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Regs > Chapter 2 The Financial Services and Markets Act 2000 and Financial Services Act 2012 > Flashcards

Chapter 2 The Financial Services and Markets Act 2000 and Financial Services Act 2012 Flashcards

1
Q

What is the General prohibition

A

No person may carry on a regulated activity in the UK unless he is an authorized person or an exempt person

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2
Q

Regulated activity order

A

Specified activity undertaken with a specified investment

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3
Q

Authorized person?

A

Received part 4A permission

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4
Q

Exempt person?

A

Eg Bank of England

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5
Q

Criminal penalties for contravening general prohibition

A

2 years imprisonment and or unlimited fine

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6
Q

Civil law penalties for contravening general prohibition

A

Injunctions (shutdown business)

Restitution (pay back losses)

Contracts are voidable at discretion of investor

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7
Q

Excluded activities which dont need to be regulated

A
  • Newspapers and other media EXCEPT TIP SHEETS
  • Providing information
  • Unpaid trustees eg nominees and executors
  • Employee share schemes
  • Group or joint enterprises (where subsidiary provides services for parent company)
  • Absence of holding out - (not buying or selling shares)
  • Gold and FX!!!!!! not specified but options on these are
  • premium bond not specified but normal bond is
  • Property
  • Options on commodities like oil are not classified- but options on precious metals are
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8
Q

Exempt persons (6)

Dont need part 4A permission

A
  • lloyds syndicate members
  • Members of designated bodies like lawyers, accountant, surveyor, actuary
  • Recognized investment exchanges
  • Recognized clearing houses
  • Appointed representatives
  • Other exempted bodies eg BoE, Supranationals, Central Banks
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9
Q

What are regulated activities

A

Specified activities in specified investments

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10
Q

Detail things not specified investments

A

Derivatives used for commercial purposes, eg hedging risk

Precious metal not specified investment on own but option on it is

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11
Q

Detail NOT specified activities

A

Dont need to be authorized to run an exchange - recognized instead

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12
Q

What is perimeter guidance manual PERG

A

Sets out guidance when authorization needed and when exclusions available. Not binding

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13
Q

What is permission notice

A

FCA/ PRA has power to grant and vary permissions

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14
Q

What do PRA oversee for dual reg firms

A

Legal status, location of offices, prudent conduct

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15
Q

What do FCA and PRA oversee together for dual reg firms

A

Suitability and effective supervision

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16
Q

List all threshold conditions for part 4A permission

A

Legal status

Location of offices

Effective supervision

Appropriate resources

Approp non financial resources

Prudent conduct

SUitability

Business model

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17
Q

Difference between Senior Management Function and Certification Function

A

SMF approved by regulator.
CF issued by firm and they do FIT check. CF are sig harm functions.

Both subject to fit and proper assessment but for CF firm administers it. ALl stuff subject to COCON

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18
Q

How long should senior Management Function records be kept for

A

6 years from any change

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19
Q

How often does firm assess fitness and propriety of Certification Functions

A

Annually

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20
Q

What is Form A

A

Firms use form A to apply for approval on behalf of senior managers. Firms should be informed within 90 days

21
Q

Conduct rule if in scope of consumer duty

A

You must act to deliver good outcomes for retail customers

22
Q

Conduct rule if out of scope of consumer duty

A

You must pay due regard to interest of customers and treat them fairly

23
Q

For how long can FCA ban products without consultation

A

Up to 12 months

24
Q

Disciplinary measures in regulator’s enforcement process

A

Prosecution

Restitution order

Prohibition (individual cant work in sector for x years)

Withdrawal or variation of authorisation or approval. Can vary authorisation only, not approval

25
Q

How quickly should firm provide evidence if FCA demands documents etc

A

Within reasonable time period

26
Q

Who issues the notices - warning, supervisory, etc

A

RDC - Regulatory Decisions Committee

27
Q

What is the enforecment process

A

Investigation gives prelim findings

Can get private warning at this stage

If not move on RDC can issue Warning notice, supervisory notice, notice of discon

Firm responds

RDC can issue Decision notice, supervisory notice, notice of discon

FIRM CAN APPEAL TO UPPER TRIBUNAL WITHIN 28 DAYS

RDC can issue final notice, final supervisory notice or notice of discon

Final notice leads to disciplinary measures

28
Q

Difference between private warning, warning notice, supervisory notice, decision notice, Final notice

A

Private warning stays on record but no D action

Warning notice can be published without consent. Alerts firm that action is proposed (only in first stage of RDC process)

Supervisory notice is trying to help them

Decision notice issued when RDC have reviewed warning notice

Further decision notice is a reworded decision notice

Final notice is PUBLISHED - issued to make decision notice or supervisory notice final. States date when action takes effect

29
Q

Under the SM&CR, a firm must take all reasonable steps to obtain a ‘regulatory reference’ from a candidate’s current employer and anyone who has been a candidate’s employer in how many past years?

A

6 years

30
Q

Which of the following Conduct Rules apply to all SMCR functions?

A

‘Observe proper standards of market conduct’ is the correct answer. The other options apply to senior manager functions only

31
Q

Who is the Tax and Chancery Chamber of the Upper Tribunal set up by?

A

The Ministry of Justice

32
Q

Which of the following could be a reason for the FCA to not publish a final notice?

A

If publishing would be prejudicial to the interests of consumers

33
Q

Which of the following would the FCA not consider acts of misconduct subject to disciplinary proceedings?

A

Dealing ahead of the firm’s research where the research is intended for the firm’s use only

34
Q

Which of the following would not be considered acts of misconduct by a firm in the financial industry?

A

Not immediately producing adequate information for an FCA inspection

A breach of a Principle for Businesses is a breach

35
Q

An authorised firm must ensure that only certificated persons perform certification functions. Which of the following is most likely to be an example of a certification function?

A

Retail customer adviser

36
Q

When the FCA grants an exchange with recognised status, it:

A

Requires that the exchange must be fit and proper

37
Q

Which ONE of the following is CORRECT concerning a multi-lateral trading facility?

A

It is a system where a firm provides similar services to those offered by exchanges

38
Q

Which of the following is not a PRA Senior Manager Function for a UK bank

A

Executive director function is an FCA function, not a PRA function.

39
Q

When the UK regulator allows a firm to undertake regulated activities, it grants which of the following?

A

Authorisation confers status, but activities must be permitted by Part 4A of the Act (Part 4A permissions).

Part 4a permission is answer

40
Q

Section 168 of the Financial Services and Markets Act 2000 permits the FCA to appoint competent persons to carry out investigations on its behalf if:

A

S168 permits the FCA to do this if an offence has been committed. This could be for a wide range of offences including, but not exclusively, market abuse.

41
Q

On which of the following trading platforms is an exchange trade reported automatically and published immediately?

A

SETS

42
Q

Which of the following is NOT a specified investment?

A

National savings certificates as its not a tradeable financial instrument

43
Q

According to Section 19 of the Financial Services and Markets Act 2000 (the ‘General Prohibition’), which of the following activities would require a firm to gain authorisation by the FCA/PRA?

A

Professional bodies providing advice in the normal course of business where the advice is (((((((separately remunerated)))))))

The following activities are not regarded as regulated activities:

Investment advice in newspapers (providing a tip sheet however is a regulated activity)

Television broadcasts and similar activities

Trustees, nominees and personal representatives (not separately remunerated)

Members of designated professional bodies (accountants, solicitors or actuaries) carrying on certain incidental regulated activities. However, if they are separately remunerated for those activities they do need authorisation.

44
Q

Vicky is a member of the RDC, and is confused as to the difference between a ‘statement of misconduct’ and ‘public censure’. How would you help Vicky to distinguish between them?

A

A statement of misconduct is imposed upon an approved person, whereas public censure is imposed upon an authorised person

A statement of misconduct is imposed upon an approved person (i.e. an individual carrying out a senior manager function or controlled function), whereas public censure is imposed upon an authorised person (i.e. a firm carrying out regulated activities). Both are imposed for regulatory breaches, not criminal offences. Both are always published, unless the FCA believes that publication is detrimental to a client’s interests.

45
Q

Under transaction reporting requirements, trades in international equities and in particular settlement reporting is necessary. Which of the following provide such functionality

A

For UK domestic transactions, transaction reports for settlement purposes are required on CREST each business day of 8.00pm on the day of trade. For international equities, an online trade confirmation service provided by an organisation called Omgeo, it can be used for settlement reporting, with transactions reported by both participants by 9.00pm on the day of the trade.

46
Q

If an authorised firm is conducting unauthorised regulated activities, this will be considered to be which ONE of the following?

A

A criminal matter

47
Q

When a firm provides designated investment business to a retail client, the examination requirements in training and competency requirements do not apply for which of the following?

A

Arranging deals in derivatives

48
Q

Which of the following is true of exempt persons under the Financial Services and Markets Act 2000?

A

They cannot be both authorised and exempt regardless of activities

49
Q

What is the role of the Tax and Chancery Chamber of the Upper Tribunal?

A

If a firm is unhappy with the decisions of the FCA they may refer it to the Upper Tribunal

Regs (6 decks)

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