Regulation and the FCA Flashcards
Q: What is the FCA’s statutory objective?
A: To ensure that financial markets work well.
Term: FCA Operational Objectives
Definition: Consumer protection, market integrity, and promoting effective competition.
Q: What is the role of the PRA in financial regulation?
A: To ensure the safety and soundness of systemically important firms.
Term: FCA Handbook
Definition: A set of rules and guidance that regulated firms must follow.
Q: What is the purpose of the FCA’s Principles for Businesses (PRIN)?
A: To set out fundamental obligations for all authorised firms
Term: Principle 6 – Customers’ Interests
Definition: A firm must pay due regard to the interests of its customers and treat them fairly.
Q: What are the FCA’s four pillars of supervision?
A: Proactive, reactive, thematic, and enforcement.
Term: Threshold Conditions (COND)
Definition: Minimum standards firms must meet to obtain and retain FCA authorisation.
Q: What is a regulated activity?
A: An activity specified under FSMA that requires authorisation from the FCA.
Term: Senior Management Arrangements, Systems and Controls (SYSC)
Definition: FCA rules that set expectations for how firms should be organised and governed.
Q: What does the FCA’s risk-based approach mean?
A: More supervision is given to higher-risk firms or sectors.
Term: Authorisation
Definition: The process by which firms apply for permission to carry out regulated activities.
Q: What are the three types of clients for regulatory purposes?
A: Retail, professional, and eligible counterparty.
Term: Client Categorisation
Definition: Classification that determines the level of protection a client receives.
Q: What is the Controlled Functions regime?
A: The FCA’s framework for identifying key roles that require approval.
Term: Approved Person
Definition: Someone authorised to carry out controlled functions under the FCA.
Q: What is the Certification Regime?
A: Requires firms to assess the fitness and propriety of certain individuals annually.
Term: Senior Managers Regime
Definition: A regime that holds senior individuals accountable for their conduct and decisions.
Q: What is the Conduct Rules Regime?
A: A set of rules that apply to most employees in regulated firms.
Term: Statement of Responsibilities
Definition: Document detailing a senior manager’s individual responsibilities.
Q: What are the two tiers of Conduct Rules?
A: Individual Conduct Rules and Senior Manager Conduct Rules.
Term: Fitness and Propriety
Definition: Standards an individual must meet to work in a regulated role.
Q: What is a breach report?
A: Notification to the FCA if someone breaks conduct rules.
Term: Enforcement
Definition: The FCA’s power to investigate and penalise rule breaches.
