Chapter 8: Financial Services Regulation and Professional Integrity

Question 1

What is the rational behind the checks that the FCA undertakes to make sure a firm is fit and proper prior to authorisation?

Answer 1

Maintain and promote fairness, efficiency, competitiveness, transparency and orderliness of markets. Reduces systemic risk, assists in maintaining the markets financial stability.

Question 2

What are the FCAs 11 Principles for Businesses ?

Answer 2

1. Integrity
2. Skill, care and diligence
3. Management and control
4. Financial prudence
5. Market conduct
6. Customers interests
7. Communications with clients
8. Conflicts of interest
9. Customers relationships of trust
10. Clients assets
11. Relations with regulators

Question 3

What are the 3 stages of the money laundering process ?

Answer 3

Placement, Layering & Integration

Question 4

What are the two major differences between money laundering and terrorist financing?

Answer 4

In terrorist financing small sums are often only required to commit terrorist acts which make it hard to trace. And if legitimate funds are used it is hard to identify when the funds become terrorist funds.

Question 5

What is the difference between identity fraud and identity theft ?

Answer 5

Identity fraud is the use of someone’s identity to commit criminal activity
Identity theft is the use of someone’s identity to obtain good in that persons name.

Question 6

What is the corporate offence in relation to bribery and what defence may be made when charged with it ?

Answer 6

The Bribery Act 2010 - Max of 10 years imprisonment, unlimited fines, confiscation of proceeds, debarment from public sector contracts and director disqualification

Question 7

What type of securities do the insider dealing rules apply to?

Answer 7

Shares, Bonds, Warrants, Depository receipts, Options, Futures and CFDs relating to securities, interest rates or share indices.

Question 8

What type of behaviour might lead to a charge of market abuse ?

Answer 8

Where financial investors have been unreasonably disadvantages, directly or indirectly by others who behave unlawfully.

Question 9

What action should a firm take before it allows another firm to process customer data for it ?

Answer 9

It needs to inform the Information Commissioner’s Office that they are processing information.

Question 10

What is the name of the body that handles dispute resolution and complaints about financial services firms

Answer 10

The Financial Ombudsman Service

Question 11

If an authorised firm were to become insolvent, who can an investor seek compensation from?

Answer 11

The FSCS