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R01 > The UK Financial Regulators > Flashcards

The UK Financial Regulators Flashcards

1
Q

Which regulator is responsible for authorisation, prudential regulation and supervision of building societies, credit unions, insurers and major investment firms

A

PRA

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2
Q

Who governs the PRA

A

PRC

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3
Q

What is the primaryobjective of the PRA

A

Promoting safety and soundness

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4
Q

Who is responsible for macro-prudential oversight of the EU system

A

European systemic risk board

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5
Q

What is the responsibilities of the financial policy committee

A

Spotting systemic risks in structural features of financial Markets or distribution of risk in a sector

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6
Q

What are the 8 regulatory principles of the FCA

A 
Efficiency and economy 
Proportionality
Sustainable growth 
Responsibility of consumers 
Senior management responsibility 
Recognising differences in diff types of business
Openness and disclosure
Transparency
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7
Q

What are the 3 objectives of the FCA

A

Protect consumers
Protect financial markets
Promote competition

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8
Q

What is authorisation aka

A

Part 4a permission

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9
Q

To whom is the FCA answerable to

A

Treasury

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10
Q

Which panels is the FCA required to ,so twin and consider the views of

A

Financial services practitioner panel
Consumer panel
Small business practitioner panel
Market practitioner panel

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11
Q

Who recommends disciplinary actions by the FCA and which committee then considers these

A

Enforcement staff and the regulatory decisions committee

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12
Q

Who handles appeals on FCA decisions

A

The upper tribunal

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13
Q

What civil actions can the FCA take

A

Injunctions
Ordering payment of restitution
Granting insolvency orders

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14
Q

What activities can result in criminal proceedings

A

Falsely claiming to be FCA authorised
Carrying on regulated activity without authorisation
Making misleading statements to induce investment
Failing to cooperate with FCA investigations

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15
Q

What is the maximum sentence for insider dealing

A

7 years and an unlimited fine

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16
Q

What is the maximum sentence an AMLO could receive

A

Up to 2 years in prison and a fine

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17
Q

What is the sentence for failure to report money laundering

A

5 years in prison

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18
Q

How does FCA approach risk based supervision

A

Individually risk asses firms and focuses on higher risk,

Potential risks are prioritised by impact and probability analysis

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19
Q

What are the 3 pillars of The FCA risk framework

A
  1. Proactive firm/group supervision
  2. Event driven, reactive supervision
  3. Thematic approach
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20
Q

What are the 2 categories of firms in relation to the level of FCA supervision

A

Fixed portfolio

Flexible portfolio

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21
Q

How many firms does the FCA supervise for prudential matters

A

18,000

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22
Q

What are the categories, in order of highest to lowest risk, of firms for prudential supervision by the FCA

A

P1
P2
P3

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23
Q

What is the compliance controlled function

A

Cf10

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24
Q

What is free asset ratio

A

Surplus assets held by life office divided by its liabilities expressed as a % of total assets

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25
Q

What are the HLS: Threshold Conditions (basic description as opposed to list of what they actually are)

A

The minimum terms for a firm to retain authorisation

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26
Q

What is the 2nd threshold condition

A

If a person is a corporate body constituted under UK law, it’s head office and registered office should be in the UK

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27
Q

What is the 3rd Threshold Condition

A

A person must be capable of being effectively supervised by the FCA

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28
Q

What is the 4th Threshold Condition

A

Resources must be appropriate in relation to the regulated activity they wish to carry out

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29
Q

What is the 5th threshold condition

A

A firm must satisfy that they are fit and proper

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30
Q

What is the 7th threshold condition

A

The business model must be suitable

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31
Q

What is HLS: Principles of business (PRIN)

A

General statement if fundamental obligations of all authorised firms

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32
Q

What does SYSC 2 Senior Management Arrangement state

A

Firms should appoint individuals to controlled functions

Ultimate responsibility lies with the CEO

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33
Q

What does SYSC3Systems and Controls state

A 
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
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34
Q

What is included in SYSC 11-17

A

Risk systems and Controls, mainly concerned with insurers

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35
Q

What does SYSC 18 Whistleblowing state

A

Workers should be protected if aware of suspicious or criminal activity

36
Q

What does SYSC19 Remuneration state

A

Firms should establish procedures that are consistent with and pro,one effective risk management

37
Q

Who does SYSC20 Reverse stress testing apply to

A

PRA authorised banks, building societies, large investment firms

38
Q

What do the 2 parts of HLS: Financial Stability and Market Confidence (FINMAR) state

A

Ability to require information relevant to stability

Rules and guidance in relation to short selling

39
Q

When did Training and Competence (TC) become an HLS

A

2011

40
Q

What are the main HLS regulatory obligations for individuals

A

APER - code of practice for approved persons
FIT - fit and proper test
COCON-code of conduct

41
Q

What does GENPRU of block 2. Of the handbook state (1-2.2)

A

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

42
Q

Which firms does BIPRU affect

A

Those subject to CRDIII

43
Q

What does BIPRU state

A

Firms should ensure their business model has a sufficient level of liquid capital

44
Q

Who does IFPRU apply to

A

Firms subject to CRDIV

45
Q

What does MIPRU set out

A

Professional indemnity insurance and CRRs for home finance providers and intermediaries and GI intermediaries

46
Q

What does IPRU-INV set out

A

Professional indemnity and CRRs for simpler investment firms

47
Q

What Block 3 business standards apply to investment advice firms

A

COBS

48
Q

What does COBS1 state

A

Detailed guidance on how to deal with customers

49
Q

What are the COBS obligations (COBS2)

A

Firms must take steps to ensure it doesn’t give, accept, offer or solicit inducements

50
Q

Who does ICOBS apply to

A

Non investment or insurance advice firms

51
Q

What are the 3 product categories set out in ICOBS

A

GI products
Pure protection
PPI

52
Q

Under ICOBS, what is the cancellation period for GI products

A

14 days

53
Q

Under ICOBS what is the cancellation period for protection and PPI

A

30 days

54
Q

When must clients be given notice of renewal terms according to ICOBS

A

In good time

55
Q

Under ICOBS what must the intermediary provide the client with before offering advice

A

Initial disclosures and or terms of business

56
Q

What is MCOBS

A

Regulatory rules on home finance advice

57
Q

What are the 4 categories of mortgage firms under MCOBS

A

Lenders
Administrators
arrangers
Advisors

58
Q

Which mortgage contracts aren’t regulated

A

Where the buyer is a company

Buy to let mortgages

59
Q

What type of info should clients receive before proceeding with equity release

A

Clear, concise and consistent information including risk warnings

60
Q

What regulations protect consumers for sale and rent back schemes

A

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

61
Q

When was the mortgage market review reviewed

A

2009

62
Q

What are the key features of the mortgage market review

A

Affordability tests,
Banning self certified mortgages
Banning toxic combinations
Banning arrears charges where the borrowe is already repaying
Mortgage advisers personally accountable to FCA

63
Q

In what circumstances does the FCA regulate mortgages (3)

A

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

64
Q

When were the rules of the mortgage credit directive implemented by the FCA

A

21/3/2016

65
Q

Does the mortgage credit directive apply to second charge mortgages

A

Yes

66
Q

What were the main changes to mcobs as a result of the mortgage credit directive

A

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

67
Q

What level of qualification must a mortgage advisor have following mortgage credit directive

A

Relevant level 3

68
Q

Under the CASS rules relating to assets, what must a firm do

A

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

69
Q

UnderCASS relating to client money, what must a firm do

A

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)

70
Q

What does Market Conduct (MAR) rules prohibit

A

Disseminating false or misleading information
Giving a false or misleading impression
Making artificial transactions

71
Q

What does Block4: Regulatory processes describe

A

Operation of the FCA supervisory and disciplinary functions

72
Q

What does Regulatory Processes:decision procedure and penalties (DEPP) say about enforcement

A

Enforcement officers can visit, demand access to documents and take copies, or if necessary obtain a warrant to do so

73
Q

What are the notification requirements under block 4 regulatory processes

A

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

74
Q

What does Block5: redress-complaints and compensation set out

A

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

75
Q

What is block 6 of the FCA handbook

A

Specialist sourcebooks applying to individual business sectors

76
Q

What is in block 7 of the FCA handbook

A

Listing, prospectus and disclosure

U.K. Listing authority rules

77
Q

What is block 8 of the FCA

A

Handbook guides

A basic overview of certain topics

78
Q

What is in block 9 of he FCA handbook

A

Regulatory guides -
The enforcement guide
Financial crime guide
Perimeter guidance rule

79
Q

When was the first consumer credit act

A

1974

80
Q

What were the main things in the consumer credit act

A

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

81
Q

When was the second consumer credit act

A

2006

82
Q

What were the main changes made by the consumer credit act 2006

A

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

83
Q

When did the FCA take over from the office of fair trading

A

2014

84
Q

When did the consumer credit directive come into force

A

2011

85
Q

What changes did the consumer credit directive make

A

None

86
Q

What is the role of the FCA in unfair contract terms

A

Responsible for considering fairness of standard terms in financial services contracts

R01 (10 decks)

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