat them fairly.
- You must observe proper standards of market conduct.
- You must act to deliver good outcomes for retail customers.
2nd tier conduct rules (4)
- Take reasonable steps to ensure the business of the firm is controlled effectively.
- Take reasonable steps to ensure the business of the firm complies with relevant requirements & standards of the regulatory system.
- Any delegation of your responsibilities is to an appointed person & you oversee the discharge of responsibilities effectively.
- You must disclose any information of which the FCA or PRA would reasonably expect notice.
Principle regulatory requirements a certificated role must adhere to
Fit & proper requirements
Conduct rules requirements
5 areas of competence and conduct
- SMCR
- MiFID II
- CII code of ethics
- T&C
- SYSC - FCA systems and controls
5 elements of SYSC that have the most impact on competence and conduct
SYSC 3 - Management systems and controls
Maintain adequate systems and controls for the business.
- Clear reporting lines.
- Adequate resources
- Adequate documented processes (T&C scheme, performance review/ appraisal process, appropriate MI, DP and advice process)
SYSC 5 “The competent employee rule”
Firms must employee personnel with the skills, knowledge, and expertise necessary for the responsibilities allocated to them.
(4 elements of Fit and proper)
SYSC 6 Compliance, Internal audit & financial crime
Firms must establish, implement and maintain adequate policies and procedures to ensure complained with FCA rules.
3 broad requirements:
- Establish procedures to ensure staff meet FCA rules
- Independent compliance and audit function
- Polices & procedures to assess and monitor money laundering risk. & reviewed regularly.
SYSC 7 Risk Control
Effective processes to identify, manage, monitor, and report risk they are or might be exposed to & set tolerance levels. Risks can include those from inadequate internal processes, arise from external factors or from people risk.
SYSC 9 Record Keeping
Develop and keep orderly records. “If it isn’t written down, it didn’t happen!”
Fit and proper checks for Senior Managers or Certification regime focus on 3 areas
- Honesty, integrity and reputation
- Competency and capability
- Financial soundness
FCA’s overall objective
To ensure the relevant markets function well so consumers get a fair deal.
Key features of Senior Managers regime under SMCR
Make the roles and responsibilities of senior managers clear.
They must have a SOR which sets out their responsibilities and written acceptance of them & will be held accountable to them.
Held accountable if don’t take reasonable steps to prevent & stop breaches in their area of responsibility.
Subject to FCA conduct rules - 1st & 2nd tiers.
Failings could lead to FCA action, being prevented from working in financial services or even criminal proceedings.
