Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Detailed FCA > The Regulatory Environment > Flashcards

The Regulatory Environment Flashcards

1
Q

FCA Key Features

A 
Responsible for the conduct of all firms
Responsible for the prudential supervision of all non-PRA firms
Has a rulebook (the FCA Handbook)
Is a company limited by guarantee
Has a board appointed by the Treasury
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

PRA Responsibility

A 
Deposit takers
Insurers
Significant firms
Has a rulebook (the PRA Handbook)
Is the BoE
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Dual regulated firms

A

Prudential regulation from PRA and conduct regulation from the FCA

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Overview of regulatory regime

A

PRA and FCA cooperate and coordinate. PRA has veto power over the FCA. FPC issues directions to the PRA and the FCA.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

FCA accountability

A

Accountable to parliament and HMT

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

FCA Strategic Objectives

A

Ensure relevant markets function well

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

FCA Operational Objectives

A

I-C-C
Integrity
Consumer protection
Competition

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

PRA General Objectives

A

Promote the safety and soundness of PRA-authorised persons.

Business is carried on in a way that avoids adverse effects on stability and minimise adverse effects if failure occurs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

FCA’s risk-based approach to supervision

A

Based on potential impact to FCA’s objectives. More effort allocated to firms posing largest threat to consumers or market integrity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

FCA Pillar 1

A

Proactive firm supervision (Firm systematic framework)

  • Business Model Strategy Analysis
  • Proactive engagement
  • Deep dive assessment
  • Firm Evaluation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

FCA Pillar 2

A

Event driven work

-Reactive supervision

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

FCA Pillar 3

A

Issues and Products supervision

-Thematic reviews

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

How firms are categorised by FCA

A

Fixed portfolio - continue to be subject to a programme of firm or group-specific supervision (Pillar 1)
Flexible portfolio - subject to event-driven reactive supervision (Pillar 2) and thematic or product supervision (Pillar 3) only

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Tools of supervision

A
  • Diagnostic: Identify, assess and measure risks
  • Monitoring: Track the development of identified risks
  • Preventative: Limit or reduce identified risks to prevent them from crystallising
  • Remedial: Respond to risks when they have crystallised
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Outcomes focused regulation

A 
Greater reliance on outcome-focused rules
The conduct risk approach
Allows for:
Innovation and development
Accessibility for smaller firms
Focus on the purpose of regulation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Powers of regulators under FSMA 2000

A

Part 4A authorisation of firms, approval of individuals, recognition of other bodies (e.g exchanges)
Supervision, Enforcement, Sanctions and disciplinary action
Rule making
Prosecution of financial crime

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Treating customers fairly outcome 1+2

A

1 The fair treatment of customers is central to the corporate culture
2 Products and services meet the needs of identified consumer groups

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Treating customers fairly outcome 3+4

A

3 Consumers are provided with clear information before, during and after the point of sale
4 The advice is suitable

19
Q

Treating customers fairly outcome 5+6

A

5 Consumers are provided with what firms have led them to expect
6 Consumers do not face unreasonable post sale barriers

20
Q

PRA Fundamental rules 1-4

A
  1. Integrity
  2. Skill, care and diligence
  3. A firm must act in a prudent manner
  4. Adequate financial resources
21
Q

PRA Fundamental rules 5-8

A
  1. Effective risk strategies and risk management systems
  2. Organise and control its affairs responsibly and effectively
  3. Open and cooperative way with regulators
    8 Prepare for resolution
22
Q

Management information

A

Firm must have management information arrangement to monitor effectiveness

23
Q

TCF

A

TCF is an outcomes-based regime focusing mainly on retail products

24
Q

Principles for businesses 1-3

A
  1. Integrity
  2. Skill, care and diligence
  3. Management and control (SYSC)
25
Q

Principles for businesses 4-7

A
  1. Financial prudence (CRD)
  2. Market conduct (MAR)
  3. Customers’ interests (COBS/CASS)
  4. Communication with clients (COBS/CASS)
26
Q

Principles for businesses 8-11

A
  1. Conflicts of interest (COBS/CASS)
  2. Customers: relationship of trust (COBS/CASS)
  3. Clients’ assets (COBS/CASS)
  4. Relations with clients
27
Q

Consequence of breaching PfB

A

If a firm breaches any of the Principles for Businesses it will be liable to disciplinary sanctions as they are legally binding on firms

28
Q

Senior management arrangements, systems and controls - Purpose

A
  • Encourage directors to take responsibility for the firm’s arrangements on regulatory matters
  • Amplify PfB 3 to organise and control its affairs responsibly and effectively
  • Vest responsibility for effective and responsible organisation in specific director and senior managers
  • Create a common platform of organisational systems and controls (MiFID/CRD)
29
Q

SYSC 4 -General requirements

A
  • Sound governance
  • Experienced management
  • Receive written reports on compliance and internal audit ANNUALLY
  • Apportionment of responsibilities must be CLEAR and APPROPRIATE
30
Q

SYSC 5 - Employees, Agents and other relevant persons

A
  • Skills, knowledge and expertise
  • Segregation of duties
  • Awareness of procedures
  • Monitoring
31
Q

SYSC 6

A
  • Compliance, audit and financial crime
32
Q

Competition and Markets Authority - Powers

A
  • To investigate and block takeovers or mergers if in the interests of completion and consumers
  • Enforce consumer protection legislation (cooperation and coordination in the financial sector)
  • Prosecute unlawful cartel members
33
Q

Information Commissioner’s Office

A
  • To uphold information rights in the public interest
  • To ensure data provides for individuals (DPA)
  • To promote openness by public bodies (FoIA)
34
Q

Pensions Regulator

A

To protect the members of work- based pension schemes (Occupational Pension Scheme)

35
Q

BoE Statutory objective

A

Contribute to protecting and enhancing the stability of the financial systems of the UK

36
Q

Financial Policy Committee

A

Identify, monitor and take action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system.

37
Q

FPC meetings

A

Meets 4 times per year, and issues biannual Financial Stability Reports

38
Q

HMRC

A

Primary tax revenue raising agency of Government. ISA -> tax efficient wrapper

39
Q

The Upper Tribunal (Tax and Chancery Chamber)

A

Hears appeals against FCA, PRA or pensions regulator decisions

40
Q

S138 FSMA 2000

A

Gives legal effect to the rules and guidance of the regulators set out in their Handbooks

41
Q

Binding provisions of FCA/PRA handbook

A

(R) Rules - rules are binding on authorised persons
(D) Directions - binding on those whom they relate, these dictate behaviour to be taken
(P) Statements of Principle - binding upon approved persons
(EU) Text from EU legislation
(UK) Text from UK law

42
Q

Non-binding provisions of FCA/PRA handbook

A

(E) Evidential provisions - non-binding, but show evidence required to demonstrate compliance with a rule
(G) Guidance - non-binding, recommends means of compliance or courses of action to take
(C) Conduct - behaviour that does not amount to market abuse

43
Q

Who funds the FCA

A

Funded by annual levies on its member firms

Detailed FCA (7 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions