UK regulatory Infrastructure Flashcards
What is the main Function of the FCA.
Regulates the Financial services industry. It exists to monitor the conduct of financial services firms, protect consumers and keep the industry stable.
What is the main function of the PRA
Supervises financial institutions that are integral to the stability of the UK financial system.
What is the main difference between the PRA and FCA.
The FCA focuses on conduct and consumer protection, while the PRA focuses on the prudential health of specific financial firms to ensure system stability.
What powers does the FCA have to enforce regulations?
The FCA can issue fines, revoke authorizations, impose restrictions, and take legal action against firms or individuals.
How does the PRA ensure Firms are financially sound?
The PRA imposes capital and liquidity requirements, conducts stress testing, and reviews firms’ risk management and governance frameworks.
What is a dually regulated firm and give 3 examples.
A dually regulated firm is a firm that is regulated by both the FCA and PRA such as banks , building societies and insurers.
Give an example of a potential conflict between the FCA and PRA.
The FCA might push for increased competition like new entrants into financial markets, while the PRA might hesitate if it believes the new entrants could pose prudential risks.
What is the PRIN
The PRIN outlines the obligation of firms under the regulatory system and they apply to all firms authorized by the FCA
Name 3 PRIN Principles
Integrity- A firm must conduct business with integrity
Financial prudence- a firm must maintain adequate financial resource.
Customers interest - a firm must act in customers’ interest and treat them fairly.
Conflict of interest
Relations with regulators- a firm must deal with regulators in an open and cooperative manner.
Market conduct- a firm must observe proper standard of market conduct.
What are the three categories of clients under the FCA framework.
Retail Clients
Professional clients
Eligible counterbodies
