Topic 18 (Regulating firms and individual) Flashcards
What is the ‘part 4A permission’
A relevant section of the FSMA 2000 where permission for regulated activities is given
What are the two distinct areas where the FCA defines investments?
- Securities ( shares, debentures, gilts)
2. Contractually-based investments ( life policies, pensions options, futures)
What is the SMCR (senior managers and certification regime)
This framework establishes an individual accountability framework and regulates individual conduct and standards in the financial services industry
In order to be ‘approved’ under the approved persons regime (APER) an individual has to…
- Be deemed ‘fit and proper’
- Comply with statements of principle and a code of practice that details behavioural requirements
- Report anything that might affect their ongoing suitability for the role
What are the 3 tiers under the SMCR framework?
- Core (firms must comply with basic requirements)
- Enhanced (for firms representing greater risk to consumers or markets)
- Limited scope (apply to firms that are already exempt under the APER)
Who is subject to CR (certification regime)?
Individuals in certified functions
- They are not required to secure direct approval from the FCA but the firm certifies their fitness and propriety to carry out the role
What are the 5 code of conduct rules?
- Must act with integrity
- Must act with due skill, care and diligence
- Must be open and co-operative with the FCA, PRA and others
- Must pay due regard to the interests of customers and treat them fairly
- Must observe proper standards of market conduct
To be deemed ‘fit and proper’ to carry out a role, there is a 3 step criteria to follow….?
- Honesty, integrity and reputation
- Competence or Capability
- Financial soundness
What must the individual have to be deemed ‘fit and proper’?
- Obtained a relevant qualification
- Undergone training
- Have a relevant degree of competence
- Has the personal characteristics required
What must senior managers ensure?
- The firm embodies a compliance culture and drives forwards the fair treatment of customers
- All staff have clearly defined responsibilities and are monitored appropriately
- Monitoring and compliance procedures are regular reviewed and updated
FCA supervision falls into 2 categories, what are they?
- Fixed Portfolio
2. Flexible Portfolio
The FCA supervision model is based on 3 pillars, what are they?
- Proactive firm or group supervision
- Event-driven reactive supervision
- Issues and products
Training and Competence rules are particularly relevant to what 3 types of employees?
- Financial Advisors
- Supervisors of the advisors
- Supervisors who oversee certain ‘black office’ admin functions
How does a firm maintain competence?
A review must take place on a regular/frequent basis to asses the employees competence
What MUST a retail investment advisor who has been assessed as competent do?
- Complete a minimum or 35 hours of appropriate continuing professional development in each 12 month period , 21 hours of CPD must be ‘structured CPD’
