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Chapter 4 - COBS and CASS > Chapter 2 - FSMA 2000 and FSA 2012 > Flashcards

Chapter 2 - FSMA 2000 and FSA 2012 Flashcards

1
Q

What is a Section 56 FSMA Prohibition Order?

A

Gives the FCA and PRA power to prohibit an individual performing a specified function.

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2
Q

What does section 71 FSMA provide to privateand non-private persons?

A

the ability to sue a firm for damages if they suffer loss from a breach of Section 56 where an individual breaches a prohibition order or Section 59 where a individual carries out a controlled function without approval.

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3
Q

What does Section 138D FSA 2012 provide?

A

The power to sue for losses resulting from the breach of a rule by an authorised person.

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4
Q

What are the exemptions to Section 138D FSA2012?

A

It doesn’t apply to listing rules, threshold conditions, short selling rules and capital adequacy rules.

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5
Q

What FCA guide does it use to give guidance on what is a contract of insurance?

A

PERG Sourcebook (Perimeter Guidance)

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6
Q

What is excluded from RAO specified investments list?

A
  • NS&I deposits and products
  • Trade bills
  • Cheques
  • Futures agreed for commercial purposes
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7
Q

What legislation covers advising, dealing and arranging in connection with a contract of insurance, and assisting in the administration and performance of a contract of insurance?

A

Insurance Mediation Directive

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8
Q

What are the Exclusions under FSMA 2000?

A

Dealing as principal for:

  • Absence of holding out
  • Group and Joint Enterprises: Intra group dealings
  • Advice in newspapers
  • Trustees, Nominees and Personal Representatives
  • Employee Share Schemes
  • Overseas Persons
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9
Q

What are the exemption under FSMA 2000?

A
  • Appointed Representatives - Section 39 FSMA (dealing only allowed for general or pure protection contracts).
  • RCHs and RIEs: FCA Handbook provides recognition and notification requirements
  • FSMA Exemption Order 2001
  • Members of Lloyd’s
  • Members of the Professions
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10
Q

What is the application fee for a Part 4a permission?

A

Straightforward case: £1500

Complex case: £5000

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11
Q

What is the regulators statutory deadline for approving cases?

A

6 months - complete cases

12 months - incomplete cases

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12
Q

What are Threshold Conditions?

A

Minimum standards expected of authorised persons being and remaining authorised.

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13
Q

Over what time horizon does the FCA assess the sustainability of a firm’s business model?

A

Medium term

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14
Q

What is the business model threshold condition?

A

the sustainability of a firm’s business model: adequate contingency planning, models meets client needs and no risk to integrity of wider financial system (financial crime).

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15
Q

To which firms does the PRA Additional Conditions apply to?

A

Banks, building societies, credit unions and investment firms.

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16
Q

Are individuals or partnerships able to hold bank deposits or complete insurance business?

A

No

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17
Q

What is the effective supervision condition?

A

Effect of group structures - activities, products and business organisation must not be too complex and impede effective supervision.

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18
Q

What does the appointment of claims representatives TC do?

A

Requires motor insurers to have a claim representative in each EEA state for dealing with claims.

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19
Q

What is a fixed portfolio firm?

A

A firm subject to firm or group supervision (Pillar 1)

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20
Q

What is a flexible portfolio firm?

A

A firm subject to event-driven supervision (Pillar 2) and thematic review of products supervision (Pillar 3).

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21
Q

How long are the supervision cycles for fixed portfolio firms?

A

12 to 36 months

22
Q

What is the Proactive Intervention Framework?

A

The PRA’s assessment of the proximity of each of its authorised firms to failure. Uses business risk, management and governance, capital and liquidity to make its assessment.

23
Q

What are the 4 supervision tools?

A
  1. Diagnostic - identify, assess and measure risk.
  2. Monitoring tools - track the development of risk
  3. Preventative tools - limit or reduce identified risks and prevent them from crystallising.
  4. Remedial tools - respond to risk why they have crystallised.
24
Q

What is a Section 166 of FSMA skilled persons’ report?

A

A report produced by an independent skilled person on an aspect of a firm’s business.

25
Q

What does Section 59 require?

A

Persons fulfilling controlled functions are to be approved by the regulator.

26
Q

How long does the FCA have to determine if a person is fit and proper to hold a controlled function?

A

90 days of receiving Form A.

27
Q

What are the 4 Significant Influence Functions?

A
  1. Governing function
  2. Required Function
  3. Systems and controls function
  4. Significant management function (e.g. head of equity)
28
Q

When can the PRA specify the description of a SIF?

A

If the firm is PRA authorised.

29
Q

Under SMCR how far back does a candidate need to provide a ‘regulatory reference’ for?

A

Past 6 years

30
Q

Under SMCR, what is a prescribed responsibility?

A

A list of responsibility that must be allocated amongst senior managers.

31
Q

What factors will the regulator assess a person’s fitness and propriety for SMCR?

A
  • honesty, integrity and reputation.
  • competence and capability
  • financial soundness
32
Q

In assessing competence and capability, what document lays out the relevant requirements?

A

Training and Competence sourcebook

33
Q

Which activities require an individual to have gained the full qualification before commencing the activity?

A
  • Advising or dealing in: securities, derivatives, packaged products, friendly society tax-exempt policies, long term care policies, corporate finance advice, Lloyds participation, pensions transfer, fund adviser.
34
Q

Within what time frame must the full qualification be attained within?

A

30 months

35
Q

For non-asterisked roles, what are the exemptions to the full qualification rule?

A

30 day rule - spend less than 30 days under supervision in the UK.

At least 3 years up-to-date overseas experience.

36
Q

As part of the RDR, when must a retail investment firm inform the FCA?

A
  • An adviser is no longer competent
  • An adviser has failed to gain the qualification in the time limits
  • An adviser fails to comply with a Statement of Principle.
  • An adviser has performed a TC activity without being competent and without the appropriate supervision.
37
Q

Which legislation introduced the UK’s whistleblowing regime?

A

Public Disclosure Act (PIDA) 1998

38
Q

What is the criteria for firms to be subject to the whistleblowing RULES?

A
  • Deposit takers (banks, building societies, credit unions) with over £250 million in assets.
  • Insurers subject to Insolvency II Directive
39
Q

What is the maximum settlement discount?

A

30%

40
Q

What is a warranty notice?

A

A notice issued by the regulator that proposes disciplinary action. It signals the start of formal enforcement proceedings.

41
Q

How many members are there on the Enforcement Decision Making Committee and how many of them have a legal background?

A

9 members with 3 who are legally qualified

42
Q

What are the 3 statutory notices?

A
  1. Warning notice
  2. Decision notice
  3. Supervisory notice
43
Q

What is a warning notice?

A

Details the action the FCA proposes to take and why. It announces that start of formal disciplinary action.

44
Q

What is a decision notice?

A

Details the actions the FCA has decided to take. Another notice can be issued if the decision changes.

45
Q

What is a supervisory notice?

A

Provides details regarding the action is taking. Can limit a Part 4A permission with immediate effect.

46
Q

What is a notice of discontinuance?

A

To overturn a decision or warning notice to signal that the regulator does not wish to proceed with disciplinary action.

47
Q

What is a final notice?

A

Set out the terms of the final action which the FCA has decided to take and the date from which it will take effect.

48
Q

What are the 3 forms of disciplinary sanctions?

A
  1. Public statements of misconduct (individuals)
  2. Public censures (Firms)
  3. Financial penalties
49
Q

How many days does a firm/person have to refer to the Upper Tribunal after receiving a decision notice?

A

28 days

50
Q

What were the additional enforcement powers provided by FSA 2012?

A
  1. Short-selling disclosure - fines
  2. Suspend firms/individuals
  3. Fines on individuals carrying out controlled functions without approval.
  4. Financial stability information-gathering powers
  5. Ban financial promotions and products

Chapter 4 - COBS and CASS (8 decks)

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