Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

ICAS - AFin > Module 18 > Flashcards

Module 18 Flashcards

1
Q

Financial services regulation in the UK

A

FSA (Financial services authority) was criticised for the lead up to the credit crunch in 2007 so was disbanded in 2013 and replaced by:

  • Financial Policy Committee (FPC)
  • Prudential Regulation Authority (PRA)
  • Financial Conduct Authority (FCA)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

All firms in financial services industry fall under jurisdiction of either

A
  • PRA

- FCA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

PRA regulates firms involved in (3)

A
  • Accepting deposits
  • Contracts of insurance
  • Managing the underwriting capacity of syndicate

If conducting other investment business, should apply to FCA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Prudential supervision =

A

Monitoring the adequacy of internal systems and controls as well as management and financial resources

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Conducting business regulation

A

Involves overseeing firms’ dealings with investors eg checking all information provided is clear, fair and not misleading

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

PRA and FCA have both

A

Criminal and civil powers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

PRA and FCA have the power to: (5)

A
  • Discipline approved individuals and firms
  • Impose fines for market abuse
  • Require return of money to compensate investors
  • Prosecute for offences
  • Withdraw firm’s authorisation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

FPC features (4)

A
  • Modelled on MPC
  • Part of BoE
  • Chaired by Governor of BoE
  • Accountable to BoE, Parliament and HM Treasury
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

FPC key job

A

Job is to identify emerging problems in financial system and take action to protect wider economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

PRA responsible for

A

Prudential regulation of individual banks, building societies and insurance companies (note that FCA is also their conduct regulator therefore dual-regulated)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

PRA applies

A

Measures used by FPC at a company level > greater discretion to tackle risks at source

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

PRA part of

A

BoE

Chairman and Chief Exec = Governor and Deputy Governor of BoE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

FCA took on

A

Majority of FSA’s roles and functions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

FCA areas of responsibility (3)

A
  • Business conduct of all firms
  • Sole regulator for independent financial advisors (IFAs)
  • Prudential regulation of firms not covered by PRA
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

FCA strategic objective

A

Ensure relevant markets function well

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

FCA operation objectives (3)

A
  • Secure appropriate degree of protection of consumers
  • Protect and enhance integrity of UK financial system
  • Promote effective competition in the interests of consumers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

FCA accountable to who?

A
  • Independent of Government and BoE

- Accountable to Parliament and Treasury

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

FCA regulates.. (2)

A
  • Accountants and Lawyers who undertake investment businesses
  • Mortgage lenders and advisors (must be authorised by FCA and adhere to rules)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

If incidental investment business, can undertake some of regulated activities under supervision by

A

Designated professional body eg ICAS, ICAEW, Law Society of England and Wales

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

FCA supervises

A

Six recognised investment exchanges (RIEs) eg LSE, NEX, ICE Futures Europe, London Metal Exchange

21
Q

FCA is UK authority for

A

Admission of securities to the Main Market of LSE.

Reviews and approves all listing particulars, prospectuses and other related documentation

22
Q

FCA responsibility

A

Educating consumers about financial services, and plays important role in fighting financial crime and reducing market abuse

23
Q

Regulation of financial services across Europe is overseen by European System of Financial Supervision (ESFS) (3)

A
  • European Banking Authority (EBA)
  • European Securities and Markets Authority (ESMA)
  • European Insurance and Occupational Pensions Authority (EIOPA)
24
Q

European Systematic Risk Board (ESRB)

A

Responsible for macro-prudential oversight of the EU financial system. BoE is voting member

25
Q

UK involvement in EU bodies

A
  • PRA involved in ESFS
  • PRA = UK representative on EBA and EIOPA
  • FCA represents UK at ESMA
26
Q

Markets in Financial Instruments Directive (MiFiD)

A

EU legislation that regulates firms who provide services to clients linked to ‘financial instruments’ and the venues where the instruments are traded

27
Q

European Market Infrastructure Regulation (EMIR)

A

European legislation concerning the reporting of derivatives and ensuring adequate risk management is in place and operating (direct response to financial crash in 2007)

28
Q

During 2017, three new codes of conduct released in the UK:

A
  • FC Global code > set of principles of good practice in FX market
  • UK Money Markets Code > voluntary written code for standards and best practice in deposit, repo and securities lending markets in UK
  • Global Precious Metals code > regulates wholesale precious metals market by defining best practice
29
Q

Dodd-Frank Wall Street Reform and Consumer Protection Act 2010

A

US financial legislation introduced as a response to recession of 2007/8

30
Q

Basel III (Third Basel Accord) (4)

A
  • Voluntary framework to reduce risk in financial markets
  • Provides suggested models to stress test banks
  • Intended to strengthen bank capital requirements by increasing bank liquidity and decreasing leverage
  • Focuses primarily on risk of a run on the bank
31
Q

Four types of market manipulation

A
  • Artificial transactions
  • Price manipulation (purpose of dealing to distort market price)
  • Abusive squeezes
  • Spreading of misleading information
32
Q

Insider dealing

A

Criminal offence of using privileged information not generally known by the market to deal in securities (Directors often privy to such information)

33
Q

Companies Act (2016) stipulated that directors’ share dealing must

A

Be disclosed in company’s annual report

34
Q

Insider dealing legislation

A

Very few prosecutions and effectiveness is questionable. Regulations are difficult to implement

35
Q

Fraud

A

Wrongful or criminal deception intended to result in financial or personal gain. Involves dishonesty, misrepresentation and legally recognised harm

36
Q

Serious Fraud Office created to deal with

A

Financial fraud, however investigations can span a number of different regulatory bodies therefore difficult

37
Q

Financial Services and Markets Act 2000

A

Makes it a serious criminal offence for anyone to make misleading statements, forecasts or promises to induce someone to enter investment agreement.

38
Q

Money laundering

A

Process by which large amounts of illegally obtained money is given the appearance of having originated from a legitimate source

39
Q

Criminal Justice Act 1988

A

Introduced legislation to allow investigation of large amounts of cash generated by criminal activities. Authorities can confiscate funds.
Financial intermediaries responsible for informing authorities about any suspicious transactions (whistleblowing)

40
Q

Drug Trafficking Act 1994

A

Reinforces powers to confiscate proceeds of the sales of illicit drugs

41
Q

Proceeds of Crime Act 2002

A

Definition of money laundering extended to include processing/ dealing with or concealing proceeds of any crime. New powers awarded to police forces, must prove funds are NOT proceeds of crime, not other way around

42
Q

Money Laundering, Terrorist Financing and Transfer of Funds regulations 2017

A

Implement EU Fourth Anti-Money laundering directive in the UK. Crucial safeguard against organised crime and terrorists

43
Q

All relevant business must (money laundering) (2)

A
  • Conduct money laundering and terrorist financing written risk assessment
  • Have appropriate anti-money laundering and terrorist financing systems in place
44
Q

Controls and procedures against money laundering (6)

A
  • New customer due diligence
  • Enhanced due diligence on transactions or persons in ‘high risk country’ or involving ‘politically exposed persons’
  • Monitoring customers’ business activities
  • Keeping right records
  • Reporting suspicious activity to National Crime Agency
  • Ensuring appropriate internal management controls
45
Q

Bribery Act 2010 > four different offences

A
  • Paying bribes
  • Receiving bribes
  • Bribery of foreign public officials
  • Failure of commercial organisations to prevent bribery
46
Q

Companies must ensure anti-corruption procedures are sufficiently robust to

A

Stop employees, agents or third parties acting on a company’s behalf from committing bribery

47
Q

Offences may be prosecuted under the Bribery Act if (3)

A
  • Offences committed by British National or UK resident
  • Offences committed within the UK
  • Commercial organisation has UK business presence
48
Q

Punishments from Bribery Act (2)

A
  • Max jail term extended from 7 to 10 years

- Unlimited fine for company

49
Q

Current issues (3)

A
  • Bitcoin
  • Mortgage Lending on interest only basis
  • Credit Card Lending

ICAS - AFin (21 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions