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CISI: UK Financial Regulations > Focus Topics > Flashcards

Focus Topics Flashcards

1
Q

What must a corporate finance firm do in regards to conflict of interest

A

For corporate finance firms who are managing an offering of securities, the policy needs to have particular regard to the offering process

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2
Q

What is the minimum amount of employees to have The Pensions Regulator (TPR) regulate?

A

1

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3
Q

What does the The Pensions Act 2008 require?

A

all UK employers to put certain staff into a workplace pension scheme and contribute towards it.

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4
Q

Who conducts macro-prudential oversight for the EU financial system?

A

The European Systemic Risk Board (ESRB)

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5
Q

What body regulates European financial services?

A

The European Systemic Risk Board (ESRB)

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6
Q

What three bodies are within the European System of Financial Supervision (ESFS)

A

*The European Banking Authority (EBA).
* The European Securities and Markets Authority (ESMA).
* The European Insurance and Occupational Pensions Authority (EIOPA)

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7
Q

What must be done with client money under CASS?

A

Segregated from any other money held by the firm

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8
Q

How is client money held as per CASS?

A

This is achieved by the firm holding the client money in trust. The trust is a statutory trust, created by the rules laid down in CASS 7.17.2R.

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9
Q

CASS 6?

A

contains the custody rules which apply when a firm holds financial instruments of a client in the course of MiFID business

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10
Q

CASS 7?

A

when it holds client money in the course of its MiFID business
firm opts to comply with the MiFID client money rules

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11
Q

Who must firms register as the legal title for assets?

A

In the client nominee or other authorised person

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12
Q

What must a firm do when opening a client bank account?

A

Advise that bank must not commingle money

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13
Q

What happens if a bank does not countersign acknowledging agreement of trustee status within 20 days? No commingling

A

Must withdraw the money and deposit within another bank

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14
Q

When does client money not apply to firms?

A

When funds are held in connecting to DvP trades
Unless its 3 days over VD

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15
Q

When does a person have an interest in shares as per UK Takeover Rules

A

Derivative or long
Short does not ocunt

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16
Q

What is a relevant security as per UK Takeover Rules

A

. securities of an offeror which carry substantially the same rights
securities of the offeree company and an offeror carrying conversion or subscription rights

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17
Q

What is churning?

A

over-dealing and/or trading more frequently for a client in order to generate additional fees

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18
Q

What is the difference between churning and switching?

A

Switching is replacing an investment with another oen
FCA has guidance on switching, must be suitable

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19
Q

What is suitability?

A

reasonable steps to ensure that personal recommendations (or decisions to trade) are suitable for their clients’ needs.

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20
Q

What is covered by suitability requirements?

A

extend to capture all decisions whether to trade, including any personal recommendations made to a client on whether to buy, sell or take no action (hold) an investment.

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21
Q

How do firms providing portfolio management services act under suitability requirements?

A

under a mandate agreed with the client which permits the firm to carry out discretionary investment services.

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22
Q

When must a portfolio management services perform suitability assessments?

A

ahead of making a personal recommendation or providing investment advice which would require client to change mandate

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23
Q

where does the FCA advise firms to look for suitability risk?

A

checking for spikes or trends in the sales patterns of individual advisers
monitor poor sales practices in face-to-face
100% variable pay, based on sales, increases the risk of misselling

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24
Q

What does a firm need to make a suitability assessment?

A

investment background
financial situation
investment objectives

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25
Q

What is an insistent client?

A

Where client going against recommendation

26
Q

What needs to be communicated to an insistent client?

A

that the firm has not recommended the transaction
the reasons why the transaction will not be in accordance with firm
the risks of the transaction
why the firm did not recommend that transaction to the client.

27
Q

What does a firm need before executing on an insistent client?

A

Acknowledgement from the Insistent Client

28
Q

How is suitability assessed for Professional Clients?

A

Per se - able to bear risks consistent with their objectives
Elective - cannot bear risks consistent with their objectives

29
Q

What is a per se professional client?

A

An entity required to be authorised or regulated to operate in the financial markets.

30
Q

When may a retail client be treated as an elective professional client?

A

Qualitative test - got the skills
Quantitative test:
10 big trades per year
500k EUR in port
worked in financial services for over a year

31
Q

Do firms need consent from clients to their best execution policy?

A

No this is implied in relationship

32
Q

What does MiFID II require firms to have about their order execution policy?

A

clearly articulates to clients how it seeks to obtain the best possible result for them.

33
Q

When must firms review their order execution policy?

A

whenever a material event occurs, but at least annually.

34
Q

When dealing with third party firms who is responsible for accuracy of information?

A

Only the third party firm

35
Q

What sourcebooks covers conflict of interest?

A

SYSC

36
Q

Where does COB apply?

A

For any business carried in the UK, regardless of firm or client nationality

37
Q

Whats the max FSCS payout?

A

85,000

38
Q

What is 90% protected

A

All other insurance aside from
* Compulsory insurance.
* Long-term insurance.
* Professional indemnity insurance.
* Claims arising from the death or incapacity of the policyholder due
to sickness, injury or infirmity.

39
Q

What is a super complaint?

A

allows a consumer body to raise competition and consumer issues with the FCA

40
Q

When is a disclosure of conflict of interest made?

A

As a last resort if internal controls will not mitigate it

41
Q

What are the disclosure thresholds set by the UK Transparency Directive?

A

5
10
15
20
25
30
50
75

42
Q

Where there is an unfair term in a contract what can the FCA do?

A

Apply to court for an injunction to prevent its enforcement

43
Q

From what date are firms required to keep CDD and terrorist docs in the specified time period?

A

From the end of the business relationship, 5 years

44
Q

What does R mean in the FCA handbook

A

Rule

45
Q

What is vicarious liability?

A

Where commercial organisation has failed to prevent bribery

46
Q

Who must renumerate an adviser who recommends a unit trust?

A

The client

47
Q

When must firms maintain seperate insider lists?

A

For each transaction they perform

48
Q

How long is Pillar 1 of a fixed portfolio firm proactive supervision period?

A

12 to 36 months

49
Q

Who must a financial promotion be understood by

A

The average member of the target group

50
Q

What is the max mkt cap before inducement rules are no longer waived

A

£200m

51
Q

What are firms prohibited from making cold calls on?

A

high vol funds and life assurance

52
Q

What is the latest time a designated investment business can provide agreement for a retail client?

A

Has to be before service provided

53
Q

What must a firm do if has doubts of appropriateness of a deal?

A

Warn client

54
Q

What must a firm do if cannot execute limit order?

A

Make it public unless instructed otherwise

55
Q

Who does inducement rules apply to?

A

Retail and professional clients

56
Q

What is the latest point a suitability report be issued for a stakeholder pension if cancellation rules apply

A

14 days after concluding contract

57
Q

When is money excluded from client money rules?

A

It is owed to firm in the form of fees outstanding

58
Q

Under MiFID business, how long must trade confirmations be retained?

A

5 years after date of dispatch

59
Q

If investment company appoints an adviser who advises customers, who is the customer a client of?

A

ACE and the investment company jointly

60
Q
A

CISI: UK Financial Regulations (5 decks)

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