Responsibilities And Approach To Regulaton Flashcards
The prudential regulation authority is part of:
The Bank of England
What are the 8 regulatory principles?
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
What does the FCA use to prioritise risks?
Using impact and probability analysis
What are the FCA taking into account when conducting a risk assessment?
Volume of transactions
Type of product being sold
Type of customer being dealt with
Likelihood and impact of the customer suffering financial disadvantage
How many categories of potential impact act does the PRA split firms into?
5 categories
What are the operational objectives of the FCA?
Protect consumers
Protect financial markets
Promote competition
What is the maximum penalty for someone found guilty of market abuse?
7 years imprisonment or an unlimited fine
What are the FCA’s three pillar supervision model?
- Proactive firm/ group supervision
- Event driven, reactive supervision
- Thematic approach
A firm is categorised as a fixed portfolio by the FCA, which of the three supervision strategies would they be subject to?
Pillar 1 - proactive firm / group supervision
A firm is categorised as a flexible portfolio by the FCA, which of the three supervision strategies would they be subject to?
Pillar 2 - event driven, reactive supervision and pillar 3 - thematic approach
What was created by the banking act 2009 to provide a tripartite authorities with a framework to deal with failing banks?
Special resolution regime
What are the objectives of the PRA?
Primary - To promote safety and soundness of the firms they regulate
Secondary - facilitate effective competition
What is the PRA’s objective which is specific to insurers?
To secure an appropriate degree of protection for those who are or may become policy holders
What two tools do the PRA use?
Regulation and supervision
What are the three characteristics of approach the PRA use?
Judgement based
Outcome based
Focused aim
Who oversees the PRA?
The Bank of England
Who oversees the financial policy committee?
Bank of England
What does the Prudential regulation committee do?
Considers the economic policy around competition, growth, competitiveness, innovation, trade and better outcomes for consumers
What is the FCA strategic objective?
To ensure relevant markets work well
What is the FCA operational objectives?
Protect consumers
Protect financial markets
Promote competition
Who does the FCA have to answer to?
The treasury so the chancellor of exchequer has overall responsibility on the financial market
If a firm has a disagreement with the FCA decision who can they appeal to?
Upper tribunal tax and chancery chamber
What is civil law?
Relates to the rights of an injured person
What is criminal law?
Related to the rights of the public and their safety
What is market abuse?
Improper conduct with undermines the uk market
What are some market abuse criminal offences?
Misleading statements
Misleading course of action
Insider dealing
What are some market abuse civil offences?
Insider dealing
Unlawful disclosure
Misuse of information
Manipulating transactions
Manipulating devices
What is the penalty for an officer who breaches anti money laundering regulations?
2 years imprisonment and a fine
What approach does the FCA have to regulation?
Proactive
How often does the FCA have to submit a report of complaints to government / parliament?
Annually
If there is a regulatory failure and it is deems the FCA fault who does this get reported to?
HM Treasury
The FCA operates as a ___________ and a ___________ regulator through monitoring procedures.
Reactive and proactive
Who within a firm is responsible for compliance?
Internal approved person or senior manager
The PRA has a __________ intervention framework to help identify and respond to risk.
Proactive
What do the international financial stability board do?
Promotes global financial stability
What is the Free Asset Ratio?
Surplus’s assets over value of liabilities (expressed as a percentage of total assets)
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
Pillar 1 - fixed portfolios require the highest level of supervision and therefore are under pillar one. Meaning they will be proactively supervised
A firm categorised as a fixed portfolio firm will be subject to a programme of firm or group supervision under which pillar?
Pillar 1 - fixed portfolio firms require the highest level of supervision therefore are under pillar 1. This means they will be proactively supervised
