Chapter 5

Question 1

A) Who is responsible for promoting the safety and soundness of systemically important firms?

Answer 1

The Prudential Regulation Authority (PRA)

Question 2

A) Who is responsible for scanning the emerging risks to the UK financial services market?

Answer 2

The Financial Policy Committee (FPC)

Question 3

A) Who has an overarching strategic objective to ‘ensure that the relevant markets function well.’

Answer 3

The Financial Conduct Authority (FCA)

Question 4

A1) What are the three operational objectives of the FCA?

Answer 4

1) To protect customers
2) To protect financial markets
3) To promote competition

Question 5

A1 ) Who governs the Prudential Regulation Authority (PRA)?

Answer 5

Prudential Regulation Committee (PRC)

Question 6

A1) What are the two primary objectives of the PRA?

Answer 6

1) a general objective to promote the safety and soundness of the firm it regulates; and
2) an objective specific to insurance firms, to contribute to ensuring that policy holders are adequately protected.

Question 7

A1) Since 2014, the PRA has had a secondary objective to:

Answer 7

facilitate effective competition in the market for services provided by PRA -authorised work

Question 8

The PRA advances its objectives using two key tools:

Answer 8

1) Regulation: it sets standards or policies that it expects firms to meet.
2) Supervision: it assesses the risks that firms pose to the PRS’s objectives and, where necessary, takes action to reduce them.’

Question 9

The PRA’s approach to regulation and supervision has three characteristics:

Answer 9

1) A judgement based approach: the PRA uses judgement in determining whether financial firms are safe and sound, whether insurers provide appropriate protection for policyholders and whether firms continue to meet the Threshold Conditions.
2) A outcome based approach: the PRA assesses firms against current risks, and also against those that could plausibly arise in the future. Where the PRA judges it necessary to intervene, it will generally aim to do so at an early stage
3) A focused approach: the PRA focuses on those issues and firms that pose the greatest risk to the stability of the UK financial system and policy holders.

Question 10

Who is the PRC accountable to?

Answer 10

PArliment