FCA Objectives and High Level Standards Flashcards
What are the FCA’s 4 Statutory objectives and what broader categories do these sit under?
Strategic Objective:
- Ensuring relevant markets function well
Operational Objective
- Secure an appropriate degree of protection for consumers
- Promote effective competition in the interests of consumers
- Protect/ enhance the integrity of the UK financial system
List the 7 blocks of the FCA Handbook
Handbooks Prove Brilliantly Readable Round Special Lighting
H - High level standards (/principles) P - Prudential Requirements B - Business Standards R - Regulatory Process R - Redress (compensation) S - Specialist Sourcebooks L - Listing, prospectus and disclosure rules - UKLA
In the FCA handbook which block do the CoBs (conduct of business rules) sit in?
Block 3 - Business Standards
in the FCA Handbook which block does part 4a permission sit in?
Block 4 - Regulatory process
List the block 1 - High level standards/ principles for business
MCCCCC FIRMS
M - Market Conduct C - Customers’ interests C - Communications with clients C - Conflicts of interest C - Customers: relationships of trust C - Clients’ assets F - Financial Prudence I - Integrity R - Relations with Regulators M - Management and control (SYSC - Senior management systems and control) S - Skill, care and diligence
What are customers & what are clients
Clients - clients includes retail clients/ professional clients/ eligible counter-parties
customers - includes retail clients / professional clients)
What are the FCA High level standards / Principles for business and what aren’t they?
They aren’t rules they are guidelines and principles but should be followed.
What further enhances the FCA Principles for business/ High level standards?
Rules
What happens when a principle is breached
- Does not in itself give rise to discipline; but
* Will be taken into account for the purposes of discipline and intervention
What rules enhance the FCA Principle for business of Customers’ interest
Financial promotion rules
What rules enhance the FCA Principle for business of Communications with clients
Financial promotion rules
What rules enhance the FCA Principle for business of conflicts of interest
Conflict of interest rules
What rules enhance the FCA Principle for business of Clients’ assets
Clients Assets rules
What is the purposes of Senior Management Arrangements, Systems and Controls (SYSC)
o Encourage directors and senior managers to take appropriate, practical responsibility for their firm’s arrangements
o Amplify Principle 3 (Management and Control)
o Create a common platform of organisational systems and controls (for firms subject to either or both MiFID and CRD – capital requirements directive)
What must UK firms to when applying for permission to carry on regulated activity?
Firms in the UK apply to the FCA for a FSMA Part 4A permission
When applying for a FSMA Part 4A permission what threshold conditions must be met?
Really Sing ABBA Especially Loudly
R - Registered office (must have UK registered office) m
S - Suitability: fitness and propriety of the applicant
A - Appointment of claims representative (insurance companies only)
B - Business model of the firm - must be a viable business model
B - Business to be conducted in a prudent manner
A - Appropriate resources ( e.g. money/ staff)
L - Legal status (what type of entity are they)
E - Effective supervision: structure of the group and close links must not inhibit supervision
What holding could inhibit supervision?
generally a holding greater than 20%
When did the new Senior Managers and Certification regime come into play and what was the key change about who it covered?
March 2016
Changed from for dual-regulated firms with changes including all firms are now covered
Under the new Senior managers regime who is accountability on?
New ‘senior managers regime’ focusing accountability on a narrower number of senior individuals
Under the new Senior managers regime who certified fitness and propriety of individuals?
Certification by firms
Under the new Senior managers regime what replaced the statements of principle and approved person code?
Conduct rules
What three main types of responsibility are there under the senior managers regime? & who approves and certifies each?
1) Senior management Functions (SMFs)
2) Prescribed responsibilities (PRs)
3) Key functions: important functions other than SMFs and PRs
1) Senior management Functions (SMFs) - Pre-approved by regulators, assessed as fit and proper by the firm and subject to the conduct rules
2) Prescribed responsibilities (PRs) - Certified as fit and proper by the firm
3) Key functions: important functions other than SMFs and PRs
Generally when summing up the new senior managers and certification scheme what can be said
down to the regulators and firms together – more emphasis has been placed on the responsibilities of these senior management individuals
Under the new senior managers and certification regime what replaced the old significant influence function (under the approved persons regime)
Effectively replacing significant influence functions
What did the senior managers and certification regime replace?
Approved persons regime
Who falls under the prescribed responsibilities function?
- Functions that would formally have been significant influence functions that do not fall within the scope of the new SMFs; and
- Individuals in customer facing roles subject to qualification requirements; and
- Anyone who supervises or manages the above
What are those who fall under the prescribed responsibilities function subject to? And who must ensure adherence to this?
Conduct rules – not the regulators role anymore onus is on the firm completely
Who falls under the Key Functions roles?
Other staff (except ancillary staff, e.g. security, catering cleaning)
What are those who fall under the Key functions subject to? And who must ensure adherence to this?
Conduct rules – not the regulators role anymore onus is on the firm completely
What brought in the Professionalism Requirement for retail advisors and what does this require?
• Since the retail distribution review (RDR), retail advisers have had to:
o Subscribe to a code of ethics
o Hold an appropriate qualification
o Carry out at least 35 hours of CPD (continued professional development)
o Hold a statement of professional standing (SPS) from an accredited body
