Chapter 6

Question 1

What is General Prohibition?

Answer 1

Regulated activities can only be carried out by someone who is authorised or exempt. Otherwise this is a criminal offence

Question 2

What are the 3 groups who have exempt status?

Answer 2

1 - Bodies
BoE, ECB, local authorities etc.

2 - Companies
DPB firms - lawyers, accountants, chartered surveyors, actuaries etc.

3 - Individuals / Firms
Appointed Representative Firms are exempt if an authorised person takes responsibility
FCA must be notified of any AR contract terminations so can remove from register

Question 3

Difference between authorised person and approved person?

Answer 3

Authorised is business who carry out regulated activities

Approved is individual who carries out controlled function

Question 4

What is a controlled function?

Answer 4

Those whose rules involve a significant influence on the conduct of authorised persons affairs and dealing with customers in relation to regulated activities

Question 5

How are firms divided under SM&CR?

Answer 5

Senior Managers and Certificate Regime

1 - Core
Most firms
Default

2 - Limited Scope
Usually small firms like sole traders and authorised professional firms

3 - Enhanced
Largest, riskiest and most complex firms (around 350) with biggest consumer impact

Question 6

What are the pillars under SM&CR?

Answer 6

1 - Senior Managers Regime
2 - Certification Regime
3 - Conduct Rules

Question 7

What is Senior Management Regime?

Answer 7

Statements of Responsibility, Prescribed Responsibilities and Duty of Responsibility

Also Responsibility Maps, Handover Procedures and Overall Responsibility apply to enhanced firms

Question 8

What is Certification Regime?

Answer 8

Applies to non SM employees who have significant role on consumers, firm and market integrity

Onus is on firm not regulator to assess and approve such individuals

Annual certification, CR limits and responsibility of CR

Question 9

What are conduct rules?

Answer 9

Tier One - apply to most employees bar ancillary staff
Tier Two - SM

Breaches must be reported to FCA within 7 days

Question 10

What are the 3 stages of money laundering?

Answer 10

Placement
Layering
Integration

Question 11

What is the law to prevent money laundering?

Answer 11

Proceeds of Crime Act (POCA) 2002

Illegal to:
Conceal, disguise, convert or transfer criminal property
Assist in acquisition, retention and control of criminal property
Acquire or use criminal property
Fail to disclose suspicion or tip of launders

Question 12

Who puts anti-money laundering policies into place?

Answer 12

Money Laundering Reporting Officer (MLRO) acts as a central point and may report to NCA

Question 13

How long must customer due diligence be kept for?

Answer 13

5 years after the end of customer relationship or after the transaction

Question 14

What are the training procedures for anti-money laundering?

Answer 14

Annual training and report by MLRO

2 year sentence for breaking these rules

Question 15

Who oversees compliance with Data Protection Act and GDPR?

Answer 15

The ICO

Question 16

Who must be appointed in relation to data protection?

Answer 16

A Data Protection Compliance Officer must be appointed since GDPR and 2018 Data Protection Act

Must ensure the authorised person complied with various data protection principles

This is both controller and processor

Question 17

What is the difference between a controller and processor?

Answer 17

Controller - Stipulates how and why data is processed

Processor - Acts on behalf of controller to keep record of data

Controller can’t pass on responsibility to any processor

Question 18

What are requests for data known as?

Answer 18

Subject Access Requests (SAR)

Individuals asking for information about them self - receive within a month

Can be a charge but rate

Need to supply evidence if changed

Question 19

What categories is data split into and give examples?

Answer 19

Personal - Name, Address, Occupation, Salary, DOB, Gender, Contact Details, Training and Qualification Records

Sensitive - Ethic origin, sexual orientation, physical or mental health, criminal record and any political or trade union affiliations

Question 20

What rules apply to use of individual data?

Answer 20

Strict rules - can’t be used for marketing

Question 21

Who does the responsibility for T&C of staff rest with?

Answer 21

Authorised person

Question 22

What are the 3 stages of T&C?

Answer 22

1 - Initial recruitment

2 - Competence

3 - Appropriate Examinations held

Question 23

What training must cover individuals dealing with retail clients?

Answer 23

Market
Legislation
Regulatory
Product changes and updates

Question 24

How long must details of training be kept for?

Answer 24

3 Years - Non-MIFID
5 Years - MIFID, Life Policies and Pension Contracts
6 Years - Promotions of Life & Pension Materials
Indefinitely - Pension Transfer Specialists, Pension Opt Outs & FSAVCs

Kept from end of employment

Question 25

What qualification must be held to give investment advice?

Answer 25

Level 4 qualification

Without you cannot provide advice

Question 26

What level must a supervisor be?

Answer 26

Must hold an equivalent qualification to the individual they are supervising

Question 27

What elements make up a T&C scheme?

Answer 27

Initial Competence
Review Competence
Adequate Record Keeping

Question 28

What information is required by FCA returns and how regular are they done?

Answer 28

Sent via GABRIEL system

Details of shareholdings and controls of firm:
Staff Turnover & Structure
Close links information
Financial Resources
Complaints

Depends on type of information but complaints are reported twice a year

Question 29

How are FCA notification requirements broke down?

Answer 29

1 - Immediate
Significant Regulatory Impacts
Serious Crime
Major breach of Authorisation
Insolvency
Incorrect information provider to regulator

2 - Reasonable Advance Notice
Changes to address, name or numbers

Question 30

Who must complaints be directed to?

Answer 30

Straight to IFA

Financial Advisors authorised person if restricted

Question 31

What is an eligible complainant?

Answer 31

Consumer
Smaller businesses & charities etc.

Question 32

What are the complaint handling times?

Answer 32

Written acknowledgment - 5 working days - can refer complaint if believe another firm is solely responsible

Progress Reports - 4 weeks and written final decision in 8 weeks - advised of the right to complain to FOS within 6 months

Question 33

What are the relevant timescales for referring a complain to FOS?

Answer 33

6 months after authorised persons final response
6 years after complaint event
3 years after the complainant knew or should have know to complain

Question 34

What are the maximum monetary awards that FOS can enforce?

Answer 34

£355,000 - After 1st April 2020
£350,000 - Between 1st April 2019 to 31st March 2020
£160,000 - Before 1st April 2019 but referred after
£150,000 - Before 1st April 2019

Interest + Costs also added on

Question 35

What are the maximum compensation limits that FSCS can enforce?

Answer 35

FSCS - companies going to default

Deposits, Investments & Mortgage are 100% capped at £85,000 - per person & per firm

General Insurance - no limits
Compulsory - 100%
Non Compulsory - 90%

Long-term Insurance - no limits
Product provider - 100%
Intermediary - 90%

Question 36

What protections are in place for members of pension schemes?

Answer 36

Pensions Advisory Service
Pensions Ombudsman
Pension Protection Fund
Fraud Compensation Scheme