CISI Regulatory exam
FSAP correct answersFinancial services action plan - creates and implements directives on an EU level.
Aims to harmonise financial services rules across EU. Includes EU directives (to be implemented into
national law) and EU regulations (binding on member states)
FSAP directives correct answersMarket Abuse Directive
Prospectus Directive
MiFID
Money Laundering Directive
What must EU members do with FSAP directives correct answersDirectives must be implemented and
transposed into national law. Regulation is immediately binding in member states.
What is an act and order correct answersLaw
EU Regulatory bodies (ESAs) correct answersEuropean level regulations that oversee national regulators
ESMA (European securities and markets agency) - financial markets
EBA (European banking agency) - banks
EIOPA - insurance and pensions
[ESRB works with ESAs to promote financial stability and avoid a financial market collapse at the
European level and ESAs implement capital standards for banks]
What must firms do in relation to LIBOR correct answersBenchmark submission and administration
What are the general duties of the FCA correct answersMaking rules; preparing and issuing codes; giving
general guidance (firms may choose not to follow this); determining general policy and principles by
which the FCA performs its functions. However, the board cannot delegate its statutory objectives to
another body.
,Lamfalussy Process (4 levels) correct answersLegislative acts (EC proposes directives or regs)
Implementing measures (specialist committees draft legislation, committees include EBC, ESC, EIOPC,
EFCC)
Facilitating Regulatory Convergence (ESAs implement legislation and liaise with national regulators to
ensure things are done on time)
Enforcement (EU commission enforces new rulings)
Where do UK regulators get their power correct answersFSMA 2000
When did FSMA 2012 become law correct answersApril 2013
FCA correct answersPrivate limited company with powers to regulate the city.
Who is the FCA accountable to? correct answersThe treasury, which is headed by the chancellor of the
ex-chequer
Who appoints the board of the FCA correct answersTreasury
Who funds the FCA correct answersThe financial industry - every firm must pay a fee to the FCA and
some firms have to pay a fine
Financial Ombudsman Service (FOS) correct answersAn independent body set up by Parliament that
settles customer and small firm complaints about providers of missold financial products at no charge to
consumers.
Who oversees the financial ombudsman service correct answersFCA
,Financial service compensation scheme correct answersPays consumers if a bank becomes insolvent and
isn't able to pay consumer deposits
Who funds the financial service compensation scheme correct answersFCA
FPC correct answersCommittee of the BoE. In charge of identifying monitoring and taking action to
remove or reduce systemic risks.
Can give directions to PRA and FCA
Role of the FCA correct answersCOnduct regulator for dual-regulated firms and all other regulated firms
e.g. brokers and advisors. The FCA also monitors the resources of non dual-regulated firms to ensure
they're adequate to run. This means the day-to-day conduct of all regulated firms incl how financial
products are sold
Roles of the PRA correct answersPart of the bank of England. They're a financial regulator of dual-
regulated firms and monitor capital standards.
Dual-regulated firms correct answersReceive prudential regulation from the PRA and conduct regulation
from the FCA. Include deposit-takers (banks and building societies) and investment banks and large
institutional funds that are systemically important.
Who is the PRA accountable to? correct answersBank of England
Other regulated firms correct answersReceive conduct and prudential regulation with the FCA only
Who appoints the FCA chair and board? correct answersCoE appoints chair, HMT appoints board
Who are the PRA and FCA answerable to correct answersFinancial policy committee (includes the
governer of the BofE,
Financial policy committee correct answerspublish a semi-annual financial stability report. The
committee monitors macro prudential standards in the UK and instructs regulators to do more if so
required
, FCA/ Regulator objectives correct answersStrategic - ensure the relevant markets work well (incl
transparency)
Operational - consumer protection to ensure appropriate degree of protection depending on knowledge
and experience
Protect and enhance the integrity of the UK financial system, e.g. reducing financial crime
Promote effective competition in the interests of consumers, i.e. ensure sufficient product choice
PRA general objective correct answersPromote safety and soundness of PRA-authorised firms to avoid
instability and ensure continuity of services (minimise the adverse effect that the failure of a PRA
authorised firm would have on the stability of the UK financial systems)
Temporary product intervention correct answersFCA power from FSA to prohibit or ban products up to
12 months
PRA specific objective correct answersSecure appropriate protection for policy holders (ensure insurers
can meet claims
PRA secondary objective correct answersFacilitate effective competition
Characteristics of PRA regulation correct answersJudgment based
Forward looking
Focused
FCA Duties correct answersMaking rules
Preparing and issuing codes
Giving general guidance
Determining general policy and principles by which it performs its function
FSAP correct answersFinancial services action plan - creates and implements directives on an EU level.
Aims to harmonise financial services rules across EU. Includes EU directives (to be implemented into
national law) and EU regulations (binding on member states)
FSAP directives correct answersMarket Abuse Directive
Prospectus Directive
MiFID
Money Laundering Directive
What must EU members do with FSAP directives correct answersDirectives must be implemented and
transposed into national law. Regulation is immediately binding in member states.
What is an act and order correct answersLaw
EU Regulatory bodies (ESAs) correct answersEuropean level regulations that oversee national regulators
ESMA (European securities and markets agency) - financial markets
EBA (European banking agency) - banks
EIOPA - insurance and pensions
[ESRB works with ESAs to promote financial stability and avoid a financial market collapse at the
European level and ESAs implement capital standards for banks]
What must firms do in relation to LIBOR correct answersBenchmark submission and administration
What are the general duties of the FCA correct answersMaking rules; preparing and issuing codes; giving
general guidance (firms may choose not to follow this); determining general policy and principles by
which the FCA performs its functions. However, the board cannot delegate its statutory objectives to
another body.
,Lamfalussy Process (4 levels) correct answersLegislative acts (EC proposes directives or regs)
Implementing measures (specialist committees draft legislation, committees include EBC, ESC, EIOPC,
EFCC)
Facilitating Regulatory Convergence (ESAs implement legislation and liaise with national regulators to
ensure things are done on time)
Enforcement (EU commission enforces new rulings)
Where do UK regulators get their power correct answersFSMA 2000
When did FSMA 2012 become law correct answersApril 2013
FCA correct answersPrivate limited company with powers to regulate the city.
Who is the FCA accountable to? correct answersThe treasury, which is headed by the chancellor of the
ex-chequer
Who appoints the board of the FCA correct answersTreasury
Who funds the FCA correct answersThe financial industry - every firm must pay a fee to the FCA and
some firms have to pay a fine
Financial Ombudsman Service (FOS) correct answersAn independent body set up by Parliament that
settles customer and small firm complaints about providers of missold financial products at no charge to
consumers.
Who oversees the financial ombudsman service correct answersFCA
,Financial service compensation scheme correct answersPays consumers if a bank becomes insolvent and
isn't able to pay consumer deposits
Who funds the financial service compensation scheme correct answersFCA
FPC correct answersCommittee of the BoE. In charge of identifying monitoring and taking action to
remove or reduce systemic risks.
Can give directions to PRA and FCA
Role of the FCA correct answersCOnduct regulator for dual-regulated firms and all other regulated firms
e.g. brokers and advisors. The FCA also monitors the resources of non dual-regulated firms to ensure
they're adequate to run. This means the day-to-day conduct of all regulated firms incl how financial
products are sold
Roles of the PRA correct answersPart of the bank of England. They're a financial regulator of dual-
regulated firms and monitor capital standards.
Dual-regulated firms correct answersReceive prudential regulation from the PRA and conduct regulation
from the FCA. Include deposit-takers (banks and building societies) and investment banks and large
institutional funds that are systemically important.
Who is the PRA accountable to? correct answersBank of England
Other regulated firms correct answersReceive conduct and prudential regulation with the FCA only
Who appoints the FCA chair and board? correct answersCoE appoints chair, HMT appoints board
Who are the PRA and FCA answerable to correct answersFinancial policy committee (includes the
governer of the BofE,
Financial policy committee correct answerspublish a semi-annual financial stability report. The
committee monitors macro prudential standards in the UK and instructs regulators to do more if so
required
, FCA/ Regulator objectives correct answersStrategic - ensure the relevant markets work well (incl
transparency)
Operational - consumer protection to ensure appropriate degree of protection depending on knowledge
and experience
Protect and enhance the integrity of the UK financial system, e.g. reducing financial crime
Promote effective competition in the interests of consumers, i.e. ensure sufficient product choice
PRA general objective correct answersPromote safety and soundness of PRA-authorised firms to avoid
instability and ensure continuity of services (minimise the adverse effect that the failure of a PRA
authorised firm would have on the stability of the UK financial systems)
Temporary product intervention correct answersFCA power from FSA to prohibit or ban products up to
12 months
PRA specific objective correct answersSecure appropriate protection for policy holders (ensure insurers
can meet claims
PRA secondary objective correct answersFacilitate effective competition
Characteristics of PRA regulation correct answersJudgment based
Forward looking
Focused
FCA Duties correct answersMaking rules
Preparing and issuing codes
Giving general guidance
Determining general policy and principles by which it performs its function
