Topic 8 Flashcards
Name the FCA’s 11 principles for business
1 Integrity- A firm must conduct its business with integrity.
2 Skill, care and diligence -A firm must conduct its business with due skill, care and diligence.
3 Management and control
A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.
4 Financial prudence
A firm must maintain adequate financial resources.
5 Market conduct
A firm must observe proper standards of market conduct.
6 Customers’ interests
A firm must pay due regard to the interests of its customers and treat them fairly.
7 Communications with clients
A firm must pay due regard to the information needs of its clients, and communicate information to them in a way which is clear, fair and not misleading.
8 Conflicts of interest
A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.
9 Customers: relationships of trust
A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment.
10 Clients’ assets
A firm must arrange adequate protection for clients’ assets when it is responsible for them.
11 Relations with regulators
A firm must deal with its regulators in an open and cooperative way, and must disclose to the FCA appropriately anything relating to the firm of which that regulator would reasonably expect notice.
Define COBS 2.1 from the FCA Handbook
COBS 2.1 requires a firm to act “honestly, fairly and professionally” in
accordance with the best interests of its client.
List the 4 key drivers in corporate culture that the FCA say can cause harm for consumers
- purpose;
- leadership;
- approach to rewarding and managing people;
- governance.
Name 2 types of market abuse
- Insider dealing, where a person who has information not available to other investors (eg, a director with knowledge of a takeover bid) makes use of
that information for personal gain. - Market manipulation, where a person knowingly gives out false or misleading information (for instance, about a company’s financial circumstances) to influence the price of a share for personal gain.
Name the 3 money laundering offences
- Concealing or disguising criminal property – concealing, disguising, converting, transferring or removing criminal property or any rights
connected. Penalty – maximum 14 years imprisonment, a fine or both. - Arranging – entering into an arrangement, knowing or suspecting that it is to facilitate the acquisition, retention, use or control of criminal property by or on behalf of another person. Penalty – maximum 14 years imprisonment, a fine or both.
- Acquisition, use and possession of criminal property. Penalty – maximum 14 years imprisonment, a fine or both.
Define the UKs 2 primary anti-money-laundering acts and what they include
Proceeds of crime act 2002:
It deals with the laundering of the proceeds of all forms of crime, and includes an obligation to report suspicions about the laundering of proceeds of all forms of crime.
Terrorism act 2000:
The Act defines terrorism as the use of (or threat of) serious violence against a person or serious damage to property or electronic systems, with the purpose of influencing a government, intimidating the public or advancing a political, religious or ideological cause.
The Act specifically mentions as an offence “the retention or control of terrorist property, by concealment, removal from the jurisdiction, transfer to
nominees or in any other way” – in other words, money laundering.
What do the Financial Action Task Force do(FATF)?
The Financial Action Task Force (FATF) was established in 1989 to co-ordinate the international fight against money laundering; it is not a law-making body.
The work of the FATF falls into three main areas:
- setting appropriate standards for national anti-money-laundering programmes – set out in a list of 40 ‘recommendations’ incorporating
minimum standards for the measures that countries should have in place;
- evaluating how individual countries have implemented these standards;
- identifying trends in money-laundering methods.
What does the National Crime Agency(NCA) do?
“The National Crime Agency leads the UK’s fight to cut serious and organised crime, protecting the public by disrupting and bringing to justice those serious and organised criminals who pose the highest risk to the UK.” (NCA, no date)
How much money would a new customer to the financial services industry have to spend to have their ID Checked?
in the case of new customers (and any existing customers whose identity has not been verified previously), when the value of a transaction exceeds
€15,000, whether as a single transaction or as a series of linked transactions; for life assurance policies the limits are €1,000 for annual premiums and €2,500 for single premiums;
What is the purpose of the Data protection Act?
The purpose of Data Protection legislation is, broadly speaking, to give private individuals control over the use of personal data about themselves held by commercial (and other) organisations. It does so by establishing a series of data protection principles, together with enforcement processes.
What is the FCA’s role in financial crime?
the FCA’s regulatory guide on financial crime is designed to help firms establish, implement and maintain effective financial crime policies, systems and controls and consists of two parts:
- Financial Crime Guide: A firm’s guide to countering financial crime risks (FGC) provides guidance on financial crime systems and controls,
generally and concerning specific risks such as money laundering, bribery, corruption and fraud (FCA, 2018b). - Financial Crime Thematic Reviews (FCTR) provides summaries of FCA thematic reviews of various financial crime risks and sets out examples of
good and poor practices included in the review findings.
Name the 7 data protection principles
1) Lawfulness, fairness and transparency: data must be processed fairly, lawfully and in a transparent manner – the data controller is required to
tell the individual what information will be processed, why and whether it will be disclosed to any other parties.
2) Purpose limitation: data can only be collected for specified, explicit and legitimate purposes.
3) Data minimisation: data must be adequate and relevant for the purpose, but not excessive.
4) Accuracy: data must be accurate and up to date (where necessary), and reasonable steps must be taken to correct or erase inaccurate data without delay.
5) Storage limitation: data must be kept in a form that permits identification of the data subject for no longer than is necessary.
6) Integrity and confidentiality: processing must ensure appropriate security, including protection against unauthorised or unlawful processing and
accidental loss, destruction or damage.
7) Accountability: the controller is responsible for compliance with the principles.
What is the time limit on complaints for the FCA?
Complaints must be made within the later of six years after the event causing the complaint, or three years from the date when the complainant became (or should have become) aware that there was cause for complaint. The three-year limit helps people who did not realise they had cause for complaint until later.
What does the Financial Services Compensation Scheme(FSCS) do?
(FSCS) is in place to provide compensation for customers of regulated firms that become insolvent or are
in default and cannot meet a claim. The definition of eligible claimants who can claim under the scheme is complex and to some extent dependent on the product at issue. In general, retail consumers, sole traders, small companies and small partnerships (both with turnover below £1m) and smaller charities are eligible. Some exceptions apply to larger corporations and charities that need to claim for insurance and deposit defaults.
Give 7 types of ‘special category’ data.
1.racial origin;
2.religious beliefs;
3. political persuasion;
4. physical health;
5. genetic and biometric data for ID purposes;
6. mental health;
7. sexual orientation.
