Financial industry overview Flashcards
Term: Financial Services and Markets Act 2000 (FSMA)
Definition: Primary legislation governing the regulation of financial services in the UK.
Q: What is the role of the Bank of England in financial services?
A: It maintains monetary stability and oversees systemic risk in the financial system.
Term: Twin Peaks Model
Definition: Regulatory structure involving the PRA and FCA working alongside each other.
Q: What is the Financial Policy Committee (FPC)?
A: A body within the Bank of England that monitors and reduces systemic risks.
Q: What is the Financial Services and Markets Act 2000 (FSMA)?
A: The main piece of legislation governing financial services in the UK.
Term: Prudential Regulation Authority (PRA)
Definition: A part of the Bank of England responsible for supervising large firms like banks and insurers.
Q: What is the Financial Conduct Authority (FCA)?
A: The UK regulator responsible for protecting consumers and ensuring market integrity.
Term: Financial Services Compensation Scheme (FSCS)
Definition: Scheme that provides compensation to consumers if a financial services firm fails.
Q: What does the FSCS cover?
A: Deposits, investments, insurance policies, and home finance
Q: What is the role of HM Treasury in financial services?
A: To oversee financial and economic policy and regulation framework.
Term: Financial Ombudsman Service (FOS)
Definition: An independent body that resolves disputes between consumers and financial firms.
Q: What’s the difference between the FCA and the PRA?
A: FCA focuses on conduct; PRA focuses on financial soundness.
Term: Office for Budget Responsibility (OBR)
Definition: Independent body that assesses public finances and economic forecasts.
Q: What is the Financial Reporting Council (FRC)?
A: It regulates auditors, accountants, and actuaries.
Term: Open Banking
Definition: A system that allows consumers to share banking data securely with third-party providers.
Q: What are the FCA’s three operational objectives?
A: Protect consumers, enhance market integrity, promote competition.
Term: Building Society
Definition: A mutual financial institution owned by its members, offering savings and mortgages.
Q: How do mutual organizations differ from listed firms?
A: They are owned by members/customers rather than shareholders.
Term: Retail Client
Definition: A client that receives the highest level of protection under FCA rules.
Q: What are the three main types of client classification?
A: Retail, professional, eligible counterparty.
Term: Wholesale Market
Definition: The financial market in which institutions deal in large volumes.
Q: What is a credit union?
A: A not-for-profit financial co-operative offering savings and loans.
Term: Challenger Bank
Definition: A smaller bank that competes with the larger traditional banks.
Q: What is a central counterparty (CCP)?
A: An entity that interposes itself between parties in a financial transaction to reduce risk.
