Week 4B: Regulation of Financial Services Flashcards
Explain what financial services are
-prof. serv. inv. the inv., lending and management of money ans assets
Explain the phases of the Financial product Lifestyle
product development–> product distribution–> product use–> product termination
Define financial intermediaries
-financial product distributors
=financial service providers
Explain the common discrepencies between financial institutions and consumers
-Imbalance of barg. power
-information asymettries
-behav. biases:
-overoptimism
-myopia
TRUE or FALSE: an individual transaction can have neg. third party effects
-TRUE
List the regulatory goals of regulating financial services
1) European market integration
2) Financial stab.
3)Ord. funct + INTEG. financial markets
4) cons. protect.
5) Sus. dev.
List the characteristics of financial markets which make regulation difficult
1) Complexity
2) Uncertainty
3)Ungovern.
4)Dynamism
list prudential regulation tools
1.Requirements :
-authorisation
-capital
-manag. bodies–> right cultures
-fit and prop test for individu
2.admin. law tools
Explain what bank capital requirements are
-reg. stand. for banks 2 det. how much liq. capit. they must keep on hand
-so no just crash like before
Explain what requirements on management bodies are
- right cult. in fina. institut.
-individual level:
-fit and proper test
-group level:
-group dynam + dec. making
List conduct of business regulatory tools
-prohibition of unfair comm. practices
-contract terms control
-info. req. for lenders
-lender’s duty to assess the cons. creditworthiness
-consumer’s right of withdrawal
Explain how the Consumer Credit Directive provides conduct of business regulation
-Strict. lenders duty 2 assess con. creditworthiness
-Int. rate caps
-Product reg.
-prohibts pot. dang. cred. products
Explain what prudential regulation is
Form of regulation which is concerned with the financial safety and soundness of:
-ind. fin. inst. (mic. pru. reg.)
-larger, system wide risks to fin. system (macro pru. reg.)
Explain what conduct of business regulation is
-regu. which is concerned with the:
-ord. func. of fina. markets
-con. protection
