The development of UK financial services regulation Flashcards
(19 cards)
Professor David Llewellyn identified what three ‘core objectives’ for regulation?
To sustain systemic stability
To protect the consumer
To maintain the safety and soundness of financial institutions
Define prudential regulation?
The risk that an institution might fail and the requirement of funds to cover any losses due to borrowers defaulting on the repayment of loans
Define Conduct of business regulation?
Relating to business practices when
dealing with customers
The Financial Services Act 2012, what three bodies formed?
The Financial Policy Committee (FPC)
The Prudential Regulatory Authority (PRA)
The Financial Conduct Authority (FCA)
The BOE’s Financial Policy Committee is responsible for what?
the prudential regulation of banks, building societies, credit unions, insurers and major investment firms
with the power to make recommendations to the PRA or FCA
The PRA is responsible for what?
the prudential regulation of larger ‘prudentially significant’ firms such as deposit takers, insurance companies and some investment firms
The FCA is responsible for what? x2
- the conduct of firms in the way that they develop, market, sell and service financial products
- the prudential regulation of less prudentially significant firms such as independent financial advisers (IFAs), investment exchanges, insurance brokers and fund managers
Define macroprudential supervision?
The FPC looking at the ‘big picture’ of the UK’s financial system and identifying actual and potential risks to the system as a whole
Regulators can be directed to use which 2 macroprudential tools?
- Requiring banks to increase their capital while profits are good to provide a ‘counter‑cyclical buffer’ for when times are not so good
- ‘sectoral capital requirements’ eg. residential or commercial property, including mortgages and other areas of the financial sector
The PRA’s Prudential Regulation Committee (PRC) is on the same legal basis as which 2 other committees and what are all 3 a part of?
The Monetary Policy Committee (MPC)
The Financial Policy Committee (FPC)
All three committees are part of the BOE
How does the The Financial Conduct Authority (FCA) differ from the PRA and?
It is a limited company and not a government department, responsible primarily for the conduct of wholesale and retail financial markets
PRA vs FCA?
PRA - responsible for the way in which large firms manage their assets and maintain financial stability
FCA - responsible for the way all firms market and sell their products, AND how smaller firms manage their assets and maintain financial stability
What is the The Competition and Markets Authority (CMA)?
An independent government department to promote competition and ensure there’s choice and fair deals
The Pensions Regulator is responsible for workplace pensions schemes, aiming to?
1) Secure saver’s money
2) Value for money
3) Scrutiny of decision‑making
4) Embracing innovation
5) Bold and effective regulation
What is the Internal Dispute Resolution Procedure (IDRP)?
an occupational pension scheme’s complaints procedure managed by a scheme’s trustees or administrator
What subsidiary of the FCA ensures ensure the UK’s payment systems are reliable, efficient, competitive
and innovative?
The Payment Systems Regulator
What UK regulator is responsible or enforcing the Data Protection Act and the Freedom of Information Act?
The Information Commissioner’s Office
Firms authorised by the FCA must appoint what role to ensure compliance with all relevant legislation and regulations?
A compliance officer
What other oversight groups are there? x2
Auditors and Trustees
