Chapter 6: FCA and PRA Supervisory Objectives, Principles and Processes Flashcards
Which of the following comes immediately after the issue of a warning?
A. Final decision
B. Settlement and mediation
C. Response and right to hearing
D. Appeal to the tribunal
C. Response and right to hearing comes immediately after the issue of a warning.
After a warning the firm has the right to put their case to the Regulator before an attempt to settle or mediate. After this the Regulator makes a decision and the firm may then appeal to the Tax and Chancery Chamber of the Upper Tribunal.
The Tax and Chancery Chamber of the Upper Tribunal is operated by:
A. The PRA
B. Trading Standards
C. An independent body of financial practitioners
D. A government department
C. An independent body of financial practitioners.
The Tribunal as an appeal committee is independent of the Regulator. It is run by the Ministry of Justice. This used to be the Lord Chancellor’s Office.
Representatives of the FCA and PRA can do all of the following except:
A. Enter a firm’s premises without notice
B. Interview any director, partner or employee of the firm, whether they are an approved person or not
C. Remove any documents from the firm’s business premises
D. Monitor any firm on a periodic basis
C. The requirement to remove documents applies only to information and documents reasonably required in connection with the exercise by the regulator of functions conferred on it by or under this Act. These will typically be copies rather than originals.
Which of the following notices can be published in accordance with disciplinary process and measures without the consent of the receiving party?
I Notice of discontinuance
II Decision notice
III Final decision notice
IV Final supervisory notice
A. I and II
B. II and III
C. III and IV
D. I and IV
C. III and IV.
Note also that the information about matters to which a discontinuance notice relates may also be published but only with the consent of the party to whom it was issued.
Which of the Prudential adequacy rules require of all firms?
A. They should have regulatory capital at least equal to that specified
B. Those falling under the scope of MiFID may have less than the regulatory capital specified
C. They should have no more than the specified regulatory capital
D. Those falling under the scope of MiFID should have more than the amount of regulatory specified capital
D. Those falling under the scope of MiFID should have more than the amount of regulatory specified capital.
Prudential rules require all MiFID firms to exceed the capital resource requirement prescribed by their competent authority.
All of the following are true with regards to FCA investigators except:
A. Notices can be served on either an authorised firm or an approved individual
B. Surveillance staff may take copies of any document or record relevant to the investigation
C. An investigation may be started as a result of an allegation of a breach of the rules
D. A person once given notice of an investigation, must cease all regulated activities immediately
D. A person does NOT need to cease activities when given notice of an investigation. A notice of investigation merely informs the person that their activities are being investigated. It does not of itself consist of disciplinary action.
If the FCA is asked to pursue ‘redress’ it will:
A. Consider the different methods of redress available to it
B. Impose a maximum penalty of £100,000
C. Refer the case to the Financial Services Compensation Scheme (FSCS)
D. Follow the thresholds set out in the Claims Level Guidance
A. Consider the different methods of redress available to it.
A is the best possible answer as the FCA could seek a restitution order or require an investor to contact the FSCS or Financial Ombudsman Service (FOS).
Which of the following is NOT true of the penalties the FCA can impose on an approved individual?
A. Fines on individuals are limited to a maximum of £250,000
B. The FCA may publish a statement of misconduct
C. Temporary suspension of approval can be imposed on individuals
D. Permanent removal of approval can be imposed on individuals
A. The FCA may impose fines. There is no maximum limit.
Which of the following notices specifies a date from which it will be effective?
A. Warning notice
B. Decision notice
C. Final notice
D. Supervisory notice
C. The final notice sets out the terms of the action the Regulatory Decisions Committee (RDC) has decided to take and the date from which it takes effect.
Which of the following is NOT a disciplinary sanction of the Regulatory Decisions Committee?
A. Public statement of misconduct
B. Private warning
C. Withdrawal of approval
D. Financial penalty
B. All four of the above can be issued by the FCA. HOWEVER, a private warning is NOT issued by the Regulatory Decisions Committee and therefore is not considered to be an official disciplinary sanction of the RDC.
When a court grants a restitution order, who will receive the money before it is paid out to those who have suffered losses?
A. HM Tresury
B. The Regulator
C. The Financial Ombudsman Service
D. The Financial Services Compensation Scheme
B. The Regulator.
When the court orders the person concerned to pay restitution, the sum will be paid to the Regulator and distributed as the court directs.
Which of the following is NOT categorised as a disciplinary measure of the FCA?
A. Public statement
B. Public censure
C. Fine
D. Private warning
D. A private warning is not a disciplinary measure. It will however remain on file and be considered in future if further breaches occur.
