Chapter 10 - part 2

Question 1

What does PIF stand for?

Answer 1

Proactive Intervention Framework

Question 2

How many demarcated PIF stages are there?

Answer 2

5

Question 3

What does each demarcated PIF stage denote?

Answer 3

Different proximity to failure

Question 4

What would move you up the PIF stages?

Answer 4

The PRA determining that the firms viability has deteriorated

Question 5

Does the PRA have a right to culture in mind of an insurance firm?

Answer 5

No

Question 6

Is it up to firms or the PRA to show how their organisation is managing prudential risks appropriately?

Answer 6

The firm

Question 7

Does the PRA regulate Lloyds?

Answer 7

Yes - it is the lead regulator

Question 8

What are the FCa’s three operational objectives?

Answer 8

• 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.

Question 9

How does the FCA aim to prevent widespread harm to consumers?

Answer 9

Being proactive and intervening at an early stage.

Question 10

What does OFT stand for?

Answer 10

Office of Fair Trading

Question 11

What does the CMA stand for?

Answer 11

Competition and Markets Authority

Question 12

What is the aim of Competition and Markets Authority?

Answer 12

To promote fair competition for the benefit of consumers both within and outside the UK.

Question 13

Under the FCA’s competition objective – to promote effective competition in the interests of consumers - What will this mean ??

Answer 13

• 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;

Question 14

What does PRIN stand for?

Answer 14

Principles for Businesses

Question 15

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.

Answer 15

The 8 core principles which guide the FCA’s supervisory work.

Question 16

The supervision model is based on three types of work and applies to all firms. What are the three types?

Answer 16

• 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

Question 17

Does the FCA have powers to intervene?

Answer 17

Yes - to prevent detriment occurrin.

Question 18

What does the FCA’s Policy, Risk and Research Division combine?

Answer 18

research into what is happening in the market and to consumers

with better analysis of the types of risks where they appear.

Question 19

The FCA’s authorisation function focuses on what three things?

Answer 19

• product governance;

• end-to-end sales processes; and

• prevention of financial crime.

Question 20

Who are the FCA required to report annually to?

Answer 20

Government and Parliament

Question 21

Which act contains a provision for independent reviews on the efficiency and effectiveness of the FCA’s use of resources?

Answer 21

The Financial Services Act 2012

Question 22

What is the FCA required to make a report to the treasury?

Answer 22

In the event of a regulatory failure and where this failure was due to the FCA’s actions.

Question 23

The FCA is required to have in place four statutory panels representing the views of what 4 groups?

Answer 23

consumers,

regulated firms,

smaller regulated firms and

market practitioners

Question 24

What stage does the FCA expect firms to treat customers fairly?

Answer 24

throughout the product life cycle

Question 25

What is Financial Vulnerability Taskforce?

Answer 25

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.

Question 26

At which stage of a policy’s lifecycle does the Financial Conduct Authority expect an insurer to treat the customer fairly?

Answer 26

During the whole lifecycle.

Question 27

What does SYSC stand for?

Answer 27

Senior management arrangements, systems and controls

Question 28

What does SM&CR stand for?

Answer 28

Senior Managers and Certification Regime

Question 29

What does PIDA stand for?

Answer 29

Public Interest Disclosure Act
1998

Question 30

What does (APER stand for?

Answer 30

the Approved Persons Regime

Question 31

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?

Answer 31

• 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.

Question 32

The Government also introduced a ‘duty of responsibility’, what does this mean for senior mangaers?

Answer 32

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.

Question 33

Firms are split into three categories, to ensure that the regime is flexible and proportionate. What are the three catagories?

Answer 33

• ‘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.

Question 34

SM&CR is formed of three key pillars. What are they?

Answer 34

• Senior Managers Regime.
• Certification Regime.
• Conduct Rules.