1.2 FSMA 2000 and FSA 2012

Question 1

What is The General Prohibition and from what section of law

Answer 1

S19 FSMA 2000

“no person may carry on a regulated activity in the UK unless he is an authorised person or an exempt person”

Question 2

Does a firm that accepts deposits from customers need to be regulated and authorised to carry out this activity?

Answer 2

Yes - Taking deposits is defined as a regulated activity under the Regulated Activities Order (RAO) therefore you need authorisation

Question 3

Is a market maker required to be regulated and authorised when carrying on such activity for a firm? CHECK THIS

Answer 3

Yes - firms which are professional dealers (eg. market makers) and hold themselves out as such are carrying on a regulated activity and require authorisation

Question 4

How are appointed representatives exempt from requirement to be regulated and authorised

Answer 4

FCA and PRA rules do not apply to appointed reps as they are not authorised persons

Have exempt status under S39 FSMA and FSMA Exemption Order 2001

Any activity conducted by appointed rep is treated as having been conducted by principal

principal must have relevant permissions for activity carried out by appointed rep

Question 5

What is an appointed representative

Answer 5

Can be any type of person (ie., natural person or any other legal person) who has entered into a contract w an authorised person (the principal) for purpose of conducting regulated activity

Authorised person accepts legal responsibility for regulated activity conducted by appointed rep.

Question 6

Name two types of exempt person under FSMA Exemption Order 2001

Answer 6

• BoE and other CBs
• Supranational bodies
• Municipal banks
• Local aurthorities
• Charities

Question 7

what are the threshold conditions for being granted Part 4A permission and which regulator is responsible in case of solo/dual regulated firms

Answer 7

minimum standards expected of authorised persons being, and remaining, authorised

• Legal status (only really applies to insurance companies/deposit takers regulated by PRA)
• Location of offices (must be UK)
  The regulator that monitors this is the regulator which the firm applied to)
  solo: FCA
  dual: PRA
• Effective supervision
  requires disclosure of any close links (controlling interests)
  solo: FCA
  dual: FCA and PRA
• Appropriate resources
  does firm have sufficient finances to cover business areas
  solo: FCA looks at all resources
  dual: FCA looks at non-financial PRA looks at financial
• Suitability
  to do with senior managers (are they fit and proper)
  solo: FCA
  dual: FCA and PRA
• Business model (last update to TCs)
  is business model in line with FCA objectives?
  solo: FCA
  dual: FCA

Question 8

How long can regulator take to decide whether to grant Part 4A authorisation?

Answer 8

Up to 6 months

Question 9

What factors are taken into account when assessing an individual as fit and proper

Answer 9

3 main areas

1. Honesty, integrity and reputation
   - employment history (6 years)
   - criminal convictions (no time limit)
   - breaches of FCA/PRA rules
   - complaints
2. Competence and capability
   - exam success
   - experience and training
3. Financial soundness
   - bankruptcy

Question 10

What is the difference for FIT for SMF vs CF (SHF)

Answer 10

background tests are same for both class of employee - only difference is the regulator carrying out the checks

• CF: Firm itself assesses whether individual is fit and proper
• SMF: Firm has to apply on recruitment/promotion of individual asking regulator to assess individual

Question 11

Regulatory reference must capture a candidate’s employment going back how many years?

Answer 11

Past 6 years

• prior to Form A being submitted to regulator firm must (under SM&CR) take all reasonable steps to obtain regulatory ref from candidates current employer and any previous employers from past 6 years

Question 12

Is the SMF 1 (Chief Executive) a PRA or FCA designated function?

Answer 12

PRA

Question 13

Which type of firm must comply with the Training and Competency Sourcebook

Answer 13

Firms carrying out activities with or for RCs

Question 14

Which Act provides legal basis for protection of whistleblowers?

Answer 14

the Public interest Disclosure Act (PIDA) 1998

Question 15

What is a Whistleblower’s champion?

Answer 15

Senior manager responsible for ensuring and overseeing integrity, independence and effectiveness of firm’s policy and procedures on whistleblowing