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CBI > Unit 5 - Financial Regulation > Flashcards

Unit 5 - Financial Regulation Flashcards

1
Q

What is Regulation & Supervision?

A

They are closely interlinked & one is not effective without the other.
1. Regulation- Rules & guidelines that define acceptable behaviour & conduct, must comply with laws.
2. Supervision- Process which regulatory authorities oversee & enforce compliance with these rules & guidelines.

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2
Q

What is Macroprudential Regulation?

A

Regulation concerned with the stability of the financial system as a whole eg of macroprudential measure is improving affordability rules on mortgages for all lenders so that banks face fewer bad debts

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3
Q

What is microprudential regulation & example?

A

Concerned with stability of individual banks & other financial institutions eg measures to ensure banks can handle external risks and to improve their liquidity

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4
Q

What is conduct regulation?

A

Aims “to ensure that financial markets work well for individuals, for businesses and for the economy as a whole”

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5
Q

Who is responsible for macroprudential regulation & what’s their job?

A

Financial Policy Commitee & is to “identify, monitor & take action to remove/reduce systemic risks to the UK’s financial system” ( Bank of England 2023)

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6
Q

Who is responsible for Microprudential regulation & their job?

A

Prudential regulation authority & focuses on consumer protection as well as promote safety and soundness of the firms it regulates

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7
Q

Who is responsible for the conduct of business regulation & its job?

A

Financial conduct authority & it is funded by fees paid by the firms/banks it regulates, also it’s how firms conduct their business ie to ensure UK financial markets are fair, competitive

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8
Q

What would be an example of sensitive data?

A
  1. Race
    2.Sex
  2. Religion
  3. Political issues
  4. Health & details of criminal record
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9
Q

What is monetary stability?

A

Means that the country’s currency maintains its value over time

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10
Q

What’s the case study for Monetary Stability ( The Bank Of England)?

A

The UK’s central bank is The Bank of England and it’s responsible for achieving monetary stability in the UK by supporting low inflation, employment & economic growth.

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11
Q

Who controls inflation & how in the UK?

A

The Bank of England controls inflation through monetary policy & it’s Monetary Policy Committee increases/reduces interest rates to control spending

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12
Q

What are additional functions for Central banks?

A

Issuing bank notes, payment & settlement, and holding reserves

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13
Q

What’s the responsibility of the Bank of England of financial regulatory framework?

A

The Bank of England has macroprudential responsibility for the oversight of the financial system & it also has day to day microprudential supervision of larger financial services firms

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14
Q

What are the 3 bodies of the UK financial regulatory framework?

A
  • 2 of the regulatory bodies are part of the Bank of England- the Financial Policy Committee for macroprudential policy & the Prudential Regulation Authority for microprudential policy.
  • The 3rd regulator, Financial Conduct Authority is an independent public body.
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15
Q

With the 3 bodies of the UK financial regulatory framework, what does it form?

A

These 3 bodies: the FCP, PRA & FCA work closely together & with the UK governments finance ministry known as HM Treasury

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16
Q

What’s the objectives of FCA?

A
  1. Protect customers from bad conduct including bad advice,fraud
  2. Protect the integrity of the UK financial system
  3. Promote effective competition in the interests of consumers, its good to make firms do their best to win customers
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17
Q

How much can banks give if they failed with deposits to customers?

A

£85,000

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18
Q

Who pays depositors if their banks become insolvent?

A

Financial Services Compensation Schemes

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19
Q

What does Financial Services Compensation Schemes provides compensation losses for?

A
  1. Deposits made with failed banks up to £85k per person
  2. Pension with a failed pension provider
  3. Bad mortgage advice/ mis-selling of a mortgage endowment
  4. Cover with a failed insurer
  5. Payment protection insurance policies where the info given was insufficient/misleading
20
Q

What authority promote competition and how?

A

The Competition and Markets Authority & they share objectives with UKs conduct regulator FCA

21
Q

What is role of PSR?

A

Payment Systems Regulations- ensure systems work efficiently
In the Uk, the role is:
1. Ensure appropriate payment systems
2. Promote effective competition
3. Promote innovation

22
Q

What countries does PSR differ in?

A

Many countries the payment system’s regulation is done by central bank such as India where the Reserve Bank is responsible for overseeing payment systems. In UK, a special body: The payment systems regulator(PSR)

23
Q

How does the Pensions Regulator work in UK? ( Protects UK’s workplace pensions, making sure that employees, trustees, pension specialists & business advisers can fulfill their duties to scheme members; Pensions Regulator 2023)

A

It’s a non-departmental public body that regulates work-based pension schemes. Works with FCA to address risks/harms in pensions.

24
Q

What are serious fraud prevention bodies in Australia and UK?

A
  1. The Serious Financial Crime Taskforce(SFCT) targets serious crimes in Australia, its priorities in 2023 included tech enabled tax crime(cybercrime) & offshore tax evasion.
  2. Serious Fraud Office(SFO) is a specialist prosecuting authority that tackles serious fraud, it oversees large crime cases and assists overseas jurisdictions
25
Q

What are data protection regulations for?

A

To ensure “the fair and proper use of information about people’ (UKs Commissioners Office 2023). Also customers want to trust banks to use their data fairly and protect them against its misuse

26
Q

What are the data protection authorities in Uk and Europe?

A
  1. UK- the information Commissioners office
  2. Europe- the European Data Protection Board
27
Q

What is the case study about the Monetary Authority of Singapore?

A

In 2020, the MAS gave guidelines to strengthen the individual accountability of senior managers accord the financial services industry

28
Q

What is an example of a microprudential measure imposed by a country’s financial regulator?

A

Obliging a bank to increase the amount of capital on its balance sheet

29
Q

What states the objective of a central banks resolution regime within the context of a bank failure?

A

Managing a bank failure in an orderly way

30
Q

Due dilligence is the process by which bank employees:

A

Gather information about their customers (KYC)

31
Q

What is 1 of the key principles of GDPR data protection?

A

Purpose limitation

32
Q

The minimum No of people required to set up a UK private limited company is:

A

1

33
Q

Which regulatory body is known as the ‘Lendor of Last Resort’?

A

Bank of England

34
Q

Prudential regulation is mainly about:

A

Consumer protection

35
Q

What is NOT a key function of a central bank?

A

Assist banks with delivering on their strategy & ensuring they always make profits

36
Q

The Financial Services Act 2012 came into force on 1st April 2013, which bodies where formed as a result of this Act?

A

1.Financial policy committee
2.Prudential regulatory authority
3.Financial conduct authority

37
Q

With regards to the UK regulatory framework, The Chancellor of the Exchequer & the Treasurer is responsible for:

A

The regulatory framework & for all decisions involving public funds

38
Q

What is the ombudsman service?

A
  1. Resolved complaints between banks & customers
  2. Independent body and funded by an annual levy paid by firms
39
Q

What is the compensation scheme?

A

Pay back depositors of their money if their bank becomes insolvent

40
Q

What is competition authority?

A

Encourages competition between firms

41
Q

What is competition authority?

A

Encourages competition between firms

42
Q

Who regulates work-based pension schemes in the UK?

A

The Pensions Regulator & it works with the FCA to address risks in pensions

43
Q

What are the UKs FCA(2023) principles?

A
  1. Integrity 2. Skill, care & diligence 3. Management/control 4. Financial prudence 5. Market conduct 6. Customers interests 7. Communications with clients 8. Conflicts of interest 9. Customers trust 10. Clients assets 11. Relations with regulators 12. Consumer duty
44
Q

What are the 7 key principles of data protection?

A
  1. Lawfulness,fairness&transparency 2.Purpose limitation 3.Data minimisation 4.Accuracy 5.Storage limitation 6.Integrity/confidentiality 7.Accountability
45
Q

What is NOT an objective of the PRA?

A

To ensure there’s a 0 firm failure across the UK financial services sector

46
Q

What is NOT an operational objective of the FCA?

A

Promote the safety & soundness of the firms it regulates

CBI (7 decks)

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