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IAD Level 4 > Chapter 7: Authorisation Of Firms And Indivudals > Flashcards

Chapter 7: Authorisation Of Firms And Indivudals Flashcards

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1
Q

What is the regulation to do with authorisation

A

FSMA 2000

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2
Q

What is the regulated activities order 2001

A

To do a specified activity with a specified investment you need to be authorised or exempt

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3
Q

What are specified investments

A
  • Shares/depository receipts/ warrants
  • Debt instruments e.g bonds, gilts, loan stock, debentures, t-bills, commercial paper
  • Units in a UCITS scheme
  • options
  • futures
  • CFDs
  • Lloyd syndicates, insurance contracts and funeral plans
  • pensions
  • regulated mortgage and home finance
  • deposits and electronic money
  • rights to specified investments e.g repurchase agreements (repos)
  • loans and other forms of credit
  • emission auction products
  • benchmarks
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4
Q

What is included in home finance

A

Equity release/life time mortgage
Home purchase plan (e.g sharia mortgage)
Regulated sale and rent back

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5
Q

What does home finance not include

A

Commercial mortgages

Buy to let mortgages

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6
Q

What are specified activities

A

Dealing in investments
Arranging deals in investments
Managing investments
Advising on investments
Operating an MTF or OTF
Safeguarding and administering investments e.g custodian
Sending dematerialised instructions e.g electronic money transfer
Lloyds activities: provision, administration, advising, arranging
Home finance activities
Managing dormant account funds
Accepting deposits of way of business
Issuing electronic money
Providing credit reference or credit information services
Establishing, operating or winding up a collective investment scheme or pension scheme
Agreeing to carry on most regulated activity

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7
Q

What are excluded activities

A 
Newspapers and media (not tip sheets) 
Providing info 
Unpaid trustees e.g nominees and executors
Employee share scheme
Group or joint enterprise
Absence of holding out
-dealing as a principle and end-user, where no service is offered to others
-primary market sale or buy back
-derivatives for risk managements
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8
Q

What are excluded investments

A 
Property
Tangible asset
Currency
Premium bonds
National saving certificates
Derivatives used for commercial purposes
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9
Q

Who are exempt from being authorised

A 
Appointed reps
Lloyd syndicate members 
DPBs
Recognised investment exchanges
RCHs
Governments 
Central banks
Supranational bodies
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10
Q

How many threshold conditions are there for a firm to be authorised

A

8

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11
Q

Who covers legal status

A

FCA firms- n/a

Dual- PRA

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12
Q

Who covers location of offices

A

FCA firm- FCA

Dual- PRA

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13
Q

Who covers effective supervision

A

FCA firms- FCA

Dual- FCA and PRA

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14
Q

Who covers appropriate resources

A

FCA firms- fca

dual- N/A

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15
Q

Who covers appropriate non financial resources

A

FCA firms- N/A

DUAL- FCA

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16
Q

Who covers prudential conduct

A

FCA firm- n/a

Dual- PRA

17
Q

Who covers suitability (fit and proper)

A

FCA firms- FCA

Dual- FCA and PRA

18
Q

Who covers the business model

A

FCA firms- FCA

Dual- FCA

19
Q

What is it called when a firm gets authorisation

A

Part 4a permission

6 months for regulations to give it, partially or not at all

20
Q

If firms aren’t given authorisation what can they do

A

Apply to the tribunal

21
Q

What does SYSC 4 cover

A

General requirements- sound governance

22
Q

What does SYSC 5 cover

A

Employee, agents and other relevant persons

23
Q

What does SYSC 9 cover

A

Record keeping

24
Q

Who is subject to fit and proper

A

SMF and CF by the firm

25
Q

Who needs pre approval by the regulator

A

SMF

26
Q

What must handover procedure documents be

A

Have all info needed to do tile

Practical and helpful not just a record
Assessment of what issues should be prioritised
Include judgements and opinion not just facts and figures

27
Q

What are FCA SMF non executive

A

Non exec director

Chairman of nominee committee

28
Q

What are FCA executive SMF

A

Exec director
Significant responsibility senior managers
MLRO
Compliance oversight

29
Q

Who needs pre approval by regular

A 
Head of
Chair
Oversight 
Senior 
Chief
Directors 
MLRO
Compliance oversight
30
Q

What is included in the fit and proper test

A

1 Honesty integrity and reputation
2 competence and capability
3 financial soundness

31
Q

In FIT test what is used to determine honesty integrity and reputation

A 
Employment history (6y) 
Criminal convictions (no time limits)
Breaches of FCA/PRA rules
Complaints
32
Q

In the FIT test what is included for competence and capability

A

Exam success

Experience and training

33
Q

In FIT test what is included for financial soundness

A

Bankruptcy

34
Q

What are the first tier individual conduct rules

A 
Integrity
Skill care due diligence 
Open and cooperative w regulators 
Interest of customers and fair treatment 
Market conduct standards
35
Q

What are the four addition second tier conduct rules for senior managers

A
  • Ensure business of firm responsible for is controlled effectively
  • Make business you are responsible for complied with relevant requirements and regulations
  • Any delegation of responsibility is given to an appropriate person who is overseen and is delegated responsibility effectively
  • Disclose appropriately any info which FCA or PRA would expect notice
36
Q

What roles are where examinations are always necessary

A
  • Performing certain advising and dealing activities
  • Acting as a broker fund advisor
  • Advising on syndicate activity at Lloyd’s
  • Acting as a pension transfer specialist
37
Q

What is the new requirements of NED

A

Minimum time requirements
Skill experience and independence of NEDs
Define firms risk appetite
Remuneration policies and performance related pay for executive directors

IAD Level 4 (4 decks)

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