FCA Activities, Objectives & Operations Flashcards
Define Regulation in relation to FCA.
The body of rules created by the various regulatory bodies, to which participants in the financial services industry must adhere.
Define Supervision in relation to the FCA’s aims and activities.
The range of activities undertaken by regulators to ensure that participants adhere to the regulatory requirements.
What are the overall responsibilities of the Bank of England?
Responsible for protecting and enhancing monetary and financial stability, broadly speaking, maintaining economic stability. The Bank has a central role in the regulation of financial services in the UK.
What is the Financial Policy Committee (FPC)?
A committee of the Bank of England. The FPC looks at the economy in broad terms to identify and address risks that may threaten the stability of the whole (or large parts of the) economy.The FPC has no direct regulatory responsibility for particular sectors of the financial services industry, but has various powers to take action where it sees threats to economic stability.
What is the Prudential Regulation Authority (PRA)?
Has sole responsibility for the day-to-day prudential (financial) supervision of banks and other financial institutions. The PRA is within the Bank of ENgland, although it is operationally independent. The PRA authorises large, systemically important providers of financial services such as banks, insurance companies and building societies.
Define Conduct regulation.
Regulation requiring firms that provide products and services to consumers to ensure that those products and services meet the consumer’s needs, and act appropriates and to deal fairly with consumers.
Define Prudential regulation
Regulation aimed at ensuring that a business is established and run on a sound financial basis. This aims to limit the risk of that business failing and, if a failure does occur, to limit any adverse impact on consumers and the wider economy.
Define Systemically important providers
Providers whose failure would have a significant adverse impact on the national or global financial system. Generally these would be providers with a large customer base
What is the overall responsibility of the Financial Conduct Authority (FCA)?
Has responsibility for the conduct of all retail and wholesale financial firms. The FCA also undertakes prudential supervision of firms that are not regulated by the PRA. The FCA is a quasi-government department with statutory powers given to it under the Banking Act 1987, the Financial Services and Markets Act 2000, and the Financial Services Act 2012 (the Act that created the FCA).
What are the operational objectives of the FCA?
- To protect consumers- To protect financial markets- To promote effective competition`
What powers does the FCA have?
- Competition powers: to open up competition, carry out market studies and make referrals to the CMA.- Product intervention powers: to ban or restrict financial products.- Power of disclosure: to publish details of warning notices issued and disciplinary action taken.- Power to take formal: action against misleading financial promotions.
What is the Competition and markets authority (CMA)?
It is responsible for investigating mergers that could restrict competition, carrying out investigations into markets where competition may not be working effectively and enforcing consumer protection legislation.
What are Principle for Business?
The FCA’s regulatory regime is based on a set of 11 ‘Principles for Businesses’, from which all of the more precise rules and regulations follow. They apply to the behaviour of firms and of the individuals who carry out the firms’s activities.
Define Senior management functions.
Key individuals within a firm who perform significant roles. Individuals must be pre-approved by the FCA/PRA before they are appointed.
Define Certification functions.
Individuals who must be certified as fit and proper to carry out their role. Also known as significant harm functions, this includes mortgage and investment advisers.