Chapter 10 - part 2 Flashcards
What does PIF stand for?
Proactive Intervention Framework
How many demarcated PIF stages are there?
5
What does each demarcated PIF stage denote?
Different proximity to failure
What would move you up the PIF stages?
The PRA determining that the firms viability has deteriorated
Does the PRA have a right to culture in mind of an insurance firm?
No
Is it up to firms or the PRA to show how their organisation is managing prudential risks appropriately?
The firm
Does the PRA regulate Lloyds?
Yes - it is the lead regulator
What are the FCa’s three operational objectives?
• Consumer protection: securing an appropriate degree of protection for consumers.
• Integrity: protecting and enhancing the integrity of the UK financial system.
• Competition: promoting effective competition in the interests of consumers.
How does the FCA aim to prevent widespread harm to consumers?
Being proactive and intervening at an early stage.
What does OFT stand for?
Office of Fair Trading
What does the CMA stand for?
Competition and Markets Authority
What is the aim of Competition and Markets Authority?
To promote fair competition for the benefit of consumers both within and outside the UK.
Under the FCA’s competition objective – to promote effective competition in the interests of consumers - What will this mean ??
• firms must compete for business by offering better services, better value and types of products that customers want and need;
• firms will need to innovate and develop new products over time: the FCA will draw a distinction between ‘good’ innovation that meets consumers’ genuine needs and other types that exploit consumers.
• prices offered are in line with costs;
What does PRIN stand for?
Principles for Businesses
What are:
• Forward-looking.
• A focus on firm strategy and business models.
• A focus on culture and governance.
• A focus on individual as well as firm accountability.
• Proportionate and risk-based
• Two-way communication.
• Coordinated.
• Putting right systematic harm that has occurred and stop it happening again.
The 8 core principles which guide the FCA’s supervisory work.
The supervision model is based on three types of work and applies to all firms. What are the three types?
• Proactive – pre-emptive identification of harm through review and assessment of firms and portfolios: this includes business model analysis and reviewing the drivers of culture.
• Reactive - dealing with issues that are emerging or have happened to prevent harm growing.
• Thematic – wider diagnostic or remedy work where there is actual or potential harm across a number of firms
Does the FCA have powers to intervene?
Yes - to prevent detriment occurrin.
What does the FCA’s Policy, Risk and Research Division combine?
research into what is happening in the market and to consumers
with better analysis of the types of risks where they appear.
The FCA’s authorisation function focuses on what three things?
• product governance;
• end-to-end sales processes; and
• prevention of financial crime.
Who are the FCA required to report annually to?
Government and Parliament
Which act contains a provision for independent reviews on the efficiency and effectiveness of the FCA’s use of resources?
The Financial Services Act 2012
What is the FCA required to make a report to the treasury?
In the event of a regulatory failure and where this failure was due to the FCA’s actions.
The FCA is required to have in place four statutory panels representing the views of what 4 groups?
consumers,
regulated firms,
smaller regulated firms and
market practitioners
What stage does the FCA expect firms to treat customers fairly?
throughout the product life cycle
What is Financial Vulnerability Taskforce?
A newly-created independent professional body
covering the insurance and wider financial sectors.
Its objective is to promote greater understanding, encourage appropriate behaviors and establish good outcomes in respect of customer vulnerability.
At which stage of a policy’s lifecycle does the Financial Conduct Authority expect an insurer to treat the customer fairly?
During the whole lifecycle.
What does SYSC stand for?
Senior management arrangements, systems and controls
What does SM&CR stand for?
Senior Managers and Certification Regime
What does PIDA stand for?
Public Interest Disclosure Act
1998
What does (APER stand for?
the Approved Persons Regime
The SM&CR introduced a new regulatory framework for individual accountability to replace the Approved Persons Regime (APER). It focuses on the most senior individuals in firms who hold key roles or have overall responsibility for whole areas of relevant firms.
Firms are required to what?
• ensure each senior manager has a Statement of Responsibilities, setting out the areas for which they are personally accountable;
• produce a ‘Responsibilities Map’ that knits these together; and
• ensure that all senior managers are pre-approved by the regulators before carrying out their roles.
The Government also introduced a ‘duty of responsibility’, what does this mean for senior mangaers?
They are required to take the steps that it is reasonable for a person in that position to take, to prevent a regulatory breach from occurring.
Firms are split into three categories, to ensure that the regime is flexible and proportionate. What are the three catagories?
• ‘Core’: applies to the majority of firms.
• ‘Enhanced’: carries increased obligations, and applies to larger and more complex organisations.
• ‘Limited scope’: more light-touch, with fewer obligations than core and enhanced.
SM&CR is formed of three key pillars. What are they?
• Senior Managers Regime.
• Certification Regime.
• Conduct Rules.
