Principles and rules set in the regulatory framework Flashcards
What is the meaning of ‘general prohibition’? under S.19
it is an offence for someone to carry out regulated acitivty unless authorised or exempt
What is the maximum penalty under S.19 (authorisation breach)
indictment as a crimial offence
2 years in prison
and or a fine
Why are many solicitors and accountants no longer authorised, when they may have previously been under RPB (recognised professional body)
As many did not like the heavy touch of the FSA (now FCA)
When does granfathering not apply?
when authorisation for activites has not been previously regulated by the FSA. (such as mortgages) a new authorisation is required
What are the general overall regulated activities that require authorisation?
Banking Home finance Insurer Scheme Operator Investment Intermediary Insurance Intermediary Investment Management Credit related
When considering an appointed representative and an authorised person (principal), who owns the responsibility for the AR’s acts and omissions?
The principle is responsible for the actions of the AR
What are the different types of AR?
Tied agent introducer AR Full AR (able to give advice)
What are the two types of registrations professional firms (DPB - designated professional body) such as solicitors and accountants can hold?
Exempt
authorised
For which regulated activities do DPB member firms not require authorisation from the FCA?
activities which are purely accidental to thier professional services
Who would a new insurance firm apply to for authorisation?
PRA
Who would a intermediary apply to for authorisation?
FCA
What would a scope of permission notice contain?
details of a firms authorisation including which activities they can undertake, from when and any limitations
For what period of time could a person within a firm undertake controlled activities without needing the approval of the FCA?
12 weeks per year
If a firm is changing from a partnership to a LTD, can it transfer its authorisation?
No, it has to apply as the new firm
As part of the SM and CR, what are the key aims?
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
Natalies investment portfolio loses 50% of its value due to a stock market crash, is she entitled to compensation from her adviser?
No, she would only be entitled if the advice she received was in breach of the FSMA/FCA rules
What are the five significant influence functions which can only be performed by approved persons?
Governing functions (director, non exec dir, Chief exec, partner) Required functions Systems and control functions significant management functions ccustomer dealing function
What are the items under ‘required functions’ of an approved person?
apportionment and oversight complaince oversight CASS oversight AML reporting benchmark submission and admin
Which job roles fall into executive functions under the new SM and CR (SMF’s)
chief exec chief finance chief risk Head of audit Head of key business area Groups entity senior manager credit union SMF
which job roles fall into Oversight as part of the new SM and CR
chairman
chair of risk committee
chair of audit committee
chair of renumeration committee
which job roles fall into Oversight as part of the new SM and CR
chairman chair of risk committee chair of audit committee chair of renumeration committee senior independant director head of overseas branch
Under the SM and CR, what does a firm need to do?
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
How do material risk takers need to be certified under the SM and CR?
asssed as F&P
issue a certificate
have process in place to assess annually
What are the three new classification of firms under SM and CR?
Limited scope
Core firms
Enhanced firms
if you were an enhanced firm under SM and CR - what type of firm might you be?
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)
How long should training records be kept for?
three years for non MiFID firms
five years for MiFID firms
Indefinately for pension transfers
How long must complaints be retained for - both MiFID and non MiFID?
none MiFID - 3 years
MiFID - 5 years
As an employee of an FCA regulated firm advising retail clients can expect to receive ongoing training in which areas?
changes in the market, products, legislation and regulation
What are the time limits on complaints to FOS?
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
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?
To the firm and then to FOS
What are the three eligible claimants for the FSCS (financial compensation scheme)?
Protected deposit
protected Insurance contract
protected investment business
who is exempt from being an eligible claimant under FSCS?
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
What are the limits for the FSCS?
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
