7. FCA And PRA Flashcards
What are the PRAs 3 statutory objectives?
Promote safety and soundness of the firms it regulates
Secure appropriate degree of protection for insurance policyholders
Facilitate effective competition between firms
What is the FCA’s strategic objective?
Ensure relevant markets function well
What are the FCA’s 3 operational objectives?
Secure appropriate degree of protection for consumers
Protect and enhance integrity of UK financial system
Promote effective competition in the interests of consumers
What are the FCA’s 8 supervisory principles?
- Forward looking
- Focus on strategy and business models
- Focus on culture and governance
- Individual + firm accountability
- Proportionate and risk based
- Two-way communication (consumers and firms)
- Coordinated (other bodies)
- Put right harm and prevent reoccurrence
What are the FCA’s 2 categories of firms? “Portfolio”
Fixed portfolio: large firms, specific FCA team
Flexible portfolio: thematic and market-based
What 3 types of work does the FCA model?
Proactive
Reactive
Thematic
What are the FCA’s 8 enforcement powers?
Variation of permissions
Withdrawal of approval
Injunction
Restitution (recover profits)
Redress (refund/compensation)
Criminal prosecution
Disciplinary action (private warning / publish statement of misconduct / financial penalty)
What are the FCA’s 3 categories of firms in terms of prudential regulation?
P1: prudentially critical
P2: prudentially significant
P3: prudentially non-significant
What are the conditions for ‘paying away’ client money? (Length of time and thresholds)
No activity for 6 years (money) or 12 years (assets)
> £25 (retail) or £100 (other) - must try to make contact 3 times
What are the 3 categories of firms under SM+CR?
Limited scope
Core
Enhanced
What are Senior Management Functions and what are they required to do?
Specific roles covered by Senior Managers Regime
SMF must complete statements of responsibility and have a duty of responsibility
Firms apply for approval for individual to carry out SMF role
Who does the Certification Regime apply to and how long does a firm have to certify them?
Applies to those in a significant management function (not senior manager)
Firm has 12 months to certify
Roles with qualifications / client-dealing / material risk-takers
What are the 5 Conduct Rules for individuals and who do they apply to?
Applies to all non-ancillary staff
Act with integrity
Act with due skill, care and diligence
Be open and cooperative with regulators
Pay regard to interests of customers and treat them fairly
Observe proper standards of market conduct
What are the 4 additional Conduct Rules for senior managers?
Ensure firm is controlled effectively
Ensure compliance with requirements + standards
Appropriate delegation
Disclose information to regulators
What are the 3 areas individuals are assessed as fit and proper?
Honesty, integrity + reputation
Competence + capability
Financial soundness
