Chapter 1 - M80

Question 1

What is the regulatory regime based on?

Answer 1

A number of parliamentary acts

Question 2

What are the main two acts which influenced the regulatory regime?

Answer 2

Financial Services and Markets Act 2000 - which was amended by Financial Service Act 2012

Question 3

What are the 3 main bodies that were given financial responsibility under Financial Service Act 2012?

Answer 3

FCA - Financial Conduct Authority
PRA - Prudential Regulation Authority
FPC- Financial Policy Committee

Question 4

What does the Financial Policy Committee do?

Answer 4

• sits behind Bank of England
• monitors emerging risk
• provides strategic direction for the regulation regime

Question 5

What does the Duel Regulatory approach consist of?

Answer 5

Rules and guidance from
- FCA handbook
- PRA handbook

Question 6

What role of each regulator sits on each others board?

Answer 6

Chief executive officers

Question 7

What are the PRA responsible for?

Answer 7

Encouraging stable and prudent behaviour in the Financial System.

For: Banks, Building Societies, Credit Unions, Insurers, Investment Firms

Question 8

What are the FCA responsible for?

Answer 8

Regulation of conduct

For: Retail, Wholesale, Financial Markets, Infrastructure, firms the PRA don’t cover e.g Brokers

Question 9

Which regulatory firm is accountable to the Bank of England?

Answer 9

PRA

Question 10

Which regulatory firm is accountable to HM Treasury of Parliament?

Answer 10

FCA

Question 11

What role does the FPC have on the PRA and FCA?

Answer 11

FPC can make recommendations and directions to PRA and FCA in order to meet objectives

Question 12

What act amended the Financial Services Act 2012?

Answer 12

Bank of England and Financial Services Act 2016

Question 13

What happened to the PRA under the Bank of England and Financial Services Act 2016?

Answer 13

PRA became PRC - Prudential Regulation Committee and part of the Bank

Question 14

What 2 Bank committees works along side PRC?

Answer 14

FPC - Financial Policy Committee
MPC - Monetary Policy Committee

Question 15

What are the 3 PRA objectives?

Answer 15

• promote safety and soundness
• insurance to contribute to protection
• facilitate effective competition

Question 16

What are the FCA Objectives?

Answer 16

• ensure that relevant markets function well
• promote competition in consumer interest
• provide protection for consumers
• protect integrity of financial system

Question 17

What are the FCA Objectives?

Answer 17

• ensure that relevant markets function well
• promote competition in consumer interest
• provide protection for consumers
• protect integrity of financial system

Question 18

Who are the FCA responsible for?

Answer 18

• Financial Ombudsman Service
• MoneyHelper Service
• Financial Service Compensation Scheme
• Consumer Duty

Question 19

What do the FCA have the power to do?

Answer 19

• intervene in area of products
• instruct firms to remove misleading promotions
• publish disappears matter with warning notice

Question 20

What approach does PRA make?

Answer 20

Judgement based approach

Question 21

What approach does PRA make?

Answer 21

Judgement based approach

Question 22

What is the PRA supervision on Insurers?

Answer 22

• forward looking for future problems
• sets outcomes it wishes, insurers to achieve
• intervene early with recommendations
• Insurers submit financial submissions and reports

Question 23

What is a Threshold Condition according to the PRA?

Answer 23

Minimum requirements a firm must fulfil in order to trade
- consistent with statutory safety and soundness

Question 24

Who is the lead regulator for Lloyds?

Answer 24

• Lloyds and Lloyds managing agents = dual regulated (FCA - conduct)
• Lloyds brokers = FCA regulated

Question 25

What is the FCA risk based approach points?

Answer 25

1) consumer protection
2) integrity
3) competition (pricing in firms)