Principles and rules set in the regulatory framework

Question 1

What is the meaning of ‘general prohibition’? under S.19

Answer 1

it is an offence for someone to carry out regulated acitivty unless authorised or exempt

Question 2

What is the maximum penalty under S.19 (authorisation breach)

Answer 2

indictment as a crimial offence
2 years in prison
and or a fine

Question 3

Why are many solicitors and accountants no longer authorised, when they may have previously been under RPB (recognised professional body)

Answer 3

As many did not like the heavy touch of the FSA (now FCA)

Question 4

When does granfathering not apply?

Answer 4

when authorisation for activites has not been previously regulated by the FSA. (such as mortgages) a new authorisation is required

Question 5

What are the general overall regulated activities that require authorisation?

Answer 5

Banking
Home finance
Insurer
Scheme Operator
Investment Intermediary
Insurance Intermediary
Investment Management
Credit related

Question 6

When considering an appointed representative and an authorised person (principal), who owns the responsibility for the AR’s acts and omissions?

Answer 6

The principle is responsible for the actions of the AR

Question 7

What are the different types of AR?

Answer 7

Tied agent
introducer AR
Full AR (able to give advice)

Question 8

What are the two types of registrations professional firms (DPB - designated professional body) such as solicitors and accountants can hold?

Answer 8

Exempt

authorised

Question 9

For which regulated activities do DPB member firms not require authorisation from the FCA?

Answer 9

activities which are purely accidental to thier professional services

Question 10

Who would a new insurance firm apply to for authorisation?

Answer 10

PRA

Question 11

Who would a intermediary apply to for authorisation?

Answer 11

FCA

Question 12

What would a scope of permission notice contain?

Answer 12

details of a firms authorisation including which activities they can undertake, from when and any limitations

Question 13

For what period of time could a person within a firm undertake controlled activities without needing the approval of the FCA?

Answer 13

12 weeks per year

Question 14

If a firm is changing from a partnership to a LTD, can it transfer its authorisation?

Answer 14

No, it has to apply as the new firm

Question 15

As part of the SM and CR, what are the key aims?

Answer 15

encourage a culture of staff at all levels to take personal responsibility for actions
ensure firms and staff clearly understand and can demostrate where responsibility lies

Question 16

Natalies investment portfolio loses 50% of its value due to a stock market crash, is she entitled to compensation from her adviser?

Answer 16

No, she would only be entitled if the advice she received was in breach of the FSMA/FCA rules

Question 17

What are the five significant influence functions which can only be performed by approved persons?

Answer 17

Governing functions (director, non exec dir, Chief exec, partner)
Required functions 
Systems and control functions
significant management functions
ccustomer dealing function

Question 18

What are the items under ‘required functions’ of an approved person?

Answer 18

apportionment and oversight
complaince oversight
CASS oversight
AML reporting
benchmark submission and admin

Question 19

Which job roles fall into executive functions under the new SM and CR (SMF’s)

Answer 19

chief exec
chief finance
chief risk
Head of audit
Head of key business area
Groups entity senior manager
credit union SMF

Question 20

which job roles fall into Oversight as part of the new SM and CR

Answer 20

chairman
chair of risk committee
chair of audit committee
chair of renumeration committee

Question 21

which job roles fall into Oversight as part of the new SM and CR

Answer 21

chairman
chair of risk committee
chair of audit committee
chair of renumeration committee
senior independant director
head of overseas branch

Question 22

Under the SM and CR, what does a firm need to do?

Answer 22

ensure each senior manager has a statement of responsibilities
introduce a firm responsiibilities map
ensure all senior managers are pre-approved before carrying out thier roles
ensure each is assesed for F&P

Question 23

How do material risk takers need to be certified under the SM and CR?

Answer 23

asssed as F&P
issue a certificate
have process in place to assess annually

Question 24

What are the three new classification of firms under SM and CR?

Answer 24

Limited scope
Core firms
Enhanced firms

Question 25

if you were an enhanced firm under SM and CR - what type of firm might you be?

Answer 25

significant IFPRU firms
large CASS firms
asset managers £50BM or more
intermediary firms £35M revenue PA
credit lending over £100M PA
mortgage lenders 10K or more mortgages outstanding (not Banks)

Question 26

How long should training records be kept for?

Answer 26

three years for non MiFID firms
five years for MiFID firms
Indefinately for pension transfers

Question 27

How long must complaints be retained for - both MiFID and non MiFID?

Answer 27

none MiFID - 3 years

MiFID - 5 years

Question 28

As an employee of an FCA regulated firm advising retail clients can expect to receive ongoing training in which areas?

Answer 28

changes in the market, products, legislation and regulation

Question 29

What are the time limits on complaints to FOS?

Answer 29

six months of the date of the final outcome from the firm
six years after the event
three years after the complainant knew they had cause for complaint

Question 30

Derek is a retail client and he wants to complain about the financial advice he has received from a regulated firm, who should be complain to in the first instance?

Answer 30

To the firm and then to FOS

Question 31

What are the three eligible claimants for the FSCS (financial compensation scheme)?

Answer 31

Protected deposit
protected Insurance contract
protected investment business

Question 32

who is exempt from being an eligible claimant under FSCS?

Answer 32

Overseas financial service institutions (outside the EEA, UK, Channel islands, IOM)
Pension and retirement funds
supranational institutions, governments, admin authoriities
regional, local authorities
large companies & partnerships
alternative investment funds
large mutuals

Question 33

What are the limits for the FSCS?

Answer 33

deposits 100% of the first £85K per person, per firm
Investments 100% of £85K
Long term insurance - providers 100% of the claim (no limit), intermediaries 90% (some at 100%) no upper limit
GI - 100% of valid claims or unexpired premiums for complusory insurance, 90% for non-compulsory
Home finance - 100% of £85K