CISI Financial Regulations Exam With Complete
Questions and Answers | All Questions and Correct
Answers | Graded A+ | Verified Answers | Just
Released
Financial Services and Markets Act (FSMA) - (ANSWER)The legislation that
established the Financial Services Authority, and empowered it to regulate the
financial services sector. The Act has subsequently been amended by the Financial
Services Act 2012 to create the twin peaks approach of regulation in the form of
the FCA and the PRA
What are the two core purposes of the Bank of England? - (ANSWER)1. Monetary
Stability - meaning up-keeping confidence in the currency and keeping prices
stable. The latter is defined by the inflation target and is met through the
decisions delegated to the Monetary Policy Committee.
2. Financial Stability - this entails detecting and reducing threats to the stability of
the financial system as a whole, an area covered by the PRA.
Financial Policy Committee - (ANSWER)An official committee of the BoE that
possesses powers of direction and recommendation in relation to financial
stability. The committee meets at least four times a year and is responsible for
the Bank's bi-annual Financial Stability Report.
They identify, monitor, remove and reduce systemic risk.
Her Majesty's Treasury - (ANSWER)Has overall responsibility for the UK's financial
system, including the institutional structure and the legislation that governs it.
The Treasury has the power to appoint or dismiss the FCA's board and chairman,
and requires the FCA to report to the Treasury at least once a year . HMT also has
,the power to commission reviews and inquiries into the aspects of the FCA's
operations. (appoint/dismiss, reports, inquiries)
Financial Conduct Authority - (ANSWER)A replacement of the Financial Services
Authority, responsible for protecting consumers, keeping the industry stable, and
promoting healthy competition between financial services providers.
Prudential Regulation Authority - (ANSWER)An authority part of the BoE that
oversees the prudential regulation of dual-regulated firms, which includes deposit
takers, insurers and significant investment firms.
The statutory objectives of the FCA - (ANSWER)Strategic objective:
1. Ensure that relevant markets function well
Operational objectives:
2. Consumer protection objective :"Secure an appropriate degree of protection
for consumers"
3. Integrity objective: "Protecting and enhancing the integrity of the UK financial
system"
4. Competition objective: "Promoting effective competition in the interests of
consumers"
(F-PIC: function, protection, integrity, competition)
The statutory objective of the PRA - (ANSWER)Promoting the safety and
soundness of PRA-authorised firms
,FCA's Supervisory Principles - (ANSWER)1. Forward-looking
2. Focus on strategy and business models
3. Culture and governance
4. Focus on individual as well as firm accountability
5. Proportionate and risk-based
6. Two-way communication
7. Co-ordinated
8. Put right systemic harm that has occurred and stop it happening again through
enforcement action or by seeking redress
(For many colleagues, imminent risk causes catastrophic stress - forward, models,
culture, individual, risk, communication, coordination, systemic harm)
The three types of work that the FCA's supervisory model is based on -
(ANSWER)1. Proactive - pre-emptive identification of harm through review and
assessment of firms and portfolios.
2. Reactive - dealing with issues that are emerging or have happened to prevent
harm growing.
3. Thematic - wider diagnostic or remedy work where there is actual or potential
harm across a number of firms
Conduct risk - (ANSWER)Risks posed to customers and the wider integrity of the
financial markets by the way in which authorised firms and their staff conduct
themselves. Requires firms to consider whether the way it does business causes
poor outcomes for customers or harms market integrity.
, FSMA empowers either regulator to - (ANSWER)1. Make rules that are legally
binding on authorised firms
2. Grant authorisation (Part 4A Permission)
3. Supervise authorised persons on an ongoing basis
4. Employ disciplinary measures and sanctions to punish or limit activities
5. Generally enforce the regulatory framework
(DARES - discipline, authorise, rules, enforce, supervise)
Applications of EU Legislation and Guidance - (ANSWER)Effective from 31
December 2020, UK firms lost their ability to access the single market through
'passporting'. The UK Government introduced legislation that converted existing
direct EU legislation (Regulations) into UK law, and preserved existing UK laws
which implement EU obligations.
The FCA's Principles for Businesses - (ANSWER)1. Integrity
2. Skill, care and diligence
3. Management and control (SYSC)
4. Financial prudence
5. Market conduct
6. Customer's interests
7. Communications with clients
8. Conflicts of interest
Questions and Answers | All Questions and Correct
Answers | Graded A+ | Verified Answers | Just
Released
Financial Services and Markets Act (FSMA) - (ANSWER)The legislation that
established the Financial Services Authority, and empowered it to regulate the
financial services sector. The Act has subsequently been amended by the Financial
Services Act 2012 to create the twin peaks approach of regulation in the form of
the FCA and the PRA
What are the two core purposes of the Bank of England? - (ANSWER)1. Monetary
Stability - meaning up-keeping confidence in the currency and keeping prices
stable. The latter is defined by the inflation target and is met through the
decisions delegated to the Monetary Policy Committee.
2. Financial Stability - this entails detecting and reducing threats to the stability of
the financial system as a whole, an area covered by the PRA.
Financial Policy Committee - (ANSWER)An official committee of the BoE that
possesses powers of direction and recommendation in relation to financial
stability. The committee meets at least four times a year and is responsible for
the Bank's bi-annual Financial Stability Report.
They identify, monitor, remove and reduce systemic risk.
Her Majesty's Treasury - (ANSWER)Has overall responsibility for the UK's financial
system, including the institutional structure and the legislation that governs it.
The Treasury has the power to appoint or dismiss the FCA's board and chairman,
and requires the FCA to report to the Treasury at least once a year . HMT also has
,the power to commission reviews and inquiries into the aspects of the FCA's
operations. (appoint/dismiss, reports, inquiries)
Financial Conduct Authority - (ANSWER)A replacement of the Financial Services
Authority, responsible for protecting consumers, keeping the industry stable, and
promoting healthy competition between financial services providers.
Prudential Regulation Authority - (ANSWER)An authority part of the BoE that
oversees the prudential regulation of dual-regulated firms, which includes deposit
takers, insurers and significant investment firms.
The statutory objectives of the FCA - (ANSWER)Strategic objective:
1. Ensure that relevant markets function well
Operational objectives:
2. Consumer protection objective :"Secure an appropriate degree of protection
for consumers"
3. Integrity objective: "Protecting and enhancing the integrity of the UK financial
system"
4. Competition objective: "Promoting effective competition in the interests of
consumers"
(F-PIC: function, protection, integrity, competition)
The statutory objective of the PRA - (ANSWER)Promoting the safety and
soundness of PRA-authorised firms
,FCA's Supervisory Principles - (ANSWER)1. Forward-looking
2. Focus on strategy and business models
3. Culture and governance
4. Focus on individual as well as firm accountability
5. Proportionate and risk-based
6. Two-way communication
7. Co-ordinated
8. Put right systemic harm that has occurred and stop it happening again through
enforcement action or by seeking redress
(For many colleagues, imminent risk causes catastrophic stress - forward, models,
culture, individual, risk, communication, coordination, systemic harm)
The three types of work that the FCA's supervisory model is based on -
(ANSWER)1. Proactive - pre-emptive identification of harm through review and
assessment of firms and portfolios.
2. Reactive - dealing with issues that are emerging or have happened to prevent
harm growing.
3. Thematic - wider diagnostic or remedy work where there is actual or potential
harm across a number of firms
Conduct risk - (ANSWER)Risks posed to customers and the wider integrity of the
financial markets by the way in which authorised firms and their staff conduct
themselves. Requires firms to consider whether the way it does business causes
poor outcomes for customers or harms market integrity.
, FSMA empowers either regulator to - (ANSWER)1. Make rules that are legally
binding on authorised firms
2. Grant authorisation (Part 4A Permission)
3. Supervise authorised persons on an ongoing basis
4. Employ disciplinary measures and sanctions to punish or limit activities
5. Generally enforce the regulatory framework
(DARES - discipline, authorise, rules, enforce, supervise)
Applications of EU Legislation and Guidance - (ANSWER)Effective from 31
December 2020, UK firms lost their ability to access the single market through
'passporting'. The UK Government introduced legislation that converted existing
direct EU legislation (Regulations) into UK law, and preserved existing UK laws
which implement EU obligations.
The FCA's Principles for Businesses - (ANSWER)1. Integrity
2. Skill, care and diligence
3. Management and control (SYSC)
4. Financial prudence
5. Market conduct
6. Customer's interests
7. Communications with clients
8. Conflicts of interest
