UK Regulation Flashcards by Emily Havers

What are the three key institutions in the UK regulatory structure?

The financial Policy Committee (FPC)
The Financial Conduct Authority (FCA)
The Prudential Regulatory Authority (PRA)

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What is the FPC?

Committee of the Bank of England

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What does the FPC monitor?

The stability of the whole financial system

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What does the FPC have powers over?

The FCA and PRA

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Who is the FCA overseen by

The Treasury

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What does the FCA regulate?

All firms

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What is the role of the FCA?

CONDUCT regulation of banks, insurers and large investment firms

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What is the PRA?

A legal entity within the bank of England

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What is the core objective of the PRA?

promote the safety and soundness of the firms it regulates

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What is the role of the PRA?

regulation of banks, insurers and large investment firms. (companies that are Systemically influential Financial Institutions ‘too big to fail’ – these will be dual regulated by FCA and PRA.

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What do the FPC, FCA and PRA all meet and create and how often is this?

Create the Financial Stability Report (FSR) a bi-annual report produced by the FPC.

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What is in section 19 of the Financial Services and Markets Act 2000? And what is this more usually referred to as?

“No person may carry on a REGULATED ACTIVITY in the UK, unless he is either AUTHORISED or EXEMPT”

AKA. General prohibition

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In the Financial Services and Markets Act when it says person what is it actually referring to?

People and firms

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What defines what a regulated activity is in terms of the Financial Services and Markets act 2000

Regulated Activities Order - RAO

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What is the newer version of the Financial Services and Markets act 2000

Financial Services act 2012

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What are the two types of authorisation under the Financial Services and Markets act 2000?

• Two types of authorisation:
o FSMA Part 4A permission (UK firms)
o Person authorised in another EEA member state (under MiFID) – non UK firms can apply from home state regulator

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What are the listed criminal offences under FSMA 2000 and what is the max jail time?

o Unauthorised investment business

o 2 years in jail = max time

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What are the additional listed criminal offences under Financial Services Act (Section 91)

Misleading a market or investors by making false of misleading statements (also specifically now in relation to benchmarks, e.g. LIBOR)

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What two groupings are there under the Regulated Activities Order?

Specified Investments and Regulated Activities

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What is included and excluded under specified investments under RAO?

o All investment instruments and rights to those investment instruments, excluding physical assets

Includes: provision of credit, mortgages and buy to let
Excludes: land, antiques, commodities

Under RAO what are the regulated activities listed?

AEIO MAD

o Accepting deposits
o Electronic money - the issuing of
o Insurance contracts - Effecting/ Administering/ Performing contracts of insurance
o Dealing in investments as principal or agent/ Arranging deals in investments/ Advising on investments
o Arranging/ Advising on home finance transactions
o Managing investment
o Operating a multilateral trading facility (MTF)

Under FSA 2012 / FSMA 2000 who is an exempt persons?

Appointed representatives (Tied agent – not an employee of an organisation but represents an organisation – the firm itself would need to be authorised. These representatives are typically just using scripts)
Recognised investment exchanges (RIEs) – recognised by the FCA and clearing houses (RCHs) – recognised by the PRA
Members of the professions: member of a designated professional body (DPB) carrying on incidental investment business. E.g. accountants, actuaries and lawyers – tend to be carrying out incidental business not actually the ones selling/ marketing the products.
Members of Lloyds of London (underwriters)

What is the Payment systems regulator?

o a new economic regulator for the payments system in the UK

What does the Payment Systems Regulator (PSR) regulate?

o Regulates systems designated by HM Treasury:

BACS
Cheque and Credit clearing company
CHAPS (clearing house payment system)
Faster Payment Services (FPS)
LINK
MasterCard
Visa Europe
Northern Island Cheque Clearing (NICC)

What is special about the Competition and Markets Authority (CMA) and the Department for Business, Energy and Industrial Strategy (BEIS)

They work together

Who do the Competition and Markets Authority (CMA) and the Department for Business, Energy and Industrial Strategy (BEIS) work on behalf of?

Consumers

What do the Competition and Markets Authority (CMA) and the Department for Business, Energy and Industrial Strategy (BEIS) act as?

An independent competition authority in the UK

When must the Competition and Markets Authority (CMA) and the Department for Business, Energy and Industrial Strategy (BEIS) investigate?

o Must investigate where: - The merged company will control greater than 25% of the UK market ‘share of supply test’; and/or - The target company has turnover of £70m or more

What does the Competition and Markets Authority CMA have the power to do?

o If the merger will lead to a ‘substantial lessening in competition’, the CMA has the power to prohibit the merger (or impose remedies if the merger has taken place)

What does the secretary of state (at the Department for Business, Energy and Industrial Strategy) have the power to do>

may intervene where there are ‘public interest’ (national security) issues.

What does the Panel on Takeovers and Mergers (PTM) operate and enforce?

o Operates and enforces the City Code on Takeovers and Mergers (‘the Takeover code’)

What funds the Panel on Takeovers and Mergers?

o Funded by the PTM levy (£1 on purchases and sales in excess of £10,000)

What does the Panel on Takeovers and Mergers do?

Acts as the referee of the FAIR CONDUCT OF TAKEOVER BIDS

Under fair conduct of takeover bids (in reference to PTM) when is a compulsory bid enacted and what must the offer be?

-Compulsory bid – enacted if: • Someone secures 30% or more of the voting rights • Cash offer to all shareholders at the HIGHEST PRICE PAID IN THE PREVIOUS YEAR of the person who is securing over 30%

Under fair conduct of takeover bids (in reference to PTM) how long must any offer remain open for?

21 day s

Under fair conduct of takeover bids (in reference to PTM) at what stage can the buyer still back out?

 If under remains 50% post cash offer then the buyer may back out of this but once over 50% becomes compulsory.

Under fair conduct of takeover bids (in reference to PTM) when can a predator force out minority shareholders to sell (squeeze out)?

 If a predator’s stake reaches 90% or more, the predator may force the remaining minority shareholders to sell (squeeze out)

Who does GDPR require data controllers to register with?

• The information Commissioner’s Office (ICO)

Under GDPR what principles must data be handled in accordance with?

1) Processed lawfully and fairly 2) Collected for specified, explicit and legitimate purposes 3) Adequate, relevant and limited to what is necessary in relation to the purposes for which it is processed 4) Accurate and, where necessary, kept up-to-date 5) Kept for no longer than is necessary for the purpose for which the personal data is processed 6) Processed in a manner that ensures appropriate security of the personal data, including protection against unauthorised or unlawful processing and against accidental loss, destruction or damage

What is the max fine for breaches of GDPR?

can be up to 20m euros or 4% of global annual turnover (whichever is the greater)

What is the timeframe in which GDPR breaches must be notified to the ICO?

72 hours

What did the Trustees act of 2000 replace

Trustee Investment Act 1961

What does the Trustees act 2000 allow?

o Allows trustees to make any kind of investment provided they:  Obtain and consider proper advice; and  Have regards to standard investment criteria: • Suitability • Need to diversify  Review trust investments and take advice on variations

What does the Trustees Act 200 not apply to?

- Occupational pension schemes - Authorised unit trusts - Certain schemes under the charities act

What systems are excluded from the Payments System Regulator?

Payment systems that are embedded in securities trading systems, clearing houses or central counterparties Also Bank of England in its role as payments provider and operator of the real-time gross settlement infrastructure.

What is the PTM levy payable on trades in?

- Equity share capital, whether voting or non-voting. Equity share capital is share capital that has an unlimited right to participate in the profits of the company. - Securities convertible into equity share capital - Transferable securities that give the holder the right to subscribe for equity share capital, including warrants, provisional allotment letters and nil paid rights. - US depository receipts and global depository receipts in respect of any of the securities described above

What is the PTM levy not payable on trades in?

- Covered warrants - Debentures and other debt securities - Preference shares - Permanent interest bearing securities - Contracts for differences and total return swaps - Spread bets - Opinion contracts

Where is the statutory basis of the PTM set out?

Companies act 2006 hence has statutory force

When is the PTM unable to enforce sanctions?

Once a takeover has actually occurred