London Market Legal & Regulatory Environment Flashcards
(47 cards)
What year did the FCA & PRA replace the previous regulator?
2013.
What is the FCA and what is it responsible for?
FCA is an independent regulator.
Responsible for the conduct of business & market issues for ALL firms.
Its overarching objective is to ‘ensure the relevant markets function well’ (for ALL firms).
Essentially: The FCA takes care of consumer protection and market regulation.
What are the 3 operational objectives of the FCA?
- consumer protection
- integrity
- competition
What does the FCA’s objective of competition refer to?
Wanting firms to innovate & produce new products but not at the cost of exploiting customers, and still genuinely meeting customers needs.
What is the PRA and what is it responsible for?
Sits within the Bank of England.
Responsible for the solvency & stability of those institutions that are important to the financial services industry as a whole.
In the Lloyd’s Market who does both the FCA & PRA regulate?
- the society of Lloyd’s
- managing agent’s
In the Lloyd’s Market who does the FCA regulate only?
- Lloyd’s brokers
- member’s agents
How does the FCA mainly encourage businesses to run?
Businesses are encouraged to run on the ethos of ‘treating customers fairly’.
What is a fixed portfolio firm?
Is a small population of firms who require the highest level of supervisory attention.
They are allocated a named supervisor.
What is a flexible portfolio firm?
Is the majority of firms.
These are supervised by communication, engagement, and education.
What can the FCA do if it finds problems?
- ban products in the retail sector
- withdraw misleading financial promotions
- fine or prosecute individuals or organisations
Is the FCA responsible for the FOS & FSCS?
Yes.
Who does the FCA report to and when?
The government and parliament annually.
What are the 11 Principles for Business (PRIN) of both the FCA & PRA?
- integrity
- skill, care, & diligence
- management & control
- financial prudence
- market conduct
- customer’s interests
- communications with clients
- conflicts of interest
- customers: relationships of trust
- clients’ assets
- relations with regulators
What is one of the main ‘principles for business (PRIN)’ that the FCA expects its authorised firms to show?
That the ‘fair treatment’ of customers is at the heart of their business model.
How must intermediaries and insurers use their expertise?
They must use their relevant expertise in creating appropriate solutions for their clients.
What is Senior Management Arrangements, Systems & Controls (SYSC)?
Requires regulated firms to share out its responsibilities between directors and senior management.
SYSC also requires firms to appoint a Money Laundering Reporting Officer (MLRO), who is responsible for anti-money laundering systems and controls within the firm.
(SYSC refers to business principle no. 3: Management and control).
What is ‘whistle blowing’?
The public allegation of a firms concealed misconduct, usually from within the same organisation.
What is the technical term for ‘whistle blowing’?
‘making a qualified disclosure’.
What is the Public Information Disclosure Act 1998 (PIDA)?
Concerns ‘whistle blowing’ which is the public allegation of a firms concealed misconduct, usually from within the same organisation.
PIDA states an individual cannot be discriminated against for ‘whistle blowing’ (disclosing concealed info).
PIDA aims to encourage a culture of openness.
What is ‘home state financial regulation’?
When an insurer is authorised in 1 EU country known as its “home state”, and can thus operate freely in ALL other EU countries.
What does it mean if a company works on an ‘establishment basis’?
The company has chosen to open offices in another EU state.
What does it mean if a company works on a ‘services’ basis?
The company has chosen to operate only from its ‘home state’.
What does it mean if a company works on an ‘admitted basis’?
Insurance companies are granted permission by individual states to write business in the USA.
