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
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
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
4
Q
What is regulation?
A
Body of rules that participants in financial services industry must adhere to
5
Q
What is Supervision?
A
Activities undertaken by regulators ensure participants adhere to regulatory requirements
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
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
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
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
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
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
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
13
Q
What did the Financial Services Act 2012 do?
A
- Abolition of the Financial Services Act (FSA)
- Changes to the regulatory system
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)
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
16
Q
True or False
The Financial Policy Committee (FPC) is a committee of the Bank of England
A
True
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)
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)
19
Q
Who exercises the powers of the Prudential Regulation Committee (PRC)?
A
Prudential Regulation Authority (PRA)
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)
21
Q
What is “Conduct Regulation”?
A
Requirement requiring firms that provide product & services meet customer’s needs
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
23
Q
What are “Systemically Important Providers”?
A
Providers whose failure would have a significant adverse impact on global or national financial system
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
25
What are the features of Smarter Regulatory Framework
- Enables retained EU law on financial services & Markets to be revoked
- Treasury able to make regulations either restarting or amending laws to suit UK
26
What are the features of Designed Activities Regime (DAR)?
UK regulatory regime for activities previously covered by the EU regulations
27
What are the features of Oversight of Third Parties (OTP's)?
Regulators have limited oversight of certain non-regulated businesses that financial services which firms rely on
28
What are the features Digital Settlement Assets (DSA)?
Allowed government to bring DSA under financial regulation
29
What are the features of Financial Promotions Gateway?
Allows regulated firms to approve financial promotions for non-regulated business have gateway to do so
30
What are the features of improved access to cash?
Current account customers can access cash for free (on withdrawals & deposits)
31
The Prudential Regulation Authority (PRA) is the prudential regulator to all what firms?
PRA regulated firms
32
The Financial Conduct Authority (FCA) is the prudential regulator to all what firms?
Non-regulated firms
33
The Financial Conduct Authority (FCA) is also what?
Conduct of business regulator to UK product & service firms
34
What are the operational objectives of the FCA?
- To protect consumers from bad conduct
- To protect financial markets
- To promote effective competition
35
The secondary objective of the PRA & FCA is what?
Facilitate the UK economy's international competitiveness & growth
36
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
How the FCA seeks to promote competition
37
What are the 2 key principles for co-operation between the FCA & PRA?
1. Each regulator's supervisory judgements will be based on all relevant information
2. Supervisory activity all not be conducted jointly
38
Why are with-profits regulated by both the PRA & FCA?
PRA
PRA because of it's insurance element that bonuses paid are in line with firm's safety and soundness
39
Why are with-profits regulated by both the PRA & FCA?
FCA
Ensuring that previous allocations are consistent with insurance company's previous communications to policyholders.
- In line with FCA's conduct rules
40
Is this statement correct?
The FCA can enforce the competition's act 1998 & carry out market studies based on the Enterprise Act 2002
This is a correct fact
41
All these are what
- Competition Powers
- Product Intervention Powers
- Power of Disclosure
- Take Formal Action
The FCA'S Powers
42
The below is which power the FCA can enforce?
Open up competition, carry out market studies & make referrals to the CMA
Competition Powers
43
The below is which power the FCA can enforce?
Ban or restrict financial products
Product Intervention Powers
44
The below is which power the FCA can enforce?
Publish details of warning notices & disciplinary action taken
Powers of Disclosure
45
The below is which power the FCA can enforce?
Actions can be taken against misleading financial promotions
Power to take formal action
46
Who is responsible for the Financial Services Compensation Scheme (FSCS)
Both the FCA & PRA
47
Who is responsible for the Financial Ombudsman Scheme (FOS)?
FCA
48
What are the aims of the Competition & Market Act (CMA)?
Promote competition for customers
49
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
Competition & Market Act (CMA)
50
What does the FCA Handbook consist of?
1. Rules
2. Guidance
51
The rules set out in the FCA Handbook do not create binding obligations that firms have to follow.
True or False
False
The obligations are binding
52
What is the purpose of Guidance in the FCA handbook?
Explain the rules & indicate ways of complying with them
53
What are evidential provisions in the FCA handbook?
Rules that are not binding but relate to binding rules
54
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
Examples of Evidential Provisons
55
Which organisation has day to day **Prudential (Financial)** supervision of banks and financial organisation?
Prudential Regulation Authority (PRA)
56
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) ?
Financial Conduct Authority (FCA)
57
The High Level Standards section of the FCA Handbook details overarching standards to who?
All firms & authorised individuals
58
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
High Level Standards
59
All the below are examples of what?
- Principles for Business
- Financial Stability & Market Confidence Sourcebook
- General Provisions
- Fees Manual
- Training & Competance
High Level Standards
60
What do Prudential standards covered by the FCA include?
- Financial Standard & Management of firms
- Valuation of firms assets & liabilities
- Firms reserves
- Financial reporting
61
What do the conduct of business sourcebooks consistent of?
- (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
Market Conduct Sourcebook is of interest to which type of firms?
Investment firms
63
What sourcebook related to client assets?
Client Assets Sourcebook
64
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
Regulatory Processes
65
Which handbook would cover the below?
- Dealing with complaints
- Provision of compensation
Redress Handbook
66
Which handbook would cover the below?
- Credit Unions
- Professional firms
- Collective Investments
- Consumer Credit
- Investment Funds
- Recognised Investments
- Regulated Bonds
Specialist Sourcebooks
67
Who do the Principles for Businesses apply to?
Behaviour of firms & individuals carrying out the firms activities
68
Which of the 12 Principles of Business is this?
- A frim must conduct it's business with Integrity
Integrity
69
Which of the 12 Principles of Business is this?
- A frim must conduct it's business with Skill, Care & Diligence
Skill, Care & Diligence
70
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
Management & Control
71
Which of the 12 Principles of Business is this?
A form must maintain adequate financial resources
Financial Prudence
72
Which of the 12 Principles of Business is this?
A firm must observe proper standards of market conduct
Market Conduct
73
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
Customer's Interest
74
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
Communications with Clients
75
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
Conflicts of Interest
76
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
Customer relationships of trust
77
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
Client's Assets
78
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
Regulations with Regulators
79
Which of the 12 Principles of Business is this?
A firm must deliver good outcomes for retail customers
Consumer Duty
80
Key individuals within a firm must be pre-approved by the FCA or PRA before they are appointed.
True or False
True
81
Individuals must be certified as fit & proper to carry out their role
True or False
True
82
Who is responsible to the fair treatment of customers within a firm?
Senior Management
83
When would the FCA regulate a firms systems and controls?
A regular intervals
