Responsibilities And Approach To Regulaton

Question 1

The prudential regulation authority is part of:

Answer 1

The Bank of England

Question 2

What are the 8 regulatory principles?

Answer 2

1 Efficiency and economy
2 Proportionality
3 Sustainable growth
4 Consumer responsibility
5 senior management responsibility
6 Recognising the differences in the
business carried out by different regulated persons
7 Openness and disclosure
8 Transparency

Question 3

What does the FCA use to prioritise risks?

Answer 3

Using impact and probability analysis

Question 4

What are the FCA taking into account when conducting a risk assessment?

Answer 4

Volume of transactions
Type of product being sold
Type of customer being dealt with
Likelihood and impact of the customer suffering financial disadvantage

Question 5

How many categories of potential impact act does the PRA split firms into?

Answer 5

5 categories

Question 6

What are the operational objectives of the FCA?

Answer 6

Protect consumers
Protect financial markets
Promote competition

Question 7

What is the maximum penalty for someone found guilty of market abuse?

Answer 7

7 years imprisonment or an unlimited fine

Question 8

What are the FCA’s three pillar supervision model?

Answer 8

1. Proactive firm/ group supervision
2. Event driven, reactive supervision
3. Thematic approach

Question 9

A firm is categorised as a fixed portfolio by the FCA, which of the three supervision strategies would they be subject to?

Answer 9

Pillar 1 - proactive firm / group supervision

Question 10

A firm is categorised as a flexible portfolio by the FCA, which of the three supervision strategies would they be subject to?

Answer 10

Pillar 2 - event driven, reactive supervision and pillar 3 - thematic approach

Question 11

What was created by the banking act 2009 to provide a tripartite authorities with a framework to deal with failing banks?

Answer 11

Special resolution regime

Question 12

What are the objectives of the PRA?

Answer 12

Primary - To promote safety and soundness of the firms they regulate
Secondary - facilitate effective competition

Question 13

What is the PRA’s objective which is specific to insurers?

Answer 13

To secure an appropriate degree of protection for those who are or may become policy holders

Question 14

What two tools do the PRA use?

Answer 14

Regulation and supervision

Question 15

What are the three characteristics of approach the PRA use?

Answer 15

Judgement based
Outcome based
Focused aim

Question 16

Who oversees the PRA?

Answer 16

The Bank of England

Question 17

Who oversees the financial policy committee?

Answer 17

Bank of England

Question 18

What does the Prudential regulation committee do?

Answer 18

Considers the economic policy around competition, growth, competitiveness, innovation, trade and better outcomes for consumers

Question 19

What is the FCA strategic objective?

Answer 19

To ensure relevant markets work well

Question 20

What is the FCA operational objectives?

Answer 20

Protect consumers
Protect financial markets
Promote competition

Question 21

Who does the FCA have to answer to?

Answer 21

The treasury so the chancellor of exchequer has overall responsibility on the financial market

Question 22

If a firm has a disagreement with the FCA decision who can they appeal to?

Answer 22

Upper tribunal tax and chancery chamber

Question 23

What is civil law?

Answer 23

Relates to the rights of an injured person

Question 24

What is criminal law?

Answer 24

Related to the rights of the public and their safety

Question 25

What is market abuse?

Answer 25

Improper conduct with undermines the uk market

Question 26

What are some market abuse criminal offences?

Answer 26

Misleading statements
Misleading course of action
Insider dealing

Question 27

What are some market abuse civil offences?

Answer 27

Insider dealing
Unlawful disclosure
Misuse of information
Manipulating transactions
Manipulating devices

Question 28

What is the penalty for an officer who breaches anti money laundering regulations?

Answer 28

2 years imprisonment and a fine

Question 29

What approach does the FCA have to regulation?

Answer 29

Proactive

Question 30

How often does the FCA have to submit a report of complaints to government / parliament?

Answer 30

Annually

Question 31

If there is a regulatory failure and it is deems the FCA fault who does this get reported to?

Answer 31

HM Treasury

Question 32

The FCA operates as a ___________ and a ___________ regulator through monitoring procedures.

Answer 32

Reactive and proactive

Question 33

Who within a firm is responsible for compliance?

Answer 33

Internal approved person or senior manager

Question 34

The PRA has a __________ intervention framework to help identify and respond to risk.

Answer 34

Proactive

Question 35

What do the international financial stability board do?

Answer 35

Promotes global financial stability

Question 36

What is the Free Asset Ratio?

Answer 36

Surplus’s assets over value of liabilities (expressed as a percentage of total assets)

Question 37

A firm which is categorised at a fixed portfolio will be subject to a programme of firm or group specific super vision under which pillar

Answer 37

Pillar 1 - fixed portfolios require the highest level of supervision and therefore are under pillar one. Meaning they will be proactively supervised

Question 38

A firm categorised as a fixed portfolio firm will be subject to a programme of firm or group supervision under which pillar?

Answer 38

Pillar 1 - fixed portfolio firms require the highest level of supervision therefore are under pillar 1. This means they will be proactively supervised