Chapter 1D - How the EU impacts UK regulation

Question 1

Roughly what percentage of FCA policymaking is driven by EU initiatives?

Answer 1

70%

Question 2

True or False: Most of the current UK financial services regulation originates from the EU?

Answer 2

True

Question 3

Which three ESAs were formed in January 2011 as a response to the 2007/08 financial crisis?

Answer 3

European Banking Authority (EBA)
European Insurance and Occupational Pensions Authority (EIOPA)
European Securities and Markets Authority (ESMA)

Question 4

What does FSAP stand for?

Answer 4

Financial Services Action Plan

Question 5

What were the three original objectives of the Financial Services Action Plan?

Answer 5

• Create a single EU wholesale market
• Achieve open and secure retail markets
• Create state-of-the-art prudential rules and structure for supervision

Question 6

How do the three original objectives of the Financial Services Action Plan promote the wider European economy?

Answer 6

Removing barriers and increasing competition, thus making markets more efficient and reducing the costs of raising capital

Question 7

Since 1999, the European Commission has adopted or updated requirements concerning…

(6 answers)

Answer 7

• amount of capital that firms should hold
• compliance rules for carrying out business
• controls firms must apply to counter money laundering and terrorist financing
• tests to apply when assessing the suitability of new controllers or large shareholders
• requirements they must impose to counter the risk of market abuse
• disclosures that companies must make when seeking new capital

Question 8

What is the name of the department of UK Government responsible for regulating the financial services market?

Answer 8

The Treasury

Question 9

Who does the Treasury work under the direct authority of?

Answer 9

Chancellor of the Exchequer

Question 10

What are the three key pieces of legislation governing the financial services industry in the UK?

Answer 10

Financial Services and Markets Act 2000 (FSMA)
Financial Services Act 2012
Bank of England and Financial Services Act 2016

Question 11

What is the Prudential Regulation Authority (PRA)?

Answer 11

part of Bank of England
authorises and regulates capital, solvency and risk
larger firms, banks and insurers

Question 12

What is the Prudential Regulation Committee (PRC)?

Answer 12

A committee within the Bank of England

Question 13

What is the Financial Policy Committee (FPC)?

Answer 13

A committee within the Bank of England that monitors the UK economy

Question 14

What is the Financial Conduct Authority (FCA)?

Answer 14

regulator for conduct and markets

authorises smaller firms; intermediaries and mortgage brokers

Question 15

What was the financial regulator in the UK prior to having the FCA and PRA?

Answer 15

The FSA

Question 16

What are the four key characteristics of the dual regulation model?

Answer 16

• Split regulation for prudential and conduct matters
• Independent supervisors judge against different objectives
• Internal coordination maximises exchange of info
• Regulatory data only collected once