Chapter 2 - FSMA 200 and FSA 2012 Flashcards
What is the name given to the approval granted by the FCA for a firm to undertake specific regulated activities?
Part 4A permission.
Part 4A permission is given by the FCA and, once granted, the firm becomes an authorised person. As an authorised person, the firm can carry on regulated activities without breaching the general prohibition and committing a criminal act.
A firm’s application for Financial Conduct Authority (FCA) authorisation was rejected. Under what circumstances, if any, will the application fee be refunded?
Never.
A firm’s application fee for authorisation by the FCA and/or the Prudential Regulation Authority (PRA) is not refundable under any circumstances.
Who does the Financial Conduct Authority (FCA) expect should normally be appointed to the role of ‘whistleblowing champion’ in a large bank?
A non-executive director.
The rules on whistleblowing require banks with assets over £250 million to appoint an individual of sufficient seniority as their whistleblowing champion. The FCA expects most banks to appoint a non-executive director or a senior manager if a bank does not have a non-executive director.
Which one of the following is specifically excluded from the need to be authorised under FSMA 2000?
Overseas persons.
Overseas persons are one of a number of categories specifically excluded from the need for authorisation under FSMA 2000.
Which one of the following Acts provides protection for employees who blow the whistle?
Public Interest Disclosure Act 1998.
The Public Interest Disclosure Act 1998 (PIDA) provides protection for employees making disclosures, against victimisation by their employers.
What is a direct consequence of the regulator giving Part 4A permission?
Authorisation is granted.
When the regulator grants Part 4A permission, the firm becomes an authorised person and can carry on the specified regulated activities.
Which one of the following is specifically excluded from the need to be authorised under FSMA 2000?
Employee share schemes.
There are a number of categories of exclusion from the need for authorisation, one of which is employee share schemes. Establishing or running a stakeholder pension scheme, arranging home purchase plans and managing Lloyd’s underwriting syndicates are all specified activities that require authorisation.
Which one of the following statutory notices gives the recipient the right to make representations to the FCA?
Warning notice.
Warning notices give the recipient details about the action the FCA proposes to take and the right to make representations to the FCA. Decision notices give details of the action that the FCA has decided to take, but leave room for appeal by the recipient. Final notices are issued after the opportunity to appeal. Supervisory notices give the recipient details regarding the action the FCA proposes to take or has taken.
Which one of the following measures is most likely to be used by the FCA where a firm no longer meets its threshold conditions?
Variation of Part 4A permission.
Where a firm is no longer able to meet the threshold conditions in relation to one or more of its regulated activities, the FCA would be likely to issue a variation of Part 4A permission to limit its ability to perform regulated activities to those areas where it still meets the threshold conditions. A financial penalty, public censure and prohibition may be applied as well - but this will depend upon whether any other rule contravention occurred..
Which FCA supervisory tool is designed to respond when the UK financial system or firms have harmed customers?
Remedy.
Of the four supervisory tools relating to risk, the remedy tool is designed to respond to crystallised risks (harm)..
Giving investment advice in the money column of a national newspaper is:
An excluded activity under FSMA 2000.
There is a particular exclusion from the regulated activity of ‘advising on investments’, in relation to newspapers and other media. If a newspaper includes investment advice, and that advice is not the principal purpose of the newspaper, then it is excluded from the regulated activity of ‘advising on investments’.
If an adviser carries on regulated activities while unauthorised, what can happen to a contract entered into by a client?
It is voidable at the discretion of the client.
Any agreement made by a person in contravention of the general prohibition is unenforceable by that person against the other party. The other party is entitled to recover any money or property transferred under the agreement and compensation for any loss suffered.
Pillar 1 proactive supervision of a ‘fixed portfolio’ firm will ordinarily take place over what time cycle?
12 to 36 months.
For fixed portfolio impacted firms, Pillar 1 proactive supervision ordinarily comprises a 12 to 36-month cycle, covering firm meetings, reviews of management information, an annual strategy meeting and other proactive firm work.
If a firm has allowed a controlled function to be carried out without prior approval, what redress does a private person have under Section 71 of FSMA?
They can sue the firm for damages if they suffer loss.
If an individual carries out a controlled function without prior approval, a private person can sue a firm for damages.
Which one of the following measures would the FCA consider using as disciplinary action?
Publishing a public censure on a firm.