Topic 17 - The FCA’s Aims and Activities

Question 1

FS Aims and regulations

Answer 1

• ensure businesses conduct business fairly towards their customers
• ensure businesses have financial arrangements to minimise loss to customers
• Accountability at senior level within FS organisations
• Ensuring the individuals carrying out regulated activities are fit to do so
• Ongoing development of the individuals working in industry
• Supervision to ensure regulatory requirements are being adhered to
• Actions taken when problems arise

Question 2

Regulation

Answer 2

The body of rules created by regulatory bodies, must be adhered to

Question 3

Supervision

Answer 3

Range of activities carried out by regulators to ensure rules are being adhered to

Question 4

Prudential regulation authority (PRA)

Answer 4

Day to day financial supervision of banks and financial institutions.

Question 5

Conduct regulation

Answer 5

Regulation of firms that provide products and services. Make sure they meet consumer needs and act fairly

Question 6

Systemically important providers

Answer 6

Providers whose failure would have significant adverse impact on national/global scale. Usually have large customer base

Question 7

FCA

Answer 7

Responsibility for the conduct of all retail and wholesale financial firms

Question 8

FCA powers

Answer 8

Open up competition in the marketplace

Ban or restrict financial products

To disclose details of warning notices issued and disciplinary actions taken

Power to take action on misleading financial promotions

Question 9

What’s in the FCA handbook?

Answer 9

Requirements of firms that operate in financial services industry. Consists of rules and guidance

Question 10

Other main areas of the FCA Handbook

Answer 10

• High level standards - applies to authorised firms and individuals
• Prudential standards - looks at financial management of firms
• Business standards - found in sourcebooks such as conduct of business (COBS), market conduct and client assets.
• Regulatory processes - rules/guidance for firms wishing to be authorised
• Redress/specialist sourcebooks - dealing with complaints and arrangements for third party firms.

Question 11

Senior management functions

Answer 11

Key individuals within a firm who perform significant roles

Question 12

Certification functions

Answer 12

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

Question 13

Management information (MI)

Answer 13

Data used to measure business performance

Question 14

The FCA six outcomes

Answer 14

1. Consumers are confident in the firms treatment
2. Products are designed to meet needs of consumers
3. Consumers are provided with clear info throughout process
4. Any advice given is suitable to customers situation
5. Product and services perform as customers expect
6. No barriers to switching products, making a claim or complaining

Question 15

Whistleblowing

Answer 15

Firms should have whistleblowing procedures to enable employees to report serious circumstance or behaviour of the firm

Question 16

FCA and financial crime

Answer 16

Operation duty to reduce financial crime such as:

Market abuse - insider dealings for personal gain or market manipulation.

Money laundering