Chapter 2 - Authorised and Approved Persons

Question 1

4A Permission threshold for FCA Firms

Answer 1

Location of Offices, Effective Supervision, Appropriate Resoruces, Suitability, Business Model

Question 2

4A Permission threshold for DR Firms

Answer 2

Legal Status, Location of Offices, Effective Supervision (PRA and FCA), Appropriate Non-Financial Resources, Prudent Conduct, Suitability (PRA and FCA), and Business Model (PRA and FCA)

Question 3

What is the purpose of MiFID?

Answer 3

• To create a common market with harmonised rules in the financial industry
• Facilitates frictionless cross-border trading (passporting

Question 4

Purpose of EU Withdrawal Act 2018

Answer 4

• Drafts all EU Regulations into UK law (‘onshoring’)
• Preserves existing UK laws that implement EU obligations
• Powers to amend current UK legislation to ensure rules and laws continue to function

Question 5

Core Services of MiFID

Answer 5

• Reception and transmission of orders
• Execution of orders
• Portfolio management
• Investment advice
• Underwriting and placing
• Operating an MTF or OTF

Question 6

Ancillary services of MiFID

Answer 6

• Safekeeping and administration
• Loans to allow the investor to execute
• Advice on capital structure and industrial strategy
• Foreign exchange connected to investment services
• Recommending financial instruments
• Services relating to underwriting

Question 7

Principles for businesses (PRIN)

Answer 7

1. Integrity
2. Skill, care and diligence
3. Management and control
4. Financial prudence
5. Market conduct
6. Customers’ interests
7. Communications with clients
8. Conflicts of interest
9. Customers: relationship of trust
   10.Clients’ assets
   11.Relations with regulators

Question 8

SYSC 4?

Answer 8

General organisational requirements

Question 9

SYSC 5?

Answer 9

Employees, agents and other relevant persons

Question 10

SYSC 6?

Answer 10

Compliance, internal audit and financial crime

Question 11

SYSC 18?

Answer 11

Whistleblowing

Question 12

How are Senior Management Functions and Certifications functions different?

Answer 12

SMF: Regulator, CF: Firm, Both are subject to Fit and Proper Assessment

Question 13

3 conditions where a regulator can take action

Answer 13

There was misconduct by the Senior Manager’s firm
* The Senior Manager was responsible for the management of the firm’s related activities
* The Senior Manager did not take such steps to avoid the misconduct

Question 14

3 components of Fit and Proper Test?

Answer 14

• Honesty, integrity and reputation
• Employment history
• Criminal convictions
• Breaches of FCA/PRA rules
• Complaints
• Competence and capability
• Exam success
• Experience and training
• Financial soundness
• Bankruptcy

Question 15

Who is Training and Competency Sourcebook for?

Answer 15

Retail Clients

Question 16

What is the Retail Distribution Review (RDR)?

Answer 16

Standards of professionalism applying to providers of retail investment products

Question 17

In RDR, what does an SPS ensure?

Answer 17

• Gained an approved qualification from the list in the FCA Handbook
• Completed a minimum of 35 hours CPD per year, of which at least 21 must be
  structured CPD
• Completed an annual declaration

Question 18

7 pillars of the Standards of professional conduct

Answer 18

Professionalism, Integrity of capital markets, and Duties to Clients, Duties to Employers, Investment Analysis and Action, Conflicts of Interest, and CFA responsibilities