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Unit 1: Regulations > REGS BIBLE Chapter 1 > Flashcards

REGS BIBLE Chapter 1 Flashcards

1
Q

BoE 2 core purposes

A

Monetary stability (prices and currency)
Financial stability (UK financial system)

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2
Q

Which body directly regulates ISAs and why

A

HMRC because of their tax-preferential treatment

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3
Q

Purpose of the FPC of the BoE

A

Financial Policy Committee’s purpose is to identify, monitor and take action/remove/reduce systemic risks

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4
Q

How many times does the FPC meet?

A

Four times a year

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5
Q

How many times a year does FPC issue a report and what is it called?

A

twice a year

Financial Stability Report

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6
Q

What are the PRA’s objectives?

A

General objective - promote safety and soundness of PRA-authorised firms (avoid instability)

Insurance objective - contributing to securing of appropriate degree of protection for those who are/may become policy holders

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7
Q

What are PRA firms

A

Deposit takers

Insurers

Significant Investment Firms

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8
Q

To whom does the FCA make a report and how often?

A

To HMT annually

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9
Q

What are the FCA objectives?

A

Strategic: To ensure relevant markets function well

3 Operational objectives:
- securing appropriate degree of protection for consumers
- protecting and enhancing integrity of UK financial system
- promoting effective competition in interests of consumers

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10
Q

Which bodies do the FCA/PRA oversee?

A

FOS - both
FSCS - FCA only

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11
Q

What are fixed portfolio vs flexible portfolio firms?

A

Fixed portfolio: Largest banks, insurers and investment firms; those which pose greatest risk to FCA objectives

Flexible portfolio firms: All other firms

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12
Q

What are the three types of risk-based supervision approaches?

A

Proactive - pre-emptive

Reactive - emerging or actual harm

Thematic - potential or actual harm

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13
Q

Which firms are subject to Pillar 1 (proactive) supervision?

A

Only fixed-portfolio firms

Flexible portfolio firms are only subject to Pillar 2 and 3

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14
Q

What are the FCA tools of supervision?

A

Identify - identify where potential harm is present
Diagnose - what is the cause, the extent and potential development of the harm
Remedy - through a range of FCA actions that can be taken
Evaluate - FCA assesses how effective these actions were

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15
Q

What are the 3 pillars of the FCA’s strategy for conduct risk supervision?

A
  1. Reducing and preventing serious harm
  2. Setting and testing higher standards
  3. Promoting competition and positive change
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16
Q

What are the 4 general powers of the FCA (Part 9A FSMA 2000)

A
  1. Grant vary or withdraw part 4A authorisation of firms, approval of individuals, and recognition of other bodies (exempt persons)
  2. Rule making for the above
  3. Prosecution for financial crime
  4. Supervision, enforcement, sanctions, disciplinary action
17
Q

Which provisions of the FCA handbook are legally binding and upon whom are they binding?

A

PRoD

P - Statements of Principle (binding upon approved persons)
R - Rules (binding on authorised persons)
D - Directions (binding on those to whom they relate)

18
Q

What are the PRIN? (list)

A
  1. Integrity
  2. Skill, care and diligence
  3. Management and Control
  4. Financial prudence
  5. Market conduct
  6. Customers’ interests
  7. Communications with clients
  8. Conflicts of interest
  9. customers; Relationship of trust
  10. Clients’ assets
  11. Relations with regulators
  12. Consumer Duty
19
Q

What are the 8 PRA Fundamental Rules (FR)

A
  • the equivalent of FCA PRIN
  1. Integrity
  2. Skill, care and due diligence
  3. Prudence
  4. Adequate financial resources
  5. Effective risk management
  6. Organisation and control
  7. Relationship with regulators
  8. resolution procedures
20
Q

What is the aim and scope of Consumer Duty

A

Aim: to ensure RCs receive good outcomes when they purchase products/services

Scope: any product that is or can be distributed to RCs (intentionally or not)

21
Q

What activities are NOT covered by the Consumer Duty

A
  • anything described non-retail/specifically directed to PCs or ECPs
  • Commercial products and services
  • Group products eg. life assurance products
  • non-retail investments (minimum investment £50000)
22
Q

How are non-retail investments defined?

A

Minimum denomination or investment of £50000

23
Q

What provisions apply for firms outside of the scope of Consumer Duty?

A

The Fair Treatment of Customers (FTOC) which has 6 outcomes

  1. Fair treatment of customers is central to corporate culture of all firms
  2. Products and services meet needs of identified consumer groups and are targeted accordingly
  3. Consumers are provided with clear information before, during and after point of sale
  4. Any advice is suitable and takes into account their circumstances
  5. Products and services perform as firms have led consumers to expect
  6. Consumers do not face unreasonable post-sale barriers imposed by firms to change a product, switch provider, submit a claim or make a complaint
24
Q

Against what 4 outcomes does the FCA assess the success of a firm’s PRIN 12?

A
  1. Products and services - are they fit for purpose?
  2. Price and value - is the value fair?
  3. Consumer services - customer support meets needs
  4. Customer understanding outcome - consumer understanding throughout the customer journey
25
Q

What are the 4 purposes of SYSC?

A
  1. Encourage directors to take responsibility for firm’s arrangements on regulatory matters
  2. Amplify PRIN 3 to organise and control affairs properly
  3. Vets responsibility for effective and responsible organisation in specific director and senior managers
  4. Create common platform or organisational systems and controls
26
Q

Upon who is the SYSC sourcebook binding?

A

Common platform firms

27
Q

What is a common platform firm?

A

A firm governed by either the CRD, MiFID, or both

28
Q

What does SYSC 4 relate to?

A

General requirements

  • sound governance
  • experienced managements
  • receive written reports on compliance and internal audit annually
  • appointment of responsibilities must be clear and appropriate
29
Q

What does SYSC 5 relate to?

A

Employees, agents, and other relevant persons

  • skills, knowledge and expertise
  • segregation of duties
  • awareness of procedures
  • monitoring
30
Q

What does SYSC 6 relate to?

A

Compliance, audit and financial crime

  • these are areas where responsibility will be vested in specific directors
31
Q

What is Principle 1 of the CISI code of conduct and stakeholders?

A

Personal accountability

Stakeholders: Self, clients, regulators, colleagues, market participants, firms, society

32
Q

What is Principle 2 of the CISI code of conduct and stakeholders?

A

Client focus

Stakeholders: Clients

33
Q

What is Principle 3 of the CISI code of conduct and stakeholders?

A

Conflict of interest

Stakeholders: Clients, market participants, regulators

34
Q

What is Principle 4 of the CISI code of conduct and stakeholders?

A

Respect for market partners

Stakeholders: Clients, market participants

35
Q

What is Principle 5 of the CISI code of conduct and stakeholders?

A

Professional development

Stakeholders: Profession, clients, colleagues

36
Q

What is Principle 6 of the CISI code of conduct and stakeholders?

A

Aware of capabilities

Stakeholders: Clients, profession, market participants

37
Q

What is Principle 7 of the CISI code of conduct and stakeholders?

A

Respect others and the environment

Stakeholders: Society, colleagues, clients, regulators, market participants, profession, professional body

38
Q

What is Principle 8 of the CISI code of conduct and stakeholders?

A

Speak up and listen up

Stakeholders: Society, colleagues

39
Q

What are the CISI recommended avenues for making a protected disclosure if a member is required to act in a manner contrary to the principles?

A

LIANS(?)

  1. Line manager - discuss concerns
  2. Internal audit - seek advice of compliance
  3. Approach Audit committee + Non-executive director
  4. Contact CISI for advice

Unit 1: Regulations (6 decks)

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