CII R01 EXAM QUESTIONS WITH
CORRECT ANSWERS
Financial Services and Markets Act 2000 (FSMA) - ANSWER - Brought
together the regulation of all sectors of the UK financial services industry under
one regulatory system - the FSA
Introduced FOS and FSCS
set out the rules for all regulated activities when dealing with:
• deposit taking
• stocks and shares
• gilts and local authority bonds
• debentures
• futures
• unit trusts
• open-ended investment companies (OEICs)
Financial Services Authority (FSA)
Disbanded - ANSWER - In 2013
- Prudential Regulatory Authority (PRA) and Financial Conduct Authority
(FCA) formed
- Reforms clarified responsibilities between:
HM Treasury and Bank of England in the event of a financial crisis, Chancellor
of the Exchequer directs the Bank of England where public funds are at risk to
financial stability.
Financial Policy Committee (FPC) - ANSWER - Committee within the Bank
of England allows:
1. scrutiny towards emerging risks to the financial system as a whole
2. Powers to take action where it identifies threats.
Prudential Regulation Authority (PRA) - ANSWER - Works with the Bank of
England but is independent.
- Responsibility for the prudential supervision and
, authorisation of important financial institutions such as banks and firms
- Ensure that individual firms can fail without bringing
down the entire financial system.
- 'judgment based' approach to supervision,
Prudential Regulation Committee (PRC) makes the PRA decisions.
UK regulatory structure - ANSWER 1. HM Treasury & Parliament
2. The Bank of England: comprising the (PRA), the
F(FPC), and the (PRC)
3. Financial Conduct Authority (FCA)
Memorandum of Understanding - ANSWER 1998 & 2006
...is a document that outlines of an agreement that two or more parties have
reached.
Financial Conduct Authority objectives - ANSWER 1. Protection for
consumers
2. Enhance integrity of financial system
3. Promote effective competition
4. Regulates firms not covered by PRA
5. Competition powers, product intervention, power to enforce disclosure and
power to take formal action
Principles of good regulation - ANSWER 1. Efficiency and economy
2. proportionality
3. sustainable growth
4. consumer responsibility
5. senior managers responsibility
6. openness and disclosure
Prudential Regulatory Authority objectives - ANSWER 1. Responsible
regulation big firms and banks
2. Accountable to parliament
3. Promote competition in markets
4. promote safety of firms
CORRECT ANSWERS
Financial Services and Markets Act 2000 (FSMA) - ANSWER - Brought
together the regulation of all sectors of the UK financial services industry under
one regulatory system - the FSA
Introduced FOS and FSCS
set out the rules for all regulated activities when dealing with:
• deposit taking
• stocks and shares
• gilts and local authority bonds
• debentures
• futures
• unit trusts
• open-ended investment companies (OEICs)
Financial Services Authority (FSA)
Disbanded - ANSWER - In 2013
- Prudential Regulatory Authority (PRA) and Financial Conduct Authority
(FCA) formed
- Reforms clarified responsibilities between:
HM Treasury and Bank of England in the event of a financial crisis, Chancellor
of the Exchequer directs the Bank of England where public funds are at risk to
financial stability.
Financial Policy Committee (FPC) - ANSWER - Committee within the Bank
of England allows:
1. scrutiny towards emerging risks to the financial system as a whole
2. Powers to take action where it identifies threats.
Prudential Regulation Authority (PRA) - ANSWER - Works with the Bank of
England but is independent.
- Responsibility for the prudential supervision and
, authorisation of important financial institutions such as banks and firms
- Ensure that individual firms can fail without bringing
down the entire financial system.
- 'judgment based' approach to supervision,
Prudential Regulation Committee (PRC) makes the PRA decisions.
UK regulatory structure - ANSWER 1. HM Treasury & Parliament
2. The Bank of England: comprising the (PRA), the
F(FPC), and the (PRC)
3. Financial Conduct Authority (FCA)
Memorandum of Understanding - ANSWER 1998 & 2006
...is a document that outlines of an agreement that two or more parties have
reached.
Financial Conduct Authority objectives - ANSWER 1. Protection for
consumers
2. Enhance integrity of financial system
3. Promote effective competition
4. Regulates firms not covered by PRA
5. Competition powers, product intervention, power to enforce disclosure and
power to take formal action
Principles of good regulation - ANSWER 1. Efficiency and economy
2. proportionality
3. sustainable growth
4. consumer responsibility
5. senior managers responsibility
6. openness and disclosure
Prudential Regulatory Authority objectives - ANSWER 1. Responsible
regulation big firms and banks
2. Accountable to parliament
3. Promote competition in markets
4. promote safety of firms
