Chapter 5.1 Responsibilities and Approach to Regulation Flashcards
What is the main objective of FSMA 2000
To bring together regulation of the sector under one regulatory system,
One regulator then FSA
One Ombudsman (FOS)
One Compensation Scheme (FSCS)
FSMA 2000 requires the FCA to have regards to the 8 principles of good regulation these are:
Efficiency & Economy Responsibility of Consumers Responsibility of Management Proportionality Openness and Disclosure Transparency Sustainable Growth Recognizing the difference in the businesses carried out by different regulators
Financial Services Act 2012- what was the new approach to financial regulation?
Abolish FSA 2013 and bring in FPC, PRA, FCA
Financial Policy Commitee FPC, econimic/finacial satbility/looking for emerging risk.
PRA, regulator of major financial firm
FCA, regulator of retails/wholesale markets
FCA’s Three Operational Objectives:
Protect Consumers
Protect Financial Markets
Promote Competition
FCA is accountable to?
The Treasury
FCA has these powers over firms and individuals carrying out regulated activities
1) Enforcement i.e impose penalties, investigations
2) Supervision i.e make rules, regulate changes
3) authorization i.e grant, vary cancel authorization
Three Pillars Approach (FCA Supervision Model)
Pillar 1 - Proactive supervision for biggest firms.
Pillar 2 - Event driven, reactive supervision of actual or emerging risks
Pillar 3 - Thematic work - issues and products
Firms solely regulated by FCA - What are the three prudential categories?
P1 - Firms whose failure would cause significant harm to consurmer/markets.
P2 - Firms whose failure would cause harm, but easily dealt with.
P3 - Firms who failure would not cause significant harm
All authorized firms are split into two “conduct” categories these are:
Fixed Portfolio Firms (P1 supervision)
Flexible Portfolio Firms (P2 most firms)
What are the responsibilities of a Regulated Firms?
1) Authorized firms responsible for conduct of all staff/agents/AR
2) Advice given by representative
3) systems in place to manage risk
4) Individuals Carrying out controlled functions must be approved by FCA
FCA Enforcement Officers check compliance systems typically these are;
1) Business Operations,
2) Personnel Matters
3) Customer Matters
What is the maximum penalties for Market Abuse Civil offences?
7 years Imprisonment and/or an unlimited fine
The types of Market Abuse Civil Offences
Insider Dealing, Improper Disclosure, Manipulating Transactions or Devices, Distortion of Info.
Free asset ratio:
The surplus asset a company has over the liabilities.
Or the amount by which a company’s assets outweigh its liabilities. (%)
Important measure to life offices
What is an approved person?
An individual approved to carry out a controlled function
