RO1: Chapter 6 Flashcards
What does COBS incorporate and introduce?
Incorporates MIFID requirements and introduces principles based regime for regulated firms.
Why has the FCA used its powers to restrict short selling?
Protect customers.
ICOBS introduces three product categories. What are these?
- General Insurance Products
- Pure protection (Term assurance, Income protection & Critical illness cover)
- PPI (Personal Protection Insurance)
What key sections are in the FCA handbook?
- High Level Standards
- Prudential Standards
- Business Standards
- Regulatory Processes
- Redress
- Specialist Sourcebooks
What are the 10 High Level Standards?
- PRIN (Principles for Business)
- SYSC (Senior Management Arrangements, Systems and Controls)
- COCON (Code of Conduct)
- COND (Threshold Conditions)
- APER (Code of Practice for Approved Persons)
- FIT (Fit and Proper Test for Employees and Senior Personnel)
- FINMAR (Financial Stability and Market Confidence)
- T&C (Training and Competence)
- GEN (General Provisions)
- FEES (Fees Manual)
What are the Threshold Conditions?
These are the conditions a firm must always adhere to to keep its part 4A permission to carry out investment business in the UK.
What is short selling?
This is where fund management try and sell shares to make profit. It is part of the FCA objects to protect consumers from this.
What are the 3 fee categories within the fees manual in the FCA handbook?
- Application fees
- Special Project fees
- Periodic fees
What is a application fee? and how much can these fees be?
Application fee is paid when applying for a part 4A permission. Can be from £1,500.00 to £25,000.00 for more complex applications.
How do the FCA use periodic fees?
These fees are paid annually to fund FCA requirements to undertake it’s statutory functions.
What are the FCA’s special project fees used for?
These fees are used to meet the cost the FCA incurs when dealing with a range of activities.
What is a Variation of Permission fee?
This is where the FCA charge a firm a fee when they are expanding it’s activities so need to alter their part 4A permissions.
What are the 8 Prudential Standards?
GENPRU (General Prudential Sourcebook for Banks, Building Societies and Investment Firms)
- BIPRU (Prudential Sourcebook for Banks, Building Societies and Investment Firms)
- IFPRU (Prudential Sourcebook for Investment Firms)
- MIPRU (Prudential Sourcebook for Mortgage, Home Finance and Insurance)
- IPRU-INV (Interim Prudential Sourcebook for Investment Businesses)
- INSPRU (Prudential Sourcebook for Insurers)
- IPRU-FSCO & IPRU-INS (Both Interim Prudential Sourcebooks for Friendly Societies)
Why are the Prudential Standards in place?
To set out prudential requirements for firms (Financial framework)
What is capital adequacy?
Having the resources (Capital) to cover risks and meet short-term liabilities. Firms must maintain adequate financial resources for general requirements.
What is professional indemnity insurance?
Professional indemnity insurance (covers the cost of compensating clients for loss or damage resulting from negligent services) for home finance providers and intermediaries.
What are the 7 Business Standards?
- COBS (Conduct of Business)
- ICOBS (Insurance Conduct of Business)
- MCOB (Mortgages and Home Finance: Code of Business)
- BCOBS (Banking Code of Business)
- CASS (Client Assets)
- MAR (Market Conduct)
- PROD (Product Intervention and Product Governance)
What does CASS stand for?
Client Assets
Why is CASS in place in the Business Standards?
Rules of safeguarding client’s assets and money, stops mixing firms assets and clients assets together. This stops the clients’ assets being used without the firm’s agreement. Promotes a fast process of clients return of client money and assets.
What does PROD stand for?
Product Intervention and Product Governance
Why is PROD in place in the Business Standards?
Applied to specific products, product features or marketing practices. Limited to a maximum duration of 12 months and referred to ‘Temporary product intervention rules’.
What are the Regulator Processes?
- DEPP (Decision Procedure and Penalties)
- SUP (Supervision)
What does Redress mean?
-Processes for handling complaints and dealing with compensation.
