5A Flashcards
(21 cards)
What is the role of the Prudential Regulation Authority (PRA)?
Ensures the safety and soundness of systemically important firms, protects policyholders in case of firm failure.
What does the Financial Policy Committee (FPC) do?
Identifies risks to the financial system, uses macro-prudential tools to mitigate systemic risks.
Which central bank oversees micro-prudential and macro-prudential regulation in the UK?
Bank of England
What is the strategic objective of the Financial Conduct Authority (FCA)?
Ensure markets function well.
What are the operational objectives of the FCA?
- Protect consumers
- Protect financial markets
- Promote competition
What is the secondary objective of the FCA added in 2023?
Support UK economic growth and international competitiveness.
What significant governance change occurred in 2016 regarding the PRA?
The PRA was integrated into the Bank of England.
What is the main purpose of the Prudential Regulation Committee (PRC)?
Promote safety and soundness of firms to maintain financial stability in the UK.
What does the PRA prioritize when firms face solvency issues?
- Safety and Soundness
- Policyholder Protection
- Competition & International Competitiveness
What are the key regulatory actions the PRA can take?
- Sanctions
- Operational Restrictions
- Formal Warnings
What macro-prudential tools does the FPC utilize?
- Countercyclical Capital Buffers
- Variable Risk Weights
- Leverage Limits
How many members are on the Financial Policy Committee (FPC)?
13 members
What are the key components of the FPC’s governance?
- Four Deputy Governors
- Executive Director for Financial Stability
- Chief Executive of the FCA
- Five independent external members
- Non-voting HM Treasury representative
What is one of the FPC’s accountability mechanisms?
Financial Stability Reporting published twice a year.
What power was granted to the FCA under the Financial Services Act 2012?
Product intervention power to ban or restrict financial products.
What is the primary focus of the PRC when making policy decisions?
- Competition
- Growth
- Competitiveness
- Innovation
- Trade
- Better Consumer Outcomes
Fill in the blank: The PRA works alongside international regulators to supervise firms and enforce standards across _______.
jurisdictions
True or False: The PRA operates a zero-failure regime.
False
What is the role of the Financial Conduct Authority (FCA) in relation to consumer protection?
Ensures appropriate consumer protection.
What is the FPC’s statutory responsibility regarding economic growth?
Limit the negative impact of its policies on economic growth.
What does the FPC monitor to prevent financial crises?
Unsustainable financial trends, including excessive leverage and credit expansion.
