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Chapter 4 - COBS and CASS > Chapter 1 - The Regulatory Environment > Flashcards

Chapter 1 - The Regulatory Environment Flashcards

1
Q

What is the situation with agreements entered into whilst the person was violating the general prohibition?

A

They are likley to be unenforceable.

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2
Q

What is the Prudential Regulation Committee?

A

A committee of the Bank of England which is responsible for micro-prudential regulation of firms.

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3
Q

How often must the FCA submit a report to the Treasury?

A

Annually

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4
Q

What are the Bank of England’s main purposes?

A
  1. Monetary stability: prices and confidence in currency.

2. Financial stability: detecting and reducing threats to the stability of the financial system as a whole.

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5
Q

What are the statutory objectives of the FCA set out in FSA 2012?

A

Strategic objective: ensure markets function well.

Operational objectives:

  • Consumer protection
  • Integrity
  • Competition
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6
Q

What is the PRA’s statutory objective?

A

Promoting the safety and soundness of PRA authorised persons.

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7
Q

What are the features of the FCA’s outcomes focused supervisory model?

A
  1. Enhanced analysis of risk identification: Business model risk and macro-prudential analysis.
  2. Outcome testing

The outcomes focused supervisory model is part of a risk-based approach to supervision.

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8
Q

What are the 3 pillars of FCA supervision?

A
  1. Proactive firm supervision - Firm Systematic Framework
  2. Event driven work
  3. Issues and products
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9
Q

What are the components of Pillar 1 - Firm Systematic Framework?

A
  • Business Model and Strategy Analysis (BMSA)
  • Proactive Engagement
  • Deep Dive Assessments
  • Firm Evaluation
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10
Q

Which 4 risk groups does the FCA look into during deep dive assessments?

A
  1. Group culture and governance
  2. Product design
  3. Sales and transaction processes
  4. Post-sales/services and transaction handling.
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11
Q

Which document should regulated firms refer to in order to understand their conduct risk outlook.

A

FCA’s Business Plan - Risk Outlook

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12
Q

What part of FSMA gives the FCA rule making powers?

A

Part 9A

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13
Q

What are the FCA’s rule making powers?

A
  • Authorisation - granting, varying and cancelling.
  • Supervision
  • Disciplinary and Sanctions
  • Enforcement
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14
Q

What are the 3 European Supervisory Authorities?

A
  • European Banking Authority (EBA)
  • European Securities and Markets Authority (ESMA)
  • European Insurance and Occupational Pensions Authority (EIOPA)
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15
Q

Which European body is responsible for macro-prudential regulation?

A

European Systemic Risk Board

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16
Q

What are the 11 Principles of Business?

A
  1. Integrity
  2. Skill, care and diligence
  3. Management and control
  4. Financial prudence
  5. Market conduct
  6. Client Interests
  7. Communication with clients
  8. Conflicts of Interest
  9. Relationships of trust
  10. Safeguarding client assets
  11. Relations with regulators
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17
Q

What are the 6 TCF initiatives?

A
  1. Fair treatment is central to corporate culture.
  2. Products and services meet client needs.
  3. Informed before, during and post sale.
  4. Advice is suitable
  5. Products perform to expectations
  6. No unreasonable post-sale barriers to claim, complain or switch product/provider.
18
Q

What are the 8 PRA Fundamental Rules?

A
  1. Integrity
  2. Skill, care and diligence
  3. Prudent
  4. Adequate financial resources
  5. Effective risk strategies and management systems
  6. Organise and control affairs effectively
  7. Relations with regulators
  8. Prepare for resolution
19
Q

What does the FCA use to interpret proper standards of market conduct?

A

Code of Market Conduct

20
Q

What are the Statements of Principle?

A
  1. Act with integrity
  2. Act with due care, skill and diligence
  3. Observe proper standards of market conduct
  4. Deal with regulators in an open and cooperative way
21
Q

What are the SIF Statements of Principle?

A
  1. Ensure that the business area that they are responsible for is organised for effective control.
  2. Exercise due skill, care and diligence in managing the business area they are responsible for.
  3. Take reasonable steps that the controlled function complies with standards of the regulatory system.
22
Q

In order to comply with Statement of Principle 5, what would the FCA/PRA expect from a SIF holder?

A
  1. Reporting Lines
  2. Authorisation levels and job descriptions
  3. Suitability of individuals
23
Q

Which type of SMCR firm were required to submit a conversion notification?

A

Enhanced scope SMCR firms

24
Q

What are the 5 Conduct Rules?

A
  1. Integrity
  2. Skill, care and diligence
  3. Cooperate with regulators
  4. Customer interests and TCF
  5. Observe standards of market conduct
25
Q

What are the 4 additional Senior Manager Conduct Rules?

A

SC1: Effective control of business area.
SC2: Business area complies with regulations
SC3: Delegate responsibilities to an appropriate person
SC4: Disclose anything that the FCA/PRA would require notice for

26
Q

What are common platform firms?

A

Firms subject to the Capital Requirements Directive (CRD) and Markets in Financial Instruments Directive (MiFID)

27
Q

How does SYSC apply to common platform firms?

A

They are rules

28
Q

What does SYSC 4 relate to?

A

General Requirements

29
Q

What does SYSC 5 relate to?

A

Employees, Agents and Other relevant persons

30
Q

What does SYSC 6 relate to?

A

Compliance, Audit and Financial Crime

31
Q

What does SYSC 7 relate to?

A

Risk Control

32
Q

What does SYSC 12 relate to?

A

Group Risk Systems and Controls

33
Q

What does SYSC 8 relate to?

A

Outsourcing - firms must inform the FCA if it intends to outsource a critical function.

34
Q

What does SYSC 9 relate to?

A

Record Keeping

35
Q

What does SYSC 10 relate to?

A

Conflicts of Interest

36
Q

What does SYSC 10A relate to?

A

Recording of telephone conversation and electronic communications - applies to receiving, executing, arranging orders for financial instruments in relation to a regulated market, MTF or OTF or investments related to such instruments.

37
Q

What does SYSC 19A,B,C,D relate to?

A

Remuneration

38
Q

Which firms have to comply with the Remuneration Code?

A

Dual regulated firms including non-EEA headquartered firms.

39
Q

What is ex-post risk adjustment?

A

Reduction, cancellation or recovery of variable remuneration to take into account crystallised risks or adverse performance outcomes including misconduct.

40
Q

What are the CISI Code of Conduct Principles?

A
  1. Act honestly and fairly
  2. Act with integrity
  3. Observe applicable law, regulations and professional conduct standards
  4. Observe standards of market integrity
  5. Manage conflicts of interest
  6. Attain professional competence
  7. Decline to act in a manner which you are not competent
  8. Strive to uphold the highest personal and professional standards.

Chapter 4 - COBS and CASS (8 decks)

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