Chapter 9

Question 1

What are the 11 Principles of Business

Answer 1

1 - Integrity
2 - Skill, Care & Diligence
3 - Management & Control
4 - Financial Prudence
5 - Market Conduct
6 - Customer Interests
7 - Communication with customers
8 - Conflicts with Interest
9 - Customers: Relationship of Trust
10 - Client Assets
11 - Relationship with Regulators

Question 2

What can a breach of a principle of business result in?

Answer 2

Immediate notification to FCA who take disciplinary action against firm
Maybe a breach of Threshold Condition 5 which questions fit and proper

Question 3

What is outcome based regulation?

Answer 3

Both FCA and PRA spot risks before they develop - forward looking judgement

Question 4

What are the 6 key cultural drivers?

Answer 4

Leadership
Strategy
Decision-making & Challenge
Controls
Recruitment & T&C
Reward

Question 5

What is ‘tone at the top’ and ‘walk the talk’?

Answer 5

Creating a culture where everyone has ownership and responsibility for doing the right thing - CEO and senior management set this

Translating this tone into business practices

Question 6

How is an individual categorised as an approved person?

Answer 6

Able to satisfy fit and proper rules

Individually approved and registered by the regulator

Question 7

What are the principles for an approved person?

Answer 7

1 - Integrity
2 - Skill, Care & Diligence
3 - Market Conduct
4 - Open & Co-operative
5 - Organisation & Control
6 - Skill, Care & Diligence in Managing
7 - Compliance

Question 8

What elements are there for a FIT test?

Answer 8

Honesty, integrity and reputation
Competence & Capacity
Financial Soundness

Must remain fit and proper throughout employment