The UK Financial Regulators Flashcards
Which regulator is responsible for authorisation, prudential regulation and supervision of building societies, credit unions, insurers and major investment firms
PRA
Who governs the PRA
PRC
What is the primaryobjective of the PRA
Promoting safety and soundness
Who is responsible for macro-prudential oversight of the EU system
European systemic risk board
What is the responsibilities of the financial policy committee
Spotting systemic risks in structural features of financial Markets or distribution of risk in a sector
What are the 8 regulatory principles of the FCA
Efficiency and economy Proportionality Sustainable growth Responsibility of consumers Senior management responsibility Recognising differences in diff types of business Openness and disclosure Transparency
What are the 3 objectives of the FCA
Protect consumers
Protect financial markets
Promote competition
What is authorisation aka
Part 4a permission
To whom is the FCA answerable to
Treasury
Which panels is the FCA required to ,so twin and consider the views of
Financial services practitioner panel
Consumer panel
Small business practitioner panel
Market practitioner panel
Who recommends disciplinary actions by the FCA and which committee then considers these
Enforcement staff and the regulatory decisions committee
Who handles appeals on FCA decisions
The upper tribunal
What civil actions can the FCA take
Injunctions
Ordering payment of restitution
Granting insolvency orders
What activities can result in criminal proceedings
Falsely claiming to be FCA authorised
Carrying on regulated activity without authorisation
Making misleading statements to induce investment
Failing to cooperate with FCA investigations
What is the maximum sentence for insider dealing
7 years and an unlimited fine
What is the maximum sentence an AMLO could receive
Up to 2 years in prison and a fine
What is the sentence for failure to report money laundering
5 years in prison
How does FCA approach risk based supervision
Individually risk asses firms and focuses on higher risk,
Potential risks are prioritised by impact and probability analysis
What are the 3 pillars of The FCA risk framework
- Proactive firm/group supervision
- Event driven, reactive supervision
- Thematic approach
What are the 2 categories of firms in relation to the level of FCA supervision
Fixed portfolio
Flexible portfolio
How many firms does the FCA supervise for prudential matters
18,000
What are the categories, in order of highest to lowest risk, of firms for prudential supervision by the FCA
P1
P2
P3
What is the compliance controlled function
Cf10
What is free asset ratio
Surplus assets held by life office divided by its liabilities expressed as a % of total assets
What are the HLS: Threshold Conditions (basic description as opposed to list of what they actually are)
The minimum terms for a firm to retain authorisation
What is the 2nd threshold condition
If a person is a corporate body constituted under UK law, it’s head office and registered office should be in the UK
What is the 3rd Threshold Condition
A person must be capable of being effectively supervised by the FCA
What is the 4th Threshold Condition
Resources must be appropriate in relation to the regulated activity they wish to carry out
What is the 5th threshold condition
A firm must satisfy that they are fit and proper
What is the 7th threshold condition
The business model must be suitable
What is HLS: Principles of business (PRIN)
General statement if fundamental obligations of all authorised firms
What does SYSC 2 Senior Management Arrangement state
Firms should appoint individuals to controlled functions
Ultimate responsibility lies with the CEO
What does SYSC3Systems and Controls state
They should be appropriate, regularly reviewed and should cover: Reporting lines The compliance function. Risk assessment Mi Honesty and competency of employees Remuneration Business continuity Record keeping
What is included in SYSC 11-17
Risk systems and Controls, mainly concerned with insurers
What does SYSC 18 Whistleblowing state
Workers should be protected if aware of suspicious or criminal activity
What does SYSC19 Remuneration state
Firms should establish procedures that are consistent with and pro,one effective risk management
Who does SYSC20 Reverse stress testing apply to
PRA authorised banks, building societies, large investment firms
What do the 2 parts of HLS: Financial Stability and Market Confidence (FINMAR) state
Ability to require information relevant to stability
Rules and guidance in relation to short selling
When did Training and Competence (TC) become an HLS
2011
What are the main HLS regulatory obligations for individuals
APER - code of practice for approved persons
FIT - fit and proper test
COCON-code of conduct
What does GENPRU of block 2. Of the handbook state (1-2.2)
GENPRU1- general requirements of adequacy of financial resource
GENPRU2- capital resource including CRD
GENPRU2.1- introduces fixed overhead requirement for BIPRU investment firms
GENPRU2.2- guidance on eligible capital
Which firms does BIPRU affect
Those subject to CRDIII
What does BIPRU state
Firms should ensure their business model has a sufficient level of liquid capital
Who does IFPRU apply to
Firms subject to CRDIV
What does MIPRU set out
Professional indemnity insurance and CRRs for home finance providers and intermediaries and GI intermediaries
What does IPRU-INV set out
Professional indemnity and CRRs for simpler investment firms
What Block 3 business standards apply to investment advice firms
COBS
What does COBS1 state
Detailed guidance on how to deal with customers
What are the COBS obligations (COBS2)
Firms must take steps to ensure it doesn’t give, accept, offer or solicit inducements
Who does ICOBS apply to
Non investment or insurance advice firms
What are the 3 product categories set out in ICOBS
GI products
Pure protection
PPI
Under ICOBS, what is the cancellation period for GI products
14 days
Under ICOBS what is the cancellation period for protection and PPI
30 days
When must clients be given notice of renewal terms according to ICOBS
In good time
Under ICOBS what must the intermediary provide the client with before offering advice
Initial disclosures and or terms of business
What is MCOBS
Regulatory rules on home finance advice
What are the 4 categories of mortgage firms under MCOBS
Lenders
Administrators
arrangers
Advisors
Which mortgage contracts aren’t regulated
Where the buyer is a company
Buy to let mortgages
What type of info should clients receive before proceeding with equity release
Clear, concise and consistent information including risk warnings
What regulations protect consumers for sale and rent back schemes
Ensure have security of tenure of at least 5 years
Non advised sales aren’t allowed
14 day cooling off period
Banned use of emotive terms
Independent valuation must be carried out
When was the mortgage market review reviewed
2009
What are the key features of the mortgage market review
Affordability tests,
Banning self certified mortgages
Banning toxic combinations
Banning arrears charges where the borrowe is already repaying
Mortgage advisers personally accountable to FCA
In what circumstances does the FCA regulate mortgages (3)
Where a lender provides credit
The obligation is secured by a legal first mortgage on uk land
At least 40% will be used as dwelling for the borrower
When were the rules of the mortgage credit directive implemented by the FCA
21/3/2016
Does the mortgage credit directive apply to second charge mortgages
Yes
What were the main changes to mcobs as a result of the mortgage credit directive
Need to provide a binding mortgage offer with at least a 7 day reflection period
New disclosure requirements
Clients can ask for info on commission
What level of qualification must a mortgage advisor have following mortgage credit directive
Relevant level 3
Under the CASS rules relating to assets, what must a firm do
Separate clients assets from its own
Must create a resolution pack to promote speedier return of client assets and money to the client upon failure of firm
UnderCASS relating to client money, what must a firm do
Must be held seperately and then paid into the account by cob the next day
Client money reconciliation must be performed as often as necessary (1x a day)
What does Market Conduct (MAR) rules prohibit
Disseminating false or misleading information
Giving a false or misleading impression
Making artificial transactions
What does Block4: Regulatory processes describe
Operation of the FCA supervisory and disciplinary functions
What does Regulatory Processes:decision procedure and penalties (DEPP) say about enforcement
Enforcement officers can visit, demand access to documents and take copies, or if necessary obtain a warrant to do so
What are the notification requirements under block 4 regulatory processes
The FCA is required to notify a person under investigation that they are and must state the reasons and provisions under which it has begun and further tell them if the scope changes.UNLESS regarding insider dealing, market abuse, misleading statements and breaches of restriction of FP
What does Block5: redress-complaints and compensation set out
The FCA has appointed a complaints commissioner to investigate and report to FCA
Complaints can be made by anyone directly affected by FCA action or inaction
What is block 6 of the FCA handbook
Specialist sourcebooks applying to individual business sectors
What is in block 7 of the FCA handbook
Listing, prospectus and disclosure
U.K. Listing authority rules
What is block 8 of the FCA
Handbook guides
A basic overview of certain topics
What is in block 9 of he FCA handbook
Regulatory guides -
The enforcement guide
Financial crime guide
Perimeter guidance rule
When was the first consumer credit act
1974
What were the main things in the consumer credit act
Affects anyone who provides credit or advice
On loans up to£25,000
Required licence from Office of Fair Trading
Regulates advertisements and quotations
Regulates cancellation rights and cooling off periods
Defines the action a lender must take to enforce the agreement if a borrower defaults
When was the second consumer credit act
2006
What were the main changes made by the consumer credit act 2006
Definition of individual was changed to include sole traders, small partnerships and unincorporated associations
Extended the jurisdiction of the FOS
£25,000 limit given exemption of purpose of business and high net worth individuals
Debt administration services and credit info services now regulated
When did the FCA take over from the office of fair trading
2014
When did the consumer credit directive come into force
2011
What changes did the consumer credit directive make
None
What is the role of the FCA in unfair contract terms
Responsible for considering fairness of standard terms in financial services contracts
