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UK regs and profess integrity > REPEATED WRONG ANSWERS > Flashcards

REPEATED WRONG ANSWERS Flashcards

1
Q

front running

A

Front running /pre-positioning - insider dealing under MAR - transaction for persons own benefit on basis of or ahead of an order - info on order is inside ingo

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2
Q

When is cancellation period not 14 days

A

life assurance and pensions - 30

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3
Q

what are exemptions to training and competency rules

A

advising retail clients on packaged prods, acting as broker fund adviser, advising on syndicate participation at lloyds, pension transfer specialist

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4
Q

Capital requirements directive basel framework

A

EU law - 3 pillars
P1 - min cap requirements for credit, market and operational risks
P2- supervisory review - constructive dialogue between firm and regfulators
P3- market discipline - pub disclosure reqs to give market role in ensuring firms hold appropriate level of cap

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5
Q

Punishment for breaching general prohibition

A

2 years and unlim fine
FSMA fives powers

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6
Q

Occupational pensions - DB and DC

A

DB - final salary pension paid as percentage of final salay
DC/money purchase - depends on contributions made and investment return. UK personal pensions and 401k are DC pensions

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7
Q

Occupational pensions - DB and DC

A

DB - final salary pension paid as percentage of final salay
DC/money purchase - depends on contributions made and investment return. UK personal pensions and 401k are DC pension

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8
Q

stakeholder pension

A

type of DC personal pension
Low charges and accessible minimum contributions

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9
Q

Inducement rules

A

MIFID - firm must not pay to or receive from a person other than client (or their rep) fees or commission or any non monetary benefit.
Non MIFID - disclosures only required for personal recs or packaged products. Disclosure not required when benefit is minor/non monetary

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10
Q

Current vs cap account

A

both used to measure UK balance of payments
Current = exports - imports
Capital = UK investment abroad and foreign invetsment in UK

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11
Q

control of current acc

A

deficit = overseas expenditure much bigger than overseas income
allow sterling to depreciate - mkes exports more attractive to foreginers. also forces brits to buy british

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12
Q

FTOC 6 outcomes

(CDISPU)

A

1 customers confident that FTOC is central to firm culture
2. prods and services sold designed to meet needs of identified customer groups and marketed accordingly
3. consumers have clear info and kept appropraitely informed before during and after sale
4. advice is suitable and takes consumer circumstance into account
5. prods perform as consumer has been led to believe
6. no unreasonable post sale barriers

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13
Q

11 PRINS

A
  1. Integrity.
  2. Skill, care and diligence.
  3. Management and control.
  4. Financial prudence.
  5. Market conduct.
  6. Customers’ interests
  7. Communication with clients.
  8. Conflicts of interest.
  9. Customers: relationships of trust.
  10. Clients’ assets.
  11. Relations with regulators
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14
Q

RIE and RCHs

A

FCA has responsibility of recognising, regulating and supervising echanges. Clearing house supervision is responsibility of BoE - exempt persons and don’t need authorisation for reg activities

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15
Q

ML penalties FSA 2012

A

Tipping off - 2 years unlim fine
all others 14 years unlim fine

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16
Q

Fiscal vs monetary policy

A

Fiscal = gov expenditure, taxing and borrowing. Monetary = money supply influence, interest rate, xchange rate, QE

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17
Q

CISI CODE OF CONDUCT

A
C
I
D
P
A
E
S

A
  1. personal accountability - stakeholders = everyone (Self, clients, regulators, colleagues, market participants, firms, profession, society)
  2. client focus - clients
  3. conflicts of interest - clients, market participants, regs
  4. respect for market partners - clients, market participants
  5. profesh dev - profession, clients, colleaagues
  6. aware of capabilities - decline to act if incompetent - Clients, profession, market participant
  7. respect others and environments - Society, colleagues, clients, regulators, market participants, profession, professional bodies)
  8. speak up and listen - society and colleagues
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18
Q

arbitrage

A

simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset’s listed price

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19
Q

who audits the FCA

A

NAO - can also carry out value for money reviews
HMT carries out economy, efficiency and effectiveness review

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20
Q

How to move between client catergories

A

Qualitative and quantitative testing for moving retail client up to elective profesh. For profesh to EC - needs to be an undertaking

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21
Q

Insider dealing CJA defences (4 general 3 specific)

A

General:
No advantage expected
Thought info was public
would’ve dealt anyway
didn’t expect recipient to deal

Special:
market info - prove info held was general market info
market makers - acted in good faith in course of bis
stabilisation

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22
Q

Misleading statements and impressions FSA2012 defences

A

Thought info was true
Stabilisation rules
Conforming to other FCA rule

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23
Q

UKMAR statutory exemptions (safe harbours)

A

share buyback
stabilisation
FCA rules
takeover code
market soundings
acceptable market practice

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24
Q

when must appropriateness be assessed

A

must be assessed and risks highlighted for non-advised services (ex only and arranging) and complex prods (derivatives and warrants)
doesnt apply to EC bis

suitability is for advise

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25
Q

KIID

A

non MIFID requirement - each UCITS scheme that fund manager managements must have a KIID

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26
Q

KFD

A
  • must provide for packaged prods, s, cash deposit ISA, cash deposit CFTs
    MIFID bis
    must include - complaints procedure, FSCS, liabilities info and right to cancel
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27
Q

KIDs

A

for PRIIPS - Packaged Retail and Insurance-based Investment Products that offer exposre to underlying financial assets

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28
Q

Elective profesh catergorisation

A

Must have 2/3 + qualitative test
10 transactions/q for past 4 q, portfolio over E500K, works or has worked in fin sec for over a year

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29
Q

EC business

A

executing orders and/or
* dealing on own account and/or
* receiving and transmitting orders

30
Q

When do suitability rules apply

A

non-MIFID = when making personal recs to retail clients and firms managing occupational/stakeholder/personal pensions, shareholde rpensions.

MIFID bis - suitability rules apply to all customers

31
Q

Compulsory vs voluntary jurisdiction of FOS

A

compulsory - elig complainants againts FCA auth firms in relation to reg activities or ancilliary
voluntary - lending on mortgages by non authorised firm + other lending activity, payments on plastic non store cards, deposits and insurance in EEA directed at UK customer

32
Q

designated vs recognized investment exchanges

A

DIEs are exempt persons (overseas) abd dont have to be authorised

33
Q

Money and pensions service?

A

body that helps raise levels of financial capability across the UK

34
Q

Who can use FOS

A

Individuals
small bis, charities, trusts
(microenterprise; balance sheet <E2mn and fewer than 10 employees)
(SME annual turnover below £6.5mn and <50 employees)
(charity with annual income below £6.5mn, trust is NAV under £6.5mn)

35
Q

What to do with limit orders that cannot be immediately executed

A

Firm must make order public unless
- expressly instructed by client not to do so
- order is large (over 10% of daily volume)

36
Q

Statement rules for firms managing investments

A

retail clients = every 3 months
- provided by another party
- client receives deal by deal confirmations = annually
- leveraged portfolios - monthly

37
Q

what should firm do if it identifies conflict of interest

A

manage it - if it can’t then must disclose

38
Q

Difference between approval and confirmation of a financial promotion

A

Approval would lead to the approving firm taking on the responsibility. Confirmation, effectively proof reading, would leave the responsibility with the original firm.

39
Q

Who overseas FSCS

A

PRA and FCA

40
Q

FCA objectives

A

stat = ensuring relavent fin.mar function well

operational= securing an appropriate degree of protection for consumers
protecting and enhancing the integrity of the UK financial system
promoting effective competition in the interests of consumers

41
Q

GNP, GDP, NI

A

GNP = GDP + NPI (Net prop income from abroad)
GDP = total domestic output of a country’s borders
GNP = total domestic output by residents of a country
NI = GNP - capital consumption
NI = total economic output from a country

42
Q

3 outcomes that satisfy FCA op objectives

A

Consumers get financial services and products that meet their needs from firms they can trust - not standardised products

Firms compete effectively with the interests of their customers and the integrity of the market at the heart of how they run their business.

Markets and financial systems are sound, stable and resilient with transparent pricing information

43
Q

Term assurance

A

Lump sum payment if insured dies within specified term

44
Q

Increasing vs decreasing term insurance

A

Increasing - increases with inflation overtime

decreasing - decreases over time - useful to takeout with balance of mortgage payment

term insurance always lump sum

45
Q

ML penalties
assisting
failure to report
tipping off

A

assisting = ML = 14 years
failure to report = 5 years
tipping off = 2 years

46
Q

PRA risk framework

A

impact that a firm could have on financial stability in the UK, both by the way it carries on its business and in the event of failure.

external context in which a firm operates, and the business risks it faces (together, its risk context) might affect the viability of the firm.

Mitigating factors ; management and governance and its risk management and controls (operational mitigation); its financial strength, specifically capital and liquidity (financial mitigation) and its resolvability (structural mitigation)

47
Q

Bribery act penalty

A

max 10 years

48
Q

GDP=

A

Note: GDP = C + I + G + (X-M)
C = consumer spending
I = investment
G = government spending
X-M = exports - imports = balance of payments

49
Q

during recession and at the start of recovery

A

2 consecutive quarter declines in GDP
inflation and interest rates typically low

50
Q

balanced budget multiplier

A

if the government increases spending and taxation by the same amount, then equilibrium national income (GDP) rises by this amount

51
Q

do accountants require authorisation for regulated activities

A

no - IF they are members of an appropriate prudish body, they are exempt for authorisation so long as reg activities are incidental and not separately
enumerated

52
Q

CASS rules - when should shortfalls in client money be repaid

A

end of business day

53
Q

difference between churning and switching

A

churning = excessive trading in shares
switching is in packaged prods

54
Q

joint tennant vs tenants in common

A

joint - multiple own entire property without identifiable shares that can be sold/given away. if one dies/bankrupt then property is jointly owned by survivors.

in common - identifiable shares that can be bought/sold/ swapped. on death of owners share passed to beneficiaries established via will or via intestacy laws

55
Q

difference between PRA’s GENPRU and BIPRU

A

insusunce companies covered GENPRU but not BIPRU

56
Q

under T&C what roles require examinations

A

advising retail clients on packaged products,
acting as a broker fund adviser,
advising on syndicate participation at Lloyd’s, pension transfer specialist.

57
Q

T&C requirements cover those doing what for retail client

A

advising, dealing, managing, overseeing

58
Q

CMAR reporting timeline

A

small firm = twice/year
med/large firm = monthly

59
Q

data protection principles

A

used fairly, lawfully and transparently
used for specified, explicit purposes
used in a way that is adequate, relevant and limited to only what is necessary
accurate and, where necessary, kept up to date
kept for no longer than is necessary
handled in a way that ensures appropriate security, including protection against unlawful or unauthorised processing, access, loss, destruction or damage

60
Q

what happens when a firm becomes aware a fin. promotion isn’t compliant

A

withdraw approval and notify anyone that relies on fin. promotion

61
Q

defined benefit pension

A

based primarily on length of employment and final salary (expressed as % of final sal)

62
Q

where are fin. promotional rules disapplied

A

exempt under the financial promotion order (FPO).
- communicated by an unauthorised person, or originates outside the UK and cannot have an effect within the UK

from outside the UK, and would be exempt under the FPO if the office from which they are communicated were a separate unauthorised person”

subject to (or exempted from) the Takeover Code

personal quotes or illustration forms

one-off promotions that are not cold calls”

63
Q

when must a firm have and follow internal complaints procedures

A

<10 employees
turnover <£2mn
annual income <£5mn

64
Q

tied vs restricted financial advisor

A

tied (or multi tied) = contracted to specified organisation and can only use that organisations prods

restricted = can only rec certain products/prod providers or both. might only focus on particular market

65
Q

which professions can carry out particular reg activities without 4a permission

A

accountants, solicitors, actuaries, chartered surveyors, licensed conveyancers
- must be member of relevant profess body
- reg activity must be incidental and not sparely enumerated

66
Q

exclusions from spec investments and activities under reg. investment order

A

ns&i deposits and prods
trade bills
sec deposits
futures agreed for commercial purposes
dealing as principal in absence of holding out
overseas persons - through authorised or exempt UK person to if UK approaches overseas person

67
Q

exemptions from general prohibition

A

exempt persons
- app representitives
- RIEs, RCHs
- misc, BoE, IMF, EEA central banks

others;
- members of des. profess bodies e.g. lloys, solicitors, accountants etc

68
Q

executor vs administrator

A

An executor is a person appointed under a Will and who will be seeking to obtain a Grant of Probate

administrator is a person who is appointed in accordance with the rules of intestacy when there is no Will.

69
Q

Bankruptcy options

A

to avoid - IVA with debtors
debtors pension - voluntary bankruptcy
min amount for bankruptcy is 5k

70
Q

FOS eligible complainants

A

retail or profess client
micro enterprise - <10 employees + balance sheet/annual turnover <£2mn
charities annual income <£6.5mn
trustee of trust NAV <£5mn
SME annual turnover <£6.5mn and <50 employees or balance sheet<£5mn

UK regs and profess integrity (6 decks)

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