The Financial Conduct Authority Handbook Flashcards
The FCA handbook is separated into seven distinguished blocks. What are these blocks?
Block 1 - High-level standards.
Block 2 - sets out Prudential requirements that affect firms (not relevant to IMC)
Block 3 - Business standards
Block 4 - Regulatory processes
Block 5 - Redress
Block 6 - Specialist sourcebooks
Block 7 - Listing, Prospectus and Disclosure
Block 1 of the FCA handbook is “High Level Standards”.
What does this contain?
These are the standards expected for authorised persons (firm) and approved persons
1A. Principles for business (PRIN) - set out the fundamental obligations of all FCA regulated firms (12 foundation principles)
1B. Senior Management Arrangements, Systems and Controls (SYSC) - focuses on the responsibilities of directors and senior management to ensure the firm has appropriate control, supervision and accountability systems in place
1C. Code of Conduct (COCON) - conduct rules for staff operating in firm subject to SM&CR
1D. Threshold Conditions (COND) - minimum statutory conditions that a firm is required to satisfy, and continue to satisfy in order to be given and to retain authorisation
1E. Statements of Principle of Practice for Approved Persons (APER) - standards on behaviour expected from approved persons
1F. Fit and Proper Test for employees and senior personnel (FIT) - minimum standards for someone seeking to take on a senior management function or a certification function
1E. Training and Competence (TC) - require requirements concerning staff compliance. Applies to the initial and ongoing competence of staff and record-keeping.
Block 1 - High Level Standards.
List out all the standard names that apply here
These are the standards expected for authorised persons (firm) and approved persons
1A. Principles for business (PRIN)
1B. Senior Management Arrangements, Systems and Controls (SYSC)
1C. Code of Conduct (COCON)
1D. Threshold Conditions (COND)
1E. Statements of Principle of Practice for Approved Persons (APER)
1F. Fit and Proper Test for employees and senior personnel (FIT)
1E. Training and Competence (TC)
Block 3 of the FCA handbook is “Business Standards”
What does this contain?
Set requirements that affect firms on a day-to-day basis
3A. Conduct of Business Sourcebook (COBS) - conduct of business requirements applying for firms carrying out designated investment business
3B. Market conduct (MAR1 & 2) - rules and guidance primarily for the wholesale and professional markets. Set out rules relating to market abuse (MAR 1) and to price stabilisation after new issue (MAR 2)
3C. Client Assets (CASS) - rules and guidance on holding client assets and money. Includes requirements for segregation and safe custody of assets, statutory trust in respect of client money and retrieving information in the event of insolvency
3D. Product Intervention and Product Governance Sourcebook (PROD) - rules that govern product oversight and governance process. Set out the FCA’s statement of policy on making temporary product intervention rules.
3E. Environmental, Social and Governance (ESG) sourcebook - rules and guidance concerning a firm’s approach to ESG matters
Block 3 - Business Standards.
List out all the standard names that apply here
Set requirements that affect firms on a day-to-day basis
3A. Conduct of Business Sourcebook (COBS)
3B. Market conduct (MAR1 & 2)
3C. Client Assets (CASS)
3D. Product Intervention and Product Governance Sourcebook (PROD)
3E. Environmental, Social and Governance (ESG) sourcebook
Block 4 - Regulatory Processes
List out all the standard names that apply here
Set up the operation of the regulators’ supervisory and disciplinary functions:
4A. Supervision (SUP)
4B. Decision Procedure and Penalties Manual (DEPP)
Block 4 of the FCA handbook is “Regulatory Processes”
What does this contain?
Set up the operation of the regulators’ supervisory and disciplinary functions:
4A. Supervision (SUP) - deals with supervisory issues and requirements concerning the regulators’ relationship with firms, including rules concerning requirement to submit reports to the FCA
4B. Decision Procedure and Penalties Manual (DEPP) - set out the FCA’s decision-making procedures that involve the giving of statutory notices, the FCA’s policy and respect of the imposing fines and amount of penalties, and the conduct of interviews
(how the FCA makes decisions when it needs to take action against a firm. It explains how they give official notices, set fines, and conduct interviews when investigating firms)
Block 5 of the FCA handbook is “Redress”
What does this contain?
Deals with the processes for handling complaints and compensation:
5A. Dispute Resolution: Complaints (DISP) - Contains rules and guidance on:
i. Firms’ internal handling of complaints about the financial services they provide.
ii. The operations of the Financial Ombudsman Service (FOS)
5B. Compensation (COMP) - Rules and guidance governing eligibility under the Financial Services Compensation Scheme (FSCS), the funding of the FSCS and its operation
Block 5. Redress
List out all the standard names that apply here
Deals with the processes for handling complaints and compensation:
5A. Dispute Resolution: Complaints (DISP)
5B. Compensation (COMP)
Block 6 of the FCA handbook is “Specialist sourcebooks”
What does this contain?
This is with regards to specialist entities in the financial system
6A. Collective Investment Schemes (COLL) - provides guidelines for investment companies that have variable capital (ICVCs) and authorised unit trusts (AUTs) in the UK:
i. Authorising them - process for officially allowing these investment companies (ICVCs) and unit trusts (AUTs) to operate.
ii. Their constitution and management - rules for how these investment schemes should be structured and managed, ensuring they run properly and follow the law.
Block 6 - Specialist sourcebooks
List out all the standard names that apply here
This is with regards to specialist entities in the financial system
6A. Collective Investment Schemes (COLL)
Block 7 of the FCA handbook is “Listing, Prospectus and Disclosure”
What does this contain?
7A. Set out the requirements for issuers listed on, or seeking admission to, the Official List of the UK Listing Authority (UKLA)
7B. Covers the rules for sponsors (the companies or people who help others get listed), including:
i. Transitional rules (TR) - for those applying to become a sponsor.
ii. The Prospectus Rules (PR) - what information must be provided to investors when a company wants to list.
iii. Disclosure and Transparency Rules (DTR) - require companies to be open and clear with information for investors after they are listed.
What are FCA’s other regulatory guides?
- Enforcement Guide (EG) - FCA’s approach to using the main enforcement powers given to it under the Financial Services Act 2012
- Perimeter Guidance Manual (PGM) - guidance about circumstances in which authorisation is required, or exempt person status is available. Also includes guidance on activities regulated under the FSMA 2000 and the exclusions that are available.
- Financial Crime Guide - guidance for firms which refers to good practice in relation to preventing money laundering, fraud, bribery and corruption
