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CeMAP Unit 2 > Topic 17 The FCA's Aims & Activities > Flashcards

Topic 17 The FCA's Aims & Activities Flashcards

1
Q

The aim of most modern governments is Economic & Legal environments is to what?

A

Provide a balance between

  • A businesses need to make profit
  • Rights of customers to receive a fair deal
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2
Q

What are all the below?

  • Ensuring that business operating in the industry are authorised & ensure fair treatment to customers
  • Ensuring that business have the necessary business in place to minimise customers financial loss
  • Establishing & understanding accountability at a senior level within financial service organisations
A

Key aims of financial regulation

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3
Q

What are all the below?

  • Ensuring individuals carrying out defined regulated activities have competence to do so
  • Ongoing development & skills & knowledge of individuals working in the industry
  • Ongoing supervision to ensure that regulatory requirements are adhered to prevent problems
  • Actions to be taken when problems arise
A

Key aims of financial regulation

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4
Q

What is regulation?

A

Body of rules that participants in financial services industry must adhere to

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5
Q

What is Supervision?

A

Activities undertaken by regulators ensure participants adhere to regulatory requirements

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6
Q

What are the below

  • Particular Scandal or Crises
  • An increase in customer finance awareness & demands for more customer focus approach
  • Response to changes in lifestyle
  • Developments in business methods
  • Innovation in product design
  • Increasing number & complexity of financial products
A

What legislation has resulted from

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7
Q

Which event has caused this financial regulatory change?

Financial events have shown the need for more diligent financial regulation of banks and lending activities

A

Particular Scandal or Crises

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8
Q

Which event has caused this financial regulatory change?

Demands for a “one stop shop” approach to financial service sales

A

Increase in customer financial awareness

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9
Q

Which event has caused this financial regulatory change?

More relaxed attitude to marriage & divorce has to divorcees to share in former spouses pension benefits

A

Need to respond to changes in lifestyle

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10
Q

Which event has caused this financial regulatory change?

Technology advances have lead to processes changing at all levels. An example is people transact more online than in banks

A

Development in business methods

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11
Q

Which event has caused this financial regulatory change?

Rapid expansion in certain product areas has increased the need for clear information to customers considering a product

A

Innovations in product design

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12
Q

Which event has caused this financial regulatory change?

Made it necessary to provide customers with more information and advice

A

Increasing number & complexity of financial products

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13
Q

What did the Financial Services Act 2012 do?

A
  • Abolition of the Financial Services Act (FSA)
  • Changes to the regulatory system
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14
Q

What did Bank of England & Financial Services Act 2016 do

A
  • Strengthening the governance and Bank of England
  • Establishing a new Prudential Regulation Committee (PRC)
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15
Q

The below are the responsibility of who

  • Responsible for protecting & enhancing monetary & Financial stability
  • Role in regulation of financial services in the UK
  • Maintain Economic Stability
  • Responsible for Payment, settlement systems & Clearing oversight
A

Bank of England

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16
Q

True or False

The Financial Policy Committee (FPC) is a committee of the Bank of England

A

True

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17
Q

The below are the responsibility of who

  • Looks at the economy as a whole
  • No direct regulatory responsibility for a particular area of the economy
  • Various powers to take action where it sees threat to the economy
A

Financial Policy Committee (FPC)

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18
Q

The below are the responsibility of who

  • Sole responsibility for day to day supervision of banks
  • Authorises providers of financial services
  • Part of the Bank of England but operates independently
  • Promote safety & soundness of the firms it’s regulates
  • Protection of insurance policy holders
A

Prudential Regulation Authority (PRA)

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19
Q

Who exercises the powers of the Prudential Regulation Committee (PRC)?

A

Prudential Regulation Authority (PRA)

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20
Q

The below are the responsibility of who

  • Conduct of all retail & wholesale financial firms
  • prudential supervision of firms not regulated by the PRA
A

Financial Conduct Authority (FCA)

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21
Q

What is “Conduct Regulation”?

A

Requirement requiring firms that provide product & services meet customer’s needs

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22
Q

What is “Prudential Regulation”

A
  • Ensuring a business is established on a sound financial basis
  • Aim to limit the risk of a business failing
  • Limit any failure on customers
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23
Q

What are “Systemically Important Providers”?

A

Providers whose failure would have a significant adverse impact on global or national financial system

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24
Q

What are these?

  • Smarter Regulatory Framework
  • Designed Activities Regime (DAR)
  • Oversight of Critical Third Parties (CTP’s)
  • Digital Settlement Assets (DSA’s)
  • Financial Promotions Gateway
  • Improved Access to Cash
A

Financial Services & Markets Act (FSMA) 2023

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25
Q

What are the features of Smarter Regulatory Framework

A
  • Enables retained EU law on financial services & Markets to be revoked
  • Treasury able to make regulations either restarting or amending laws to suit UK
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26
Q

What are the features of Designed Activities Regime (DAR)?

A

UK regulatory regime for activities previously covered by the EU regulations

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27
Q

What are the features of Oversight of Third Parties (OTP’s)?

A

Regulators have limited oversight of certain non-regulated businesses that financial services which firms rely on

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28
Q

What are the features Digital Settlement Assets (DSA)?

A

Allowed government to bring DSA under financial regulation

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29
Q

What are the features of Financial Promotions Gateway?

A

Allows regulated firms to approve financial promotions for non-regulated business have gateway to do so

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30
Q

What are the features of improved access to cash?

A

Current account customers can access cash for free (on withdrawals & deposits)

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31
Q

The Prudential Regulation Authority (PRA) is the prudential regulator to all what firms?

A

PRA regulated firms

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32
Q

The Financial Conduct Authority (FCA) is the prudential regulator to all what firms?

A

Non-regulated firms

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33
Q

The Financial Conduct Authority (FCA) is also what?

A

Conduct of business regulator to UK product & service firms

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34
Q

What are the operational objectives of the FCA?

A
  • To protect consumers from bad conduct
  • To protect financial markets
  • To promote effective competition
35
Q

The secondary objective of the PRA & FCA is what?

A

Facilitate the UK economy’s international competitiveness & growth

36
Q

These are objectives of who?

  • No barriers to entry
  • Customers are empowered to engage in a way to drive competition
  • No single firm dominates them market
  • Firms focus on customer needs
A

How the FCA seeks to promote competition

37
Q

What are the 2 key principles for co-operation between the FCA & PRA?

A
  1. Each regulator’s supervisory judgements will be based on all relevant information
  2. Supervisory activity all not be conducted jointly
38
Q

Why are with-profits regulated by both the PRA & FCA?

PRA

A

PRA because of it’s insurance element that bonuses paid are in line with firm’s safety and soundness

39
Q

Why are with-profits regulated by both the PRA & FCA?

FCA

A

Ensuring that previous allocations are consistent with insurance company’s previous communications to policyholders.

  • In line with FCA’s conduct rules
40
Q

Is this statement correct?

The FCA can enforce the competition’s act 1998 & carry out market studies based on the Enterprise Act 2002

A

This is a correct fact

41
Q

All these are what

  • Competition Powers
  • Product Intervention Powers
  • Power of Disclosure
  • Take Formal Action
A

The FCA’S Powers

42
Q

The below is which power the FCA can enforce?

Open up competition, carry out market studies & make referrals to the CMA

A

Competition Powers

43
Q

The below is which power the FCA can enforce?

Ban or restrict financial products

A

Product Intervention Powers

44
Q

The below is which power the FCA can enforce?

Publish details of warning notices & disciplinary action taken

A

Powers of Disclosure

45
Q

The below is which power the FCA can enforce?

Actions can be taken against misleading financial promotions

A

Power to take formal action

46
Q

Who is responsible for the Financial Services Compensation Scheme (FSCS)

A

Both the FCA & PRA

47
Q

Who is responsible for the Financial Ombudsman Scheme (FOS)?

A

FCA

48
Q

What are the aims of the Competition & Market Act (CMA)?

A

Promote competition for customers

49
Q

All the below are related to which act?

  • Investigating mergers that could affect competition
  • carrying out investigations into markets where competition may not be working
A

Competition & Market Act (CMA)

50
Q

What does the FCA Handbook consist of?

A
  1. Rules
  2. Guidance
51
Q

The rules set out in the FCA Handbook do not create binding obligations that firms have to follow.

True or False

A

False

The obligations are binding

52
Q

What is the purpose of Guidance in the FCA handbook?

A

Explain the rules & indicate ways of complying with them

53
Q

What are evidential provisions in the FCA handbook?

A

Rules that are not binding but relate to binding rules

54
Q

All the below are examples of ?

  • Descriptions of behaviours that we consider to be market abuse
  • Factors we take into account when determining whether or not behaviours amount to market abuse
A

Examples of Evidential Provisons

55
Q

Which organisation has day to day Prudential (Financial) supervision of banks and financial organisation?

A

Prudential Regulation Authority (PRA)

56
Q

Which organisation has supervision of the conduct of all retail & wholesale financial firms and Prudential Regulation of all firms not covered by the Prudential Regulation Authority (PRA) ?

A

Financial Conduct Authority (FCA)

57
Q

The High Level Standards section of the FCA Handbook details overarching standards to who?

A

All firms & authorised individuals

58
Q

All the below are examples of what?

  • Code of Conduct
  • Threshold Conditions
  • Statement of Principles & Code of Practice for approved persons
  • “Fit & Proper” tests for employees & senior personnel
  • Senior management arrangements systems & controls
A

High Level Standards

59
Q

All the below are examples of what?

  • Principles for Business
  • Financial Stability & Market Confidence Sourcebook
  • General Provisions
  • Fees Manual
  • Training & Competance
A

High Level Standards

60
Q

What do Prudential standards covered by the FCA include?

A
  • Financial Standard & Management of firms
  • Valuation of firms assets & liabilities
  • Firms reserves
  • Financial reporting
61
Q

What do the conduct of business sourcebooks consistent of?

A
  • (COBS) Conduct of Business Sourcebooks
  • (BCOBS) Banking Conduct of Business Sourcebooks
  • (ICOBS) Insurance Conduct of Business Sourcebooks
  • (MCOBS) Mortgage & Home Finance Conduct of Business Sourcebooks
62
Q

Market Conduct Sourcebook is of interest to which type of firms?

A

Investment firms

63
Q

What sourcebook related to client assets?

A

Client Assets Sourcebook

64
Q

What part of the FCA handbook does this relate to

  • Guidance for firms wishing to see authorisation
  • Supervision manual setting out the way the FCA regulates and monitors compliance of authorised firms
A

Regulatory Processes

65
Q

Which handbook would cover the below?

  • Dealing with complaints
  • Provision of compensation
A

Redress Handbook

66
Q

Which handbook would cover the below?

  • Credit Unions
  • Professional firms
  • Collective Investments
  • Consumer Credit
  • Investment Funds
  • Recognised Investments
  • Regulated Bonds
A

Specialist Sourcebooks

67
Q

Who do the Principles for Businesses apply to?

A

Behaviour of firms & individuals carrying out the firms activities

68
Q

Which of the 12 Principles of Business is this?

  • A frim must conduct it’s business with Integrity
A

Integrity

69
Q

Which of the 12 Principles of Business is this?

  • A frim must conduct it’s business with Skill, Care & Diligence
A

Skill, Care & Diligence

70
Q

Which of the 12 Principles of Business is this?

A form must take responsible care to organise & control it’s affairs responsibly & effectively with adequate risk management systems

A

Management & Control

71
Q

Which of the 12 Principles of Business is this?

A form must maintain adequate financial resources

A

Financial Prudence

72
Q

Which of the 12 Principles of Business is this?

A firm must observe proper standards of market conduct

A

Market Conduct

73
Q

Which of the 12 Principles of Business is this?

A firm must pay due regard to the interest of it’s customers and treat them fairly

A

Customer’s Interest

74
Q

Which of the 12 Principles of Business is this?

A firm must pay due regard to the information needs of it’s customers and communicate information in a way that is clear, fair & not misleading

A

Communications with Clients

75
Q

Which of the 12 Principles of Business is this?

  • A firm must manage conflicts of interest fairly, both between itself & it’s customers & between one customer and another
A

Conflicts of Interest

76
Q

Which of the 12 Principles of Business is this?

  • A firm must take reasonable care to ensure the suitability of it’s advice & discretionary decisions for any customer who is entitled to rely on it’s judgement
A

Customer relationships of trust

77
Q

Which of the 12 Principles of Business is this?

A firm must arrange adequate protection for clients’s assets when it’s responsible for them

A

Client’s Assets

78
Q

Which of the 12 Principles of Business is this?

A firm must deal with it’s regulators in an open & co-operative way, & must disclose anything of which the FCA or PTA would reasonably expect notice

A

Regulations with Regulators

79
Q

Which of the 12 Principles of Business is this?

A firm must deliver good outcomes for retail customers

A

Consumer Duty

80
Q

Key individuals within a firm must be pre-approved by the FCA or PRA before they are appointed.

True or False

A

True

81
Q

Individuals must be certified as fit & proper to carry out their role

True or False

A

True

82
Q

Who is responsible to the fair treatment of customers within a firm?

A

Senior Management

83
Q

When would the FCA regulate a firms systems and controls?

A

A regular intervals

CeMAP Unit 2 (11 decks)

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