u2. Financial Services Flashcards
What is the key legislation governing the regulation of financial services?
Fincancial Services and Markets Act 2000
What regulatory framework applies to solicitors?
Solicitors are subject to the same regulatory framework as the financial services industry.
What is the General Prohibition?
‘No Person may carry on a regulated activity in the UK unless Authorised or Exempt’
S.19 Fincnaial Services and Markets Act 2000
Key words:
-Regulated Activity
-Authroised
-Exempt
What is the effect of breaching the General Prohibition?
It is a criminal offence
What is the purpose of the general prohbition?
To ensure only qualified and skilled persons provide finaniacal services to consumers.
How can Solicitors become authorised?
By obtaining authorisation from The Financial Conduct Authority.
What are the 2 regulators of finacial services, and who are they for?
- The financial conduct authority (For Businesses, firms (solicitors) and finaical advisors)
- The Prudential Reglulation Authority (For finacial instutions like banks and building societes. )
What is the Strageic Objective and 3 Operational Objectives of the Financial Conduct Authority?
Strageic Objective
-Ensure Relevant Financial Markers funtion effiecetly
Operational Objective
1 Consumer Protection
2 Integrity
3 Competition
What is a regulated activity for the purpose of the Fincial Services and Markets Act?
- A Specified Activity
- That relate to a specified investment
- Carried out in Business.
The spcified Activites and Ivestments are prescribed the tresury in s.22 of the Finacial Services and Markets Act.
Give 5 Examples of a Specified Activity for the purposes of the Financal Services and Markets Act
- Dealing in Investments as an agent (buying / selling on clients behalf)
- Arranging Deals in investment
- Managing Investments
- Advising on Investments - NB GIVING GENRAL ADVICE IS NOT A REGULATD ACTIVITY , ONLY SPECIFIC ADVICE
5.Safeguarding and administrating investments
What are not Specified Investments for the purposes of the Financial Services and Markets Act 2000?
Give examples of what are specified investments.
Stated as not specified investments:
- Intrests in Land
- National Saving Products
What are specified investments:
- Company Stocks and Shares
- Debentures, Loan Stock, and bonds
- Government and public secuirties
- Open-ended investment companies (OEICs)
- Insurance Contracts
- Regulated Mortgage Contracts
- Home Reversion and Home Purchase Plans
- Deposits
- Credit Agreements
For the purposes of regulated activites in the Financial Services and Markets Act 2000, what activities are excluded and so not regulated activites?
- Introducing an authorised person
- Arranging or dealing through an authorised third party
- Acting as a trustee, nominee, or personal representative
- Activites carried on in the course of the proffesion as a necesity
- Aquiring or disposing of shares valuing 50% or more in a coporate body.
What is the Designated Profesional Body Exemption in relation to the Financial Services and Markets Act 2000.
Firms are a Designated Professional Bodies, and so can carry out certain types of regulated activities, known as exempt regulated activities, if the majority of the work carried out by the firm is not a regulated activity and they meet the conditions set out in s. 327 of the Financial Services and Markets Act.
Firms are DPB’s as the SRA, through the Law Society, is a DPB.
What are the 6 conditions a firm must meet to carry out exempt regulated activties without being authorised as per the Financial Services and Market Act 2000.
- Must be regulated by the SRA
- Must discolsure any financial incentive to the client
- Must be incidental (not a major part of the firms work) and arrise in connection to providing a legal service to the client.
- The activity must be one listed as an ‘exempt regulated activity’
- Must not be an activity prohibited from being exempt by the DPB exemption, known as non-exempt activities.
- The firm cannot be authorised by the FCA to use the DPB exemption.
What are the 7 rules prescribed by the SRA on how exempt firms can carry out Exempt Regulated Activities?
- The firm must disclose that it is not authorised by the FCA
- Executions of Transfers must take place as soon as possible unless not in clients best interest
- The firm must keep records of instructions from clients to make transfers
- The firm must keep records of any commision made
- Must safeguard assets
- ?
- All records must be maintained for 6 years
