Chapter 1 (Regulatory Environment) Flashcards
What was the act and when that set out the legal and regulatory framework for financial services firms?
FSA 2012 (Financial Services Act)
Name the 12 FCA Principles for Businesses (PRIN)
Integrity
Skill, care and diligence
Management and control
Financial prudence
Market conduct
Customers’ interests
Communications with clients
Conflicts of interest
Customers: relationship of trust
Clients’ assets
Relations with regulators
Consumer duty
What is the fee block system
Funding of FCA by financial services firms (riskier the firm, the larger the fee block charged)
FCA and PRA regulates who and what
All firms are subject to FCA conduct regulation and non-dual-regulated firms are subject to FCA prudential regulation; PRA is responsible for prudential regulation of dual-regulated firms
Strategic objectives of FCA
Ensuring relevant markets function well; securing appropriate degree of protection for consumers
Operational objectives of FCA
Consumer protection; integrity; competition
3 pillar model and which apply to fixed portfolio (large) firms and flexible portfolio (small) firms
Proactive; reactive; thematic (all apply to fixed firms, only 2 and 3 apply to flexible firms)
Who issues directions to FCA and PRA and what do they do
Financial policy committee (FPC); panel of experts and not a regulator
Which are the two non-binding FCA handbook provisions?
Evidential provisions; guidance
3 cross-cutting rules within Consumer Duty (PRIN 12)
Act in good faith towards retail clients; avoid causing foreseeable harm to RC; enable and support RC to pursue financial objectives
Who must comply with PRIN?
ALL authorised firms
According to SYSC (systems and controls), senior managers should…
Apportion responsibilities clearly and appropriately; sound governance; experienced management; receive written reports on compliance and internal audit annually
What is the maximum fine the PCA can issue?
Unlimited
Is the FCA a company and who is it answerable to?
It is a company and answers to the treasury
Can the FCA delegate its statutory objectives?
No
As a designated body under the Unfair Terms in Consumer Contracts Regulation 1999, the FCA has the power to:
Force financial services firm to amend or remove unfair contract terms.
Who is responsible for reducing risks to the financial system as a whole?
FPC
What is the purpose of the Pension Protection Fund?
To compensate members of insolvent final salary pension schemes
What is the main aim of the FCA’s Consumer Duty?
To ensure that retail customers receive good outcomes when they purchase products or services
What are the 4 supervisory tools of the FCA?
Identify, Diagnose, Remedy, Evaluate
Who is responsible for the regulation of ISAs?
HM Revenue and Customs
What are the 3 types of PRA firms?
Deposit takers (banks), insurance-related firms, significant (v.large) investment firms
What does the Takeover panel do?
Focuses on the fair treatment of affected parties during the process of the takeover or merger ( does not play a part in assessing the impact of the takeover or merger)
