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R01 Jan 2020 > The FCA Handbook > Flashcards

The FCA Handbook Flashcards

1
Q

Describe the high level content of the handbook

A

various sourcebooks, rulebooks, guides and manuals that make up the handbook across 9 specific areas

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2
Q

What is the definition of ‘high level standards’ within the handbook?

A

Regulatory obligations for all firms and approved persons

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3
Q

What are the threshold conditions (COND) a firm must satisfy to retain its Part 4A permission?

A 
Location of offices
Effective supervision
Appropriate resources
Suitability (fit and proper)
Business model - compatible, sound and prudent to the affairs being conducted, interets of consumers, integrity of the financial system
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4
Q

What does a firm need to do under SYSC2? (senior manager arrangements)

A

appoint individuals to be personally responsible for controlled functions
document who is responsible for what

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5
Q

Name three things a firm should have under SYSC3 (systems and controls)

A 
reporting lines and delegation of responsibilites
Compliance function
assessment of risks
MI
Checking honesty and competence of employees
monotoring systems and controls
business and renumeration strategy
business continuity
Record keeping
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6
Q

SYSC 5 covers employees, agents and other persons - what is a firms repsonsbilities under this heading?

A

appropriate skills, knowledge and expertise

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7
Q

SYSC 6 looks at compliance, internal audit and financial crime, one of the requirements is to manage financial crime and money laundering risks, what else does a firm need to do?

A

Maintain policies and procedures to comply with regulatory responsibilities appropriate to size and nature of the firms activities

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8
Q

What would be the risks to be considered when Outsourcing (SYSC 8)?

A

it should not prevent the FCA monitoring compliance
it shouldnt impact on the firms internal controls
it doesn’t create any undue operational risks

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9
Q

Under record keeping (SYSC 9) what are a firms obligations?

A

Accurate records are required of its business, services and transactions
it must be sufficient for the FCA to monitor compliance

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10
Q

The Public Interest Disclosure Act, states each company should have a whistle blowing policy, what type of concerns can be raised?

A

crimes, failure to comply with law, miscarriages of justice, health and safety risks, environmental risks, any suspicous activity

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11
Q

The renumeration code has twelve principles, how would you summarise them?

A

Good governance structures of renumeration policy approval, do not encourage risk taking
Fair renumeration structures, taking into account future risks and quality of business.
Bonus payments based on long term performance
Avoid over reliance on performance related pay
Consider deferral so they are paid over time

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12
Q

Why has the FCA used its powers to restrict short selling?

A

In order to promote its statutory objectives of protecting customers and enhancing financial integrity

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13
Q

Could a firm use the ‘key facts’ logo on all of its material for customer use?

A

No, the logo can only be used on those documents prescribed by the FCA and must not be reproduced

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14
Q

If giving a business card to a customer, does it have to have a status disclosure on it?

A

No, but it is best practice

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15
Q

If a firm wants to significantly vary its authorisation status, would it need to pay an application fee to the FCA?

A

Yes it would

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16
Q

Once a firm recieves a new authorisation that is as a result of a variation, what might happen in terms of fees and what might they be?

A

It may fall into a further fee block. A variation permission fee is paid at 50% of the application fee of a firm requesting a new authorisation.
a flat fee of £250 is payable if it does not fall into another fee block

17
Q

How are periodic fees determined?

A

They would pay a fee in each fee block
The tariff base would be used to decide on the fee based on the size of the business/income from carrying out its activities

18
Q

What are the three elements covered by GENPRU? (Prudential Sourcebook)

A
  1. explains the rules of adequacy and how to value
  2. The rules and guidance of the minimum capital a firm can hold
  3. Guidance of the type of eligible captial that can make up a firms capital resources
19
Q

What is the difference between INSPRU and MIPRU?

A

INSPRU is for insurers, MIPRU is for mortgage and home finance firms and insurance intermediaries

20
Q

How do intermediary firms differ in terms of the CRD (capital requirements directive)?

A

Most are exempt from the directive but are subject to financial tests according to their size and activities

21
Q

Under COBS Inducements, what does a firm need to take steps to avoid?

A

That it does not offer, give, solict or accept an inducement or place business in any way likely to conflict with any duty owed to customers

22
Q

Under the good and services FCA guidelines, which areas are considered?

A

Selling - promotion, literature and seminars
Gifts/extras - cant give general advice, IT hardware can only be given as part of a software project, gifts and hospitality reasonable, cannot pay seminar expenses
Communications - can pay travel for visiting a UK office
Training - supplied only if generally available, reasonable travelling costs

23
Q

Under ICOBS - what must be provided before any advice is given?

A

Initial disclosures

Terms of Business

24
Q

When does a cancellation notice under ICOBS not need to be issued?

A

Traded life policies
life policies for 6 months or less
policies where the customer is resident in an EEA state (not UK), outside the EEA and not present in the UK
Pure protection contracts effected by trustees of a occ pension scheme
Policies issued to corporate bodies

25
Q

What are the cancellation periods under ICOBS?

A

14 days for general insurance
30 days for pure protection and PPI

(none required for travel or other short term policies lasting less than 1 month/where performance has already been completed)

26
Q

What is the definition of ‘Information’ under MCOB?

A

Providing accurate and neutral facts, with no comment or opinion as to its merits relative to toher products or options

27
Q

ICOBS introduces three product categories, what are they?

A

General Insurance, pure protection (term assurance, income protection, critical illness), PPI

28
Q

What are individual implications associated with a home reversion plan?

A

Tax, benefits, inheritance and long term financial planning

29
Q

Sale and Rent back (SRB) is considered high risk by the FCA, what are some of the requirements within the regulatory regime?

A

Fixed tenancy agreement of at least 5 years
Non advised sales are not allowed
Firms check affordability and suitability
A check is made of ongoing benefit entitlement
Cooling off period of 14 days
Banning of cold calling, leaflet drops
No use of emotive language such as fast sale, mortgage reduce, cash quickly
An independant valuation is carried out

30
Q

What replaced the KFI for mortgages in March 2019

A

ESIS European Standardised Information Sheet

31
Q

What must an investment business create if it is holding client funds?

A

CASS Resolution Pack (CASS RP)

32
Q

How often would the FCA expect a business to reconcile client funds?

A

Daily

33
Q

If a business held client money over £1M or assets over £10M, what would they need to do?

A

Complete a CMAR via Gabriel monthly

Make a senior manager or director repsonsible for CASS

34
Q

Under PROD (Product intervention and Governance) what requirements should products meet?

A

Meet the needs of one or more identifiable target market
Sold to clients in the target market by appropriate distribution channels
Deliver appropriate client outcomes

35
Q

The FCA is required to notify anyone under its investigation, what are the exceptions to this?

A

Insider dealing, market abuse, misleading statements, breaches of the restriction of financial promotion or promoting collective investment schemes

R01 Jan 2020 (13 decks)

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