UK regulatory framework Flashcards
Who were the UK regulatory, voluntary body until 2005?
General Insurance Standards Council (GISC) - membership was voluntary not compulsory
In 2005, the UK insurance market saw a shift from voluntary regulation to statutory regulation under which act/organisation?
Financial Services Authority
Financial Services and Markets Act - set out details of how the FSA should function and gave the FSA regulatory power over general insurance companies, intermediaries and Lloyds
What is the current structure of financial services since 2013? (3 bodies)
FCA - Financial Conduct Authority
PRA - Prudential Regulation Authority
FPC - Financial Policy Committee
Who are the FPC?
Financial Policy Committee - group within the Bank of England responsible for monitoring emerging risks and look at the regulatory structure as a whole
Who are the FCA?
Financial Conduct Authority - independent body who are responsible for conduct of ALL firms holding financial capital (insurers, banks etc.), aim to promote healthy competition in the industry and set guidelines around conduct
Who are the PRA?
Prudential Regulation Authority - sit within the Bank of England and are responsible for the stability of the industry and aims to protect policyholders and promote competition
What act puts the Bank of England at the <3 of UK financial stability?
Bank of England and Financial Services Act 2016
PRA became part of the bank, and the Prudential Regulation Committee was established which operates alongside the FPC and the Monetary Policy Committee
What are threshold conditions set by the PRA?
Minimum requirements that firms must meet to carry out regulated activities and are designed to promote safety and soundness.
Examples include;
Firms head office to be in the UK
Business to be conducted in a prudent manner
Appropriately staffed
Capable of supervision
What is the PRA’s judgement led approach?
Approach to supervision which moves away from rules to a forward thinking analysis (idea is to pre-empt risks)
Intensity of supervision by PRA - what is baseline monitoring?
Minimum supervision firms face under the PRA and includes ensuring things like compliance, reserving and annual reviews are carried out.
What is the PRA’s proactive intervention framework (PIF)
Framework used to judge how close a firm is to failure - 5 markers the PRA look at
Who is the lead regulator of Lloyd’s?
PRA
What is the FCA’s overarching strategic objective?
To protect and enhance confidence in the UK financial system
Also aims to protect consumers, promote competition and protect integrity of the UK financial system
How does the FCA categorise firms?
Fixed portfolio- large insurers and brokers who have a FCA supervisor frequently in contact with them
Flexible portfolio - smaller firms which recieve less contact from the FCA
What are the 3 pillars of the FCA’s risk framework?
- firm systematic framework (designed to assess a firms conduct)
- event driven work (looks at past/emerging risks)
- issues qnd products (looks a reviews of issues and products)
The FCA has the power to intervene in order to prevent detriment - true or false?
True
The FCA and PRA have the power to publish the fact that a warning notice has been issued about a firm - true or false?
True
How many principles of good business practice are there?
11!
Integrity
Skill, care and diligence
Management and control
Financial prudence
Market conduct
Customers interests
Communications with clients
Conflicts of interest
Customers relationships of trust
Clients assets
Relationship with regulators
What does sysc stand for (management and control)?
Set of rules known as senior management arrangements, systems and controls- states that an Oversight Officer must be appointed who is responsible for monitoring regulated activities (must be an approved person)
What is a MLRO in regards to financial crime?
Money laundering reporting officer
What is whistleblowing?
An employee who exposes information about a company (usually their own company)
Public interest and disclosure act looks at whistleblowing
Why was the public interest disclosure act created?
Act concerns whistleblowing and was created to encourage openness within a company (i.e. its okay to speak up)
Act protects those who disclose information in the interest of the public from detriment by their employer
Under the public interest and disclosure act, what is a qualifying disclosure?
When a worker reveals they believe a criminal offence, failure to comply with legal obligations, health and safety risks etc aren’t complied with
Controlled functions should only be carried out by those who meet the appropriate standards - true or false?
True- controlled functions should be carried out by authorised persons
