Chapter 1 - M80 Flashcards
What is the regulatory regime based on?
A number of parliamentary acts
What are the main two acts which influenced the regulatory regime?
Financial Services and Markets Act 2000 - which was amended by Financial Service Act 2012
What are the 3 main bodies that were given financial responsibility under Financial Service Act 2012?
FCA - Financial Conduct Authority
PRA - Prudential Regulation Authority
FPC- Financial Policy Committee
What does the Financial Policy Committee do?
- sits behind Bank of England
- monitors emerging risk
- provides strategic direction for the regulation regime
What does the Duel Regulatory approach consist of?
Rules and guidance from
- FCA handbook
- PRA handbook
What role of each regulator sits on each others board?
Chief executive officers
What are the PRA responsible for?
Encouraging stable and prudent behaviour in the Financial System.
For: Banks, Building Societies, Credit Unions, Insurers, Investment Firms
What are the FCA responsible for?
Regulation of conduct
For: Retail, Wholesale, Financial Markets, Infrastructure, firms the PRA don’t cover e.g Brokers
Which regulatory firm is accountable to the Bank of England?
PRA
Which regulatory firm is accountable to HM Treasury of Parliament?
FCA
What role does the FPC have on the PRA and FCA?
FPC can make recommendations and directions to PRA and FCA in order to meet objectives
What act amended the Financial Services Act 2012?
Bank of England and Financial Services Act 2016
What happened to the PRA under the Bank of England and Financial Services Act 2016?
PRA became PRC - Prudential Regulation Committee and part of the Bank
What 2 Bank committees works along side PRC?
FPC - Financial Policy Committee
MPC - Monetary Policy Committee
What are the 3 PRA objectives?
- promote safety and soundness
- insurance to contribute to protection
- facilitate effective competition
What are the FCA Objectives?
- ensure that relevant markets function well
- promote competition in consumer interest
- provide protection for consumers
- protect integrity of financial system
What are the FCA Objectives?
- ensure that relevant markets function well
- promote competition in consumer interest
- provide protection for consumers
- protect integrity of financial system
Who are the FCA responsible for?
- Financial Ombudsman Service
- MoneyHelper Service
- Financial Service Compensation Scheme
- Consumer Duty
What do the FCA have the power to do?
- intervene in area of products
- instruct firms to remove misleading promotions
- publish disappears matter with warning notice
What approach does PRA make?
Judgement based approach
What approach does PRA make?
Judgement based approach
What is the PRA supervision on Insurers?
- forward looking for future problems
- sets outcomes it wishes, insurers to achieve
- intervene early with recommendations
- Insurers submit financial submissions and reports
What is a Threshold Condition according to the PRA?
Minimum requirements a firm must fulfil in order to trade
- consistent with statutory safety and soundness
Who is the lead regulator for Lloyds?
- Lloyds and Lloyds managing agents = dual regulated (FCA - conduct)
- Lloyds brokers = FCA regulated
What is the FCA risk based approach points?
1) consumer protection
2) integrity
3) competition (pricing in firms)
