UK Financial Regulation & Market Abuse Laws:
FSMA, FCA, and MAR Questions with Verified
Correct Answers
FSMA 2000 - what is it
The foundation Act of UK financial regulation. Creates the regulator, sets its objectives and
powers, and makes unauthorised regulated business a criminal offence. The FCA Handbook
exists because FSMA grants rule-making power.
FSMA 2000 s19
The General Prohibition. No person may carry on a regulated activity in the UK by way of
business unless authorised or exempt.
FSMA 2000 s19 - penalty
2 years and/or an unlimited fine. Any agreement made in breach is also unenforceable against
the customer, who can recover their money plus compensation.
FSMA 2000 s21
The Financial Promotion Restriction. An unauthorised person must not communicate an
invitation or inducement to engage in investment activity unless the content is approved by an
authorised person or an exemption applies.
FSMA 2000 s21 - penalty
2 years and/or an unlimited fine.
FSMA 2000 s56
Prohibition orders. The FCA can ban a person from performing functions. Applies to
INDIVIDUALS ONLY. Ranges from banning one activity to banning all regulated activities.
FSMA 2000 s59
Approved persons and senior management approval, now the SM and CR framework.
FSMA 2000 s165 and s166
,Information gathering powers, and skilled persons reports (the s166 review).
FSMA 2000 s177
Offence of failing to cooperate with an FCA investigation, destroying documents, or misleading
the FCA. 2 years and/or unlimited fine.
FSMA 2000 s380 and s382
The FCA can apply to court for injunctions (stop it) and restitution (give the money back).
FCA strategic objective
Ensure the relevant markets function well.
FCA three operational objectives
Consumer protection, market integrity, and effective competition.
Which FCA objective covers financial crime enforcement
Market integrity.
FCA secondary objective
Facilitating the international competitiveness and medium to long-term growth of the UK
economy. Introduced by FSMA 2023. Secondary means subordinate to the operational
objectives, not equal.
Financial Services Act 2012 - what it did
Abolished the FSA and created the FCA (conduct), the PRA (prudential for banks, insurers, large
investment firms) and the FPC (macroprudential, within the Bank of England). Also re-enacted
the old FSMA s397 as s89 to s91.
FSA 2012 s89
Misleading statements. Making a false or misleading statement, or dishonestly concealing
material facts, to induce another person to deal. Example: concealing relevant facts in takeover
documents.
FSA 2012 s90
Misleading impressions. Creating a false or misleading impression as to the market in, or price
or value of, an investment. Example: abusive squeezes and market rigging.
FSA 2012 s91
, Misleading statements in relation to benchmarks. Example: LIBOR.
FSA 2012 s89 to s91 - penalty
10 years and/or an unlimited fine. Criminal, intent based, proved beyond all reasonable doubt.
s89-91 vs market abuse - the distinction
s89 to s91 are CRIMINAL and require INTENT. Market manipulation under UK MAR is CIVIL and
only requires EFFECT. The FCA will pursue one route or the other, not both.
FSMA 2023
The post-Brexit smarter regulatory framework Act. Revokes retained EU financial services law
and hands the rewriting to the FCA and PRA. Why the Prospectus Regulation became POATRs
plus PRM, and why the Listing Rules became UKLR. Added the secondary competitiveness
objective.
Criminal Justice Act 1993 s52 - what it covers
The criminal insider dealing regime. Sits entirely separately from market abuse, so a person can
be pursued under either.
CJA 1993 - the three offences
Dealing on inside information, encouraging another person to deal, and disclosing inside
information other than in the proper performance of employment. Memory hook: deal, tell,
encourage.
CJA 1993 - is profit required
No. You do not need to have made a profit or avoided a loss. Attempting is enough.
Inside information - the four limbs
Relates to particular securities or a particular issuer, specific or precise, has not been made
public, and price sensitive. All four must be met.
Primary insider
Someone who acquired the information through their connection with the company, such as a
director, employee, adviser or shareholder.
Secondary insider
Someone who came across the information, directly or indirectly, from a primary insider.
CJA 1993 - scope of instruments
FSMA, FCA, and MAR Questions with Verified
Correct Answers
FSMA 2000 - what is it
The foundation Act of UK financial regulation. Creates the regulator, sets its objectives and
powers, and makes unauthorised regulated business a criminal offence. The FCA Handbook
exists because FSMA grants rule-making power.
FSMA 2000 s19
The General Prohibition. No person may carry on a regulated activity in the UK by way of
business unless authorised or exempt.
FSMA 2000 s19 - penalty
2 years and/or an unlimited fine. Any agreement made in breach is also unenforceable against
the customer, who can recover their money plus compensation.
FSMA 2000 s21
The Financial Promotion Restriction. An unauthorised person must not communicate an
invitation or inducement to engage in investment activity unless the content is approved by an
authorised person or an exemption applies.
FSMA 2000 s21 - penalty
2 years and/or an unlimited fine.
FSMA 2000 s56
Prohibition orders. The FCA can ban a person from performing functions. Applies to
INDIVIDUALS ONLY. Ranges from banning one activity to banning all regulated activities.
FSMA 2000 s59
Approved persons and senior management approval, now the SM and CR framework.
FSMA 2000 s165 and s166
,Information gathering powers, and skilled persons reports (the s166 review).
FSMA 2000 s177
Offence of failing to cooperate with an FCA investigation, destroying documents, or misleading
the FCA. 2 years and/or unlimited fine.
FSMA 2000 s380 and s382
The FCA can apply to court for injunctions (stop it) and restitution (give the money back).
FCA strategic objective
Ensure the relevant markets function well.
FCA three operational objectives
Consumer protection, market integrity, and effective competition.
Which FCA objective covers financial crime enforcement
Market integrity.
FCA secondary objective
Facilitating the international competitiveness and medium to long-term growth of the UK
economy. Introduced by FSMA 2023. Secondary means subordinate to the operational
objectives, not equal.
Financial Services Act 2012 - what it did
Abolished the FSA and created the FCA (conduct), the PRA (prudential for banks, insurers, large
investment firms) and the FPC (macroprudential, within the Bank of England). Also re-enacted
the old FSMA s397 as s89 to s91.
FSA 2012 s89
Misleading statements. Making a false or misleading statement, or dishonestly concealing
material facts, to induce another person to deal. Example: concealing relevant facts in takeover
documents.
FSA 2012 s90
Misleading impressions. Creating a false or misleading impression as to the market in, or price
or value of, an investment. Example: abusive squeezes and market rigging.
FSA 2012 s91
, Misleading statements in relation to benchmarks. Example: LIBOR.
FSA 2012 s89 to s91 - penalty
10 years and/or an unlimited fine. Criminal, intent based, proved beyond all reasonable doubt.
s89-91 vs market abuse - the distinction
s89 to s91 are CRIMINAL and require INTENT. Market manipulation under UK MAR is CIVIL and
only requires EFFECT. The FCA will pursue one route or the other, not both.
FSMA 2023
The post-Brexit smarter regulatory framework Act. Revokes retained EU financial services law
and hands the rewriting to the FCA and PRA. Why the Prospectus Regulation became POATRs
plus PRM, and why the Listing Rules became UKLR. Added the secondary competitiveness
objective.
Criminal Justice Act 1993 s52 - what it covers
The criminal insider dealing regime. Sits entirely separately from market abuse, so a person can
be pursued under either.
CJA 1993 - the three offences
Dealing on inside information, encouraging another person to deal, and disclosing inside
information other than in the proper performance of employment. Memory hook: deal, tell,
encourage.
CJA 1993 - is profit required
No. You do not need to have made a profit or avoided a loss. Attempting is enough.
Inside information - the four limbs
Relates to particular securities or a particular issuer, specific or precise, has not been made
public, and price sensitive. All four must be met.
Primary insider
Someone who acquired the information through their connection with the company, such as a
director, employee, adviser or shareholder.
Secondary insider
Someone who came across the information, directly or indirectly, from a primary insider.
CJA 1993 - scope of instruments
