Topic Ten

Question 1

Legislation exists mainly for the following reasons:

Answer 1

o To sustain systematic stability
o To protect the consumer
o Maintain safety and soundness of financial institutions

Question 2

The principle of proportionality requires that

Answer 2

burdens or restrictions placed on firms should be proportionate to the benefits expected.

Question 3

Firms involved in the provision of consumer credit are regulated by:

Answer 3

FCA

Question 4

Which of the following provides the basis for current legislation related to the capital adequacy of banks?

Answer 4

Basel accord

Question 5

Carrying out ‘regulated activities’ as defined in the Financial Services and Markets Act 2000 without proper authorisation is

Answer 5

a criminal offence.

Question 6

Under acting against avoidance the Pensions Regulator can issue contribution notices, requiring the employer to make good the amount of the debt either to the scheme or the Pension Protection Fund. It can also:

Answer 6

It can also issue financial support directions, requiring financial support to be provided to an underfunded pension scheme

Question 7

The tripartite system of regulation comprised the:

Answer 7

Bank of England, the FSA and the Treasury, (collectively known as ‘The Authorities’)

Question 8

The Financial Policy Committee looks at

Answer 8

the economy in broader terms identifying and addressing risks that could threaten the stability of the UK financial system

Question 9

The global nature of banking increases the chance that

Answer 9

a domino effect collapse of banking institutions could spread around the globe