2. The Financial Services and Markets Act 2000 & Financial Services Act 2012

Question 1

Does a firm that accepts deposits from customers need to be regulated and authorised?

Answer 1

Yes. Under FSMA s.19 (the general prohibition), accepting deposits is a regulated activity and must be authorised unless exempt.

[Ref: Section 1.2]

Question 2

Is a bank deposit a specified investment under the Regulated Activities Order?

Answer 2

Yes. Bank deposits are listed as specified investments under the Regulated Activities Order 2001.

[Ref: Section 1.2.1]

Question 3

Is a market maker required to be authorised when acting for a firm?

Answer 3

Yes. Market makers need authorisation to carry out dealing activities by way of business.

[Ref: Section 1.3.1]

Question 4

How are appointed representatives exempt from regulation?

Answer 4

They act on behalf of authorised persons and are exempt under s.39 FSMA.

[Ref: Section 2.1]

Question 5

Name two types of exempt persons under the FSMA Exemption Order 2001.

Answer 5

1) Central banks (e.g. BoE);
2) Recognised investment exchanges.

[Ref: Section 2.3]

Question 6

What are the threshold conditions for being granted Part 4A permission?

Answer 6

Threshold conditions include location of offices, effective supervision, appropriate resources, suitability, and business model.

[Ref: Section 3.3]

Question 7

A regulatory reference must capture how many years of employment?

Answer 7

Six years. [Ref: Section 5.1]

Question 8

Factors in assessing individual fitness and propriety for approval?

Answer 8

Honesty, integrity, reputation, competence and capability, and financial soundness.

[Ref: Section 5.2]

Question 9

Is SMF1 (Chief Executive) PRA- or FCA-designated?

Answer 9

SMF1 (Chief Executive) is PRA-designated.

[Ref: Section 5.3]

Question 10

Which firm type must comply with the Training and Competence Sourcebook?

Answer 10

Firms engaging in retail business under the scope of TC must comply.

[Ref: Section 6.1]

Question 11

Which Act protects whistleblowers?

Answer 11

Employment Rights Act 1996.

[Ref: Section 7]

Question 12

What is a whistleblowers’ champion?

Answer 12

A senior manager appointed to ensure effective whistleblowing arrangements.

[Ref: Section 7.1.3]

Question 13

Responsibilities of the Regulatory Decisions Committee (RDC)?

Answer 13

The RDC makes decisions on contested enforcement cases and issues warning and decision notices.

[Ref: Section 8.1]

Question 14

Types of statutory notices regulators can issue and their outcomes?

Answer 14

Warning notice, decision notice, supervisory notice, and final notice. They outline proposed and final actions taken.

[Ref: Section 8.3]

Question 15

Aim of a private warning from regulators?

Answer 15

To indicate serious concern without formal disciplinary action.

[Ref: Section 8.4.2]