Chapter 5 - Regulatory Infrastructure of UK Professional Services Flashcards
What is the FPC and it’s responsibilities?
Financial Policy Committee, exists in the BoE.
Responsibilities: macro-prudential regulation (regulaation stability and resilience of financial system as a whole)
What is the PRA and its function?
Prudential Regulation Authority, established as an independant part of the BoE for prudential regulation of dual-regulated firms
What are dual regulated firms?
Firms authorised by the PRA and regulated by the FCA and PRA. They are deposit-takers (like banks, insurers, or systemically important investment firms
What is the FCA?
Financial Conduct Authority, exists as a company where the government stands behind it to guarntee liabilities. responsible for conduct issues across financial services and market supervision, and prudential supervision of firms not supervised by the PRA
What are the Statutory objectives of the PRA?
1) Promote the safety and soundness of PRA-Authorised firms
2) Securing an appropriate degree of protection for new and existing policyholders
What are the 4 Statutory Objectives of the FCA?
1) ensure relevant markets function well
2) Secure an appropriate degree of protection for all consumers
3) Protect and enhance the UK financial systems integrity
4) Promote effective competition in the interests of consumers
What is the strategic objective of the FCA and what is meant by it?
Ensure relevant markets function well. This gives the FCA power to intervene on a proactive basis into any area of the financial services
What are the operational objectives of the FCA and what is meant by them?
1) Secure an appropriate degree of protection for all consumers - ensuring consumers get products and services from firms they trust.
2) Protect and enhance the UK financial systems integrity - ensuring markets, systems, etc, are sound, stable, and reliable. Putting consumer first, not short term profits
3) Promote effective competition in the interests of consumers - firms compete on a level playing field
What are the FCA’s key priorities in delivering good market conduct?
- Renewed focus on wholesale conduct
- Trust in the integrity of markets
- Preventing market abuse
Who is the Statutory Auditor of the FCA and what power do they have?
The National Audit Officer, power to carry out value-for-money reviews.
How is the FCA funded?
financed by charging fees to members of the financial services industry
How is the FCA accountable to Her Majesties Treasury?
1) HMT appoints FCA board members and the chairman
2) HMT monitors reports from the FCA (is it meeting it’s objectives)
3) HMT can commission reviews & inqueries into FCA operations
What are the main responsibilities of the Bank of England?
- Set interest rates (done by the MPC, rates set to meet gov inflation target of 2%)
- Maintain stability in the financial system
- Run the PRA and FPC
What is the CMA and it’s aim?
Competition and Markets Authority (is independent). The aim is to make markets work well for consumers, businesses, and the economy.
What are the responsibilities of the CMA?
- Investigate mergers that could restrict competition
- Enforce consumer protection legislation
- Prosecute unlawful cartel members
- Co-operate with regulators to use competition powers
