Chapter 4 Qs Flashcards
What is the purpose behind the UK Standing Committee on Financial Stability?
A. To ensure the smooth, efficient and effective running of the UK’s economy and
financial sector
B. To raise the rate of sustainable growth
C. To provide an established mechanism to co-ordinate the responses of the Treasury, Bank and FCA to financial contingencies
D. To maintain a stable and efficient monetary and financial framework
C. To provide an established mechanism to co-ordinate the responses of the Treasury, Bank and FCA to financial contingencies
The Bank of England, HM Treasury and the Financial Conduct Authority (FCA) work together to ensure the smooth and effective running of the economy and financial sector. The UK Standing committee is made up of representatives from each of these three organisations and its purpose is to provide a mechanism to co-ordinate the responses of the Bank, Treasury and FCA to financial contingencies; hence, the answer is c).
What are the Bank of England’s two core purposes?
A. Consumer protection and financial stability
B. Monetary stability and financial stability
C. Managing competition and consumer protection
D. Integrity of UK financial system and managing competition
B. Monetary stability and financial stability
The Bank of England’s core purposes are monetary stability (to maintain confidence in the currency) and overseeing financial stability (detecting and reducing threats to the economy).
How does an EU directive differ from an EU regulation?
A. EU regulation is non-binding, whereas an EU directive is binding
B. An EU directive requires the member state’s approval but EU regulation overrides
the member state’s legislation
C. Both are binding but under an EU directive the member state determines the method to achieve the objective; EU regulation is binding in its entirety
D. An EU directive is binding on all member states, but EU regulation is an individual measure addressed to an individual member state
C. Both are binding but under an EU directive the member state determines the method to achieve the objective; EU regulation is binding in its entirety
An EU directive requires its members to achieve a particular objective but does not dictate how they achieve that objective or the national laws they may enforce to achieve it (the objective is binding but not the method). This differs from an EU regulation in that the result and the method are both binding under EU law.
Which body has an overarching strategic objective to ensure that financial markets work well?
A. The Financial Policy Committee
B. The Bank of England
C. HM Treasury
D. The Financial Conduct Authority
D. The Financial Conduct Authority
Most of the UK financial services industry is regulated by the Financial Conduct Authority (FCA), and their overarching objective is to ensure the financial markets work well.
Which of the Competition and Markets Authority (CMA) strategic goals aims to ‘deter wrongdoing, protect consumers and educate businesses’?
A. Delivering effective enforcement
B. Extending competition frontiers
C. Achieving professional excellence
D. Developing integrated performance
A. Delivering effective enforcement
The Competition and Markets Authority (CMA) is an independent public body set up to ensure the strengthening of business competition. One of its five strategic goals is to deliver effective enforcement (to deter wrong doing, protect consumers and educate businesses).
What is the Information Commissioner’s Office’s main duty?
A. To ensure that the Data Protection Act is updated e.g. to cover text messages
B. To levy fines on those failing to comply with the Data Protection Act
C. To ensure consumers are able to access information
D. To oversee the regulation of the Data Protection Act and enforce compliance
D. To oversee the regulation of the Data Protection Act and enforce compliance
The Information Commissioner’s Office (ICO) is an independent body which oversees the regulation of the Data Protection Act (2018). It also has the responsibility of enforcing the General Data Protection Regulation (GDPR).
Which of the following IFA firms would NOT require its annual accounts to be audited?
A. An unincorporated firm that doesn’t have permission to hold client assets
B. A sole-trader who has formal permission to hold client assets
C. A limited liability company who undertakes activity within the scope of the
Insurance Distribution Directive
D. A partnership who operates a client bank account specifically to hold client
monies with formal permission to do so
A. An unincorporated firm that doesn’t have permission to hold client assets
An IFA firm that does not hold clients’ money does not require its accounts to be externally audited. A limited liability company, who undertakes activities under the Insurance Distribution Directive, requires an external audit, as do partnerships and sole traders if they hold client money.
How does the Financial Services Act 2012 directly affect the FCA and the PRA in respect of financial stability?
A) It transfers all responsibility to the Bank of England
B) It makes the FCA and PRA directly accountable to the Chancellor of the Exchequer
C) It requires the FCA and PRA to have an appropriate strategy, and work with the Bank of England and HM treasury to achieve satisfactory outcome.
D) It requires the FCA and the PRA to work with the European Central Bank to facilitate cross-border co-operation on money laundering activities.
C) It requires the FCA and PRA to have an appropriate strategy, and work with the Bank of England and HM treasury to achieve satisfactory outcome. (4:1)
A professional firm of pension trustees have been deemed to be in breach of the law whilst administering and managing an occupational pension scheme. What is the maximum fine may be levied by the pensions regulator against the firm? A) £5000 B) £10000 C) £50000 D) £100000
C) £50000(4:2)
An authorised firm is using the services of an external compliance consultancy to advise a firm on all compliance matters. In respect of this arrangement, the authorised firm should be aware that
A) Responsibility for compliance issues rests with the senior management of the firm
B) The compliance officer may delegate all responsibility to the external consultants
C) The consultants will be ultimately responsible for compliance matters
D) The firm need not appoint a compliance officer, providing that the consultants have been approved by the FCA
A) Responsibility for compliance issues rests with the senior management of the firm
Firms are responsible for ensuring compliance with the regulatory system, whether or not they use a compliance consultant.
Firms cannot contract out their regulatory obligations and all firms need to meet the FCA principles.
In what circumstances would the Financial Services Compensation Scheme provide a compensation payment to the customer.
A) When a complaint has been upheld by the Financial Ombudsman Service, but the regulated firm refuses to compensate the customer
B) When the scheme is instructed to do so by the FCA
C) When compensation is due and the firm that the customer dealt with is unable to meet its liabilities and is no longer trading
D) When compensation is due and the regulated firm has a large excess on their professional indemnity insurance policy
C) When compensation is due and the firm that the customer dealt with is unable to meet its liabilities and is no longer trading
What is the main function of the Financial Action Task Force with regard to the EU money laundering service?
A) To set standards required to deal with money laundering and terrorist financing
B) To replace the joint money laundering steering group and its role as an organisation fighting financial crime
C) To retrieve money obtained through criminal activities
D) To implement and monitor compliance with the money laundering regulations 2007
A) To set standards required to deal with money laundering and terrorist financing
