RO1 - S.9 - Ethics

Question 1

How many Principles are there under PRIN?

Answer 1

11

Question 2

Name 5 Principles from PRIN

Answer 2

1) Integrity
2) Skill, Care and diligence
3) Management and control
4) Financial Prudence
5) Market Conduct
6) Customers interests
7) Comms w clients
8) Conflicts of interest
9) Customers – relationships of trust
10) Client Assets
11) Relations with regulators

Question 3

If there is a material PRIN breach who is bound to inform the FCA?

Answer 3

Firm’s compliance officer

Question 4

If there is a conflict between rules based regs and priciples based regs which prevail?

Answer 4

Principles based regulation

Question 5

What is the difference between principles based regulation and outcomes based regulation?

Answer 5

Principles - Set out high level action that the regulator would expect
Outcomes - Sets out what good outcomes would be for consumers, firms have more flexibility in how to implement

Question 6

What was the intention of COCON when it was brought in?

Answer 6

Was brought in to drive up standards of behaviour

Question 7

What does COCON stand for?

Answer 7

Code of Conduct regulations

Question 8

What does COCON make firms do re disciplinary actions?

Answer 8

Firms need to inform FCA about any disciplinary on conduct grounds ( Notifiable events)

Question 9

Who do the COCON rules 2.1 apply to?

Answer 9

All who are within scope in SM&CR firms, including individuals & seniors

Question 10

Who do the APER regulations apply to?

Answer 10

Appointed representatives carrying out controlled function roles

Question 11

Who do the COCON 2.2 rules apply to?

Answer 11

Senior managers in SM&CR firms

Question 12

Who is responsible in the firm for managing conflicts of interest risk?

Answer 12

Senior managers

Question 13

What did RDR do for ethics in financial services?

Answer 13

Drove up standards of ethics in financial services

Question 14

in whicb regulatory framework are ethics clearly aligned?

Answer 14

PRIN - Principles for Business

Question 15

What was the effect of RDR on adviser qualifications?

Answer 15

increased base level required to advise to Level 4 Diploma

Question 16

What is a statement of Professional standing and which review introduced it?

Answer 16

Statement of Professional standing ( ethical license to operate each year, issued by accrediting body and without it can’t advise)

Question 17

Can an adviser advise without a statement of professional standing?

Answer 17

No

Question 18

How many blocks are there in the FCA’s ethics framework?

Answer 18

4

Question 19

What are the 4 blocks of the FCA’s ethics framework?

Answer 19

1) Commitment –
2) Leadership -
3) Operational
4) Oversight

Question 20

How can firms demonstrate the commitment block of the ethical framework?

Answer 20

Have a commitment to having an ethical culture, generate a mission statement for the firm

Question 21

How can firms demonstrate the Leadership block of the ethical framework?

Answer 21

To instil the ethical practices

Question 22

How can firms demonstrate the Operational block of the ethical framework?

Answer 22

– Have written policies & procedures, provide training to staff

Question 23

How can firms demonstrate the Oversight block of the ethical framework?

Answer 23

Monitoring through GRC