FCA Regulatory Exam Questions With
Correct Answers
FPC: |acronym |& |responsibilities |& |meetings
FOC: |Finacial |Policy |Committee |(sits |under |Bank |of |England |with |the |PRA)
Purpose: |identify, |monitor |and |take |action |to |remove |and |reduce |systemic |risk |in |the |financial |
industry |as |a |whole. |Oversees |the |macro-economic |and |financial |issues |that |could |cause |instability
Meets: |4 |(quarterly) |times |a |year, |issues |financial |reports: |2 |times |a |year |biannual
- |three |letters |in |between |2 |and |4 |(meet |more |than |report)
FCA |statutory |objectives |(written |objectives)
1. |Strategic |objective:Ensuring |relevant |market |function |well
3 |operational |objectives:
- |Consumer |Protection: |Securing |an |appropriate |degree |of |protection |for |consumers |"appropriate |
degree": |regulation |is |proportional; |protection |where |its |needed |
- |Integrity: |Protecting |and |enhancing |the |integrity |of |the |UK |financial |system
- |Competition: |Promoting |effective |competition |in |the |interest |of |consumers
FCA
Financial |Conduct |Authority
FCA |FOCUS: |achieve |statutory |objectives |
Limited |liabitlies |company |regulated |& |authorized |by |the |FSMA |2000 |--> |funded |by |regulated |firms
Sole |responsibility: |Appropriate |non-financial |resources
Treasury |guarantees |FCA |& |appoints |board, |but |FCA |is |the |rule |making |body
PRA
Prudential |Regulation |Authority
Prudentials |for |systemic |firms |(dual |regulated |firms)
PRA |firms: |Deposit |takers |(banks, |building |societies, |credit |unions), |Insurers, |Significant |investment |
firms
,The |PRA |looks |at |prudent |conduct.
HMRC: |acronym |& |responsibility
Acronym: |HM |Revenue |and |Costumes
Responsibility: |primary |tax |revenue |raising |agency |& |regulates |individual |savings |accounts |(ISA)
FCA |11 |Principles |of |Business
1. |Integrity
2. |Skill, |care |and |diligence
3. |Management |and |control |(leads |to |SYSC) |→ |part |of |high-level |FCA |standards |--> |risk |management.
4. |Financial |prudence |(links |to |the |Capital |Requirements |Directive, |CRD)
5. |Market |conduct |(links |to |Market |Abuse |Regulation, |MAR)
6. |Customer's |interests |(covered |in |Conduct |of |Business |Sourcebook, |COBS |+ |Client |Assets |
Sourcebook, |CASS)
7. |Communications |with |clients |(COBS |+ |CASS)
8. |Conflicts |of |interest |(COBS |+ |CASS)
9. |Customers: |relationship |of |trust |(COBS |+ |CASS)
10. |Client's |assets |(COBS |+ |CASS)
11. |Relations |with |regulators
FCA |rule |making |power |on...
PRA |rule |making |power |on...
FCA: |authorised |firms |for |regulated |activity |and |not |regulated |activity
PRA:PRA-authorised |persons
HM |Treasury |Role |with |FCA
HMT:
- |Appoints |FCA's |board
- |Guarantees |FCA's |operations
FCA |us |accountable |to |the |HMT |and |answers |to |them |--> |reports |back |on |a |yearly |bases
General |powers |of |FSMA |2000 |(Financial |Services |and |Markets |Act |2000)
- |Authorization: |a |person |applies |to |the |Regulator |under |Part |4A |of |the |Financial |Services |and |
Markets |Act |2000
- |Rule-making
- |Supervision, |enforcement, |actions |and |disciplinary |actions
- |Prosecution |for |financial |crime
- |Regulates |and |authorizes |the |FCA
The |Panel |on |Takeovers |and |Mergers |(takeover |panel)
,Takeover |Code: |focuses |on |the |fair |treatment |of |affected |parties |during |the |process |of |the |takeover |
or |merger
- |Issue |and |administer |the |City |Code |on |Takeovers |and |Mergers |(the |'Code')
- |Independent |body |of |FCA |and |PRA
Conduct |risk |regulation
FCA |manages |conduct |risk: |states |that |rules |do |matter, |but |outcomes |for |consumers |and |markets |are
|the |principal |focus |of |regulatory |concern |(Principle |based |approach)
PRA |Statutory |Objectives
General |Objective: |to |promote |the |safety |and |soundness |of |PRA-authorised |firms
- |Avoid |instability |within |those |firms |--> |ensure |stability |in |the |market
- |Minimise |the |adverse |effect |that |the |failure |of |a |PRA-authorised |firm |would |have |on |the |stability |of |
the |UK |financial |system
Insurance |Objective: |to |contribute |to |the |securing |of |an |appropriate |degree |of |protection |for |those |
who |are |or |may |become |policyholders
The |Competition |and |Markets |Authority
Main |focus |= |consumers |and |the |economy
- |Investigate |and |block |takeovers |or |mergers |if |in |the |interests |of |competition |and |consumers |
(concerned |with |impact |of |anti-competitive |practices |on |the |consumers)
- |Enforce |consumer |protection |legislation
- |Cooperation |and |coordination |in |the |financial |sector
Prosecute |unlawful |cartel |members |(e.g. |price |fixing |cartel)
The |Information |Commissioner's |Office
- |Main |focus |= |data |privacy |for |individuals, |openness |by |public |bodies
- |To |uphold |information |rights |in |the |public |interest
- |To |ensure |data |privacy |for |individuals |and |not |unfairly |distributed |to |other |bodies |(Data |Protection |
Act, |DPA)
- |To |promote |openness |by |public |bodies |(Freedom |of |Information |Act, |FoIA)
Unfair |Terms |in |Consumer |Contracts |Regulation |1999
FCA |has |the |power |to |force |financial |services |firm |to |amend |or |remove |unfair |contract |terms
Senior |Management |Arrangements, |Systems |and |Controls |(SYSC)
Purpose: |A |firm |must |take |reasonable |care |to |maintain |a |clear |and |appropriate |apportionment |of |
significant |responsibilities |among |its |directors |and |senior |managers |(risk |management |--> |risk |based |
approach |to |control |business)
, The |records |must |be |kept |for |six |years.
Yearly |written |reports |on |compliance |and |audit |must |be: |clear |and |appropriate
Rules |are |binding |upon |common |platform |firms. |(CRD, |MIFID)
SYSC |is |guidance |for |all |other |firms
SYSC |4: |General |Requirements
- |Experienced |management
- |Annual |written |reports |on |compliance |and |internal |audit
- |Apportionment |of |responsibilities |to |directors |must |be |appropriate |and |clear
SYSC |5: |Competent |Employees |Rule
- |All |employees |should |have |skill, |knowledge |and |expertise, |Segregation |of |duties, |Awareness |of |
procedures |(continual |e-Learning), |Monitoring |of |three |points |above
SYSC |6: |Need |senior |manager |in |charge |of |compliance, |audit |and |financial |crim
Relevant |markets
Regulated |Markets |e.g. |London |Stock |Exchange |(LSE). |MTF |(multilateral |trading |facility |- |privately |
owned |exchange)
OTF |(non |equity |investments |e.g. |bonds, |derivatives)
OTC |(over |the |counter |markets) |- |but |only |if |they |affect |the |above |markets
FCA |supervisory |model |- |3 |steps
1. |Proactive |firm |supervision: |for |fixed |portfolio |firms |only
- |look |at |the |business |model |and |strategy, |and |compare |it |with |statutory |objectives |(preemptive)
2. |Event-driven |work: |for |all |firms
- |Reactive |work: |responding |to |specific |events |(where |things |have |gone |wrong)
3. |Thematic: |for |all |firms
- |Referred |to |as |'Issues |& |Products' |e.g. |market |abuse |surveillance |within |asset |management |firms, |
transaction |reports |(how |well |are |asset |management |firms |monitoring |their |risk |to |market |abuse |and |
how |are |they |identifying |that |risk)
4 |Tools |of |Supervison |under |FCA
Diagnostic: |identify, |assess |and |measure |risks
Monitoring: |track |the |development |of |identified |risks
- |Transaction |reporting: |regulatory |report |by |FCA
- |Complaints |returns |(report |every |6 |months)
Correct Answers
FPC: |acronym |& |responsibilities |& |meetings
FOC: |Finacial |Policy |Committee |(sits |under |Bank |of |England |with |the |PRA)
Purpose: |identify, |monitor |and |take |action |to |remove |and |reduce |systemic |risk |in |the |financial |
industry |as |a |whole. |Oversees |the |macro-economic |and |financial |issues |that |could |cause |instability
Meets: |4 |(quarterly) |times |a |year, |issues |financial |reports: |2 |times |a |year |biannual
- |three |letters |in |between |2 |and |4 |(meet |more |than |report)
FCA |statutory |objectives |(written |objectives)
1. |Strategic |objective:Ensuring |relevant |market |function |well
3 |operational |objectives:
- |Consumer |Protection: |Securing |an |appropriate |degree |of |protection |for |consumers |"appropriate |
degree": |regulation |is |proportional; |protection |where |its |needed |
- |Integrity: |Protecting |and |enhancing |the |integrity |of |the |UK |financial |system
- |Competition: |Promoting |effective |competition |in |the |interest |of |consumers
FCA
Financial |Conduct |Authority
FCA |FOCUS: |achieve |statutory |objectives |
Limited |liabitlies |company |regulated |& |authorized |by |the |FSMA |2000 |--> |funded |by |regulated |firms
Sole |responsibility: |Appropriate |non-financial |resources
Treasury |guarantees |FCA |& |appoints |board, |but |FCA |is |the |rule |making |body
PRA
Prudential |Regulation |Authority
Prudentials |for |systemic |firms |(dual |regulated |firms)
PRA |firms: |Deposit |takers |(banks, |building |societies, |credit |unions), |Insurers, |Significant |investment |
firms
,The |PRA |looks |at |prudent |conduct.
HMRC: |acronym |& |responsibility
Acronym: |HM |Revenue |and |Costumes
Responsibility: |primary |tax |revenue |raising |agency |& |regulates |individual |savings |accounts |(ISA)
FCA |11 |Principles |of |Business
1. |Integrity
2. |Skill, |care |and |diligence
3. |Management |and |control |(leads |to |SYSC) |→ |part |of |high-level |FCA |standards |--> |risk |management.
4. |Financial |prudence |(links |to |the |Capital |Requirements |Directive, |CRD)
5. |Market |conduct |(links |to |Market |Abuse |Regulation, |MAR)
6. |Customer's |interests |(covered |in |Conduct |of |Business |Sourcebook, |COBS |+ |Client |Assets |
Sourcebook, |CASS)
7. |Communications |with |clients |(COBS |+ |CASS)
8. |Conflicts |of |interest |(COBS |+ |CASS)
9. |Customers: |relationship |of |trust |(COBS |+ |CASS)
10. |Client's |assets |(COBS |+ |CASS)
11. |Relations |with |regulators
FCA |rule |making |power |on...
PRA |rule |making |power |on...
FCA: |authorised |firms |for |regulated |activity |and |not |regulated |activity
PRA:PRA-authorised |persons
HM |Treasury |Role |with |FCA
HMT:
- |Appoints |FCA's |board
- |Guarantees |FCA's |operations
FCA |us |accountable |to |the |HMT |and |answers |to |them |--> |reports |back |on |a |yearly |bases
General |powers |of |FSMA |2000 |(Financial |Services |and |Markets |Act |2000)
- |Authorization: |a |person |applies |to |the |Regulator |under |Part |4A |of |the |Financial |Services |and |
Markets |Act |2000
- |Rule-making
- |Supervision, |enforcement, |actions |and |disciplinary |actions
- |Prosecution |for |financial |crime
- |Regulates |and |authorizes |the |FCA
The |Panel |on |Takeovers |and |Mergers |(takeover |panel)
,Takeover |Code: |focuses |on |the |fair |treatment |of |affected |parties |during |the |process |of |the |takeover |
or |merger
- |Issue |and |administer |the |City |Code |on |Takeovers |and |Mergers |(the |'Code')
- |Independent |body |of |FCA |and |PRA
Conduct |risk |regulation
FCA |manages |conduct |risk: |states |that |rules |do |matter, |but |outcomes |for |consumers |and |markets |are
|the |principal |focus |of |regulatory |concern |(Principle |based |approach)
PRA |Statutory |Objectives
General |Objective: |to |promote |the |safety |and |soundness |of |PRA-authorised |firms
- |Avoid |instability |within |those |firms |--> |ensure |stability |in |the |market
- |Minimise |the |adverse |effect |that |the |failure |of |a |PRA-authorised |firm |would |have |on |the |stability |of |
the |UK |financial |system
Insurance |Objective: |to |contribute |to |the |securing |of |an |appropriate |degree |of |protection |for |those |
who |are |or |may |become |policyholders
The |Competition |and |Markets |Authority
Main |focus |= |consumers |and |the |economy
- |Investigate |and |block |takeovers |or |mergers |if |in |the |interests |of |competition |and |consumers |
(concerned |with |impact |of |anti-competitive |practices |on |the |consumers)
- |Enforce |consumer |protection |legislation
- |Cooperation |and |coordination |in |the |financial |sector
Prosecute |unlawful |cartel |members |(e.g. |price |fixing |cartel)
The |Information |Commissioner's |Office
- |Main |focus |= |data |privacy |for |individuals, |openness |by |public |bodies
- |To |uphold |information |rights |in |the |public |interest
- |To |ensure |data |privacy |for |individuals |and |not |unfairly |distributed |to |other |bodies |(Data |Protection |
Act, |DPA)
- |To |promote |openness |by |public |bodies |(Freedom |of |Information |Act, |FoIA)
Unfair |Terms |in |Consumer |Contracts |Regulation |1999
FCA |has |the |power |to |force |financial |services |firm |to |amend |or |remove |unfair |contract |terms
Senior |Management |Arrangements, |Systems |and |Controls |(SYSC)
Purpose: |A |firm |must |take |reasonable |care |to |maintain |a |clear |and |appropriate |apportionment |of |
significant |responsibilities |among |its |directors |and |senior |managers |(risk |management |--> |risk |based |
approach |to |control |business)
, The |records |must |be |kept |for |six |years.
Yearly |written |reports |on |compliance |and |audit |must |be: |clear |and |appropriate
Rules |are |binding |upon |common |platform |firms. |(CRD, |MIFID)
SYSC |is |guidance |for |all |other |firms
SYSC |4: |General |Requirements
- |Experienced |management
- |Annual |written |reports |on |compliance |and |internal |audit
- |Apportionment |of |responsibilities |to |directors |must |be |appropriate |and |clear
SYSC |5: |Competent |Employees |Rule
- |All |employees |should |have |skill, |knowledge |and |expertise, |Segregation |of |duties, |Awareness |of |
procedures |(continual |e-Learning), |Monitoring |of |three |points |above
SYSC |6: |Need |senior |manager |in |charge |of |compliance, |audit |and |financial |crim
Relevant |markets
Regulated |Markets |e.g. |London |Stock |Exchange |(LSE). |MTF |(multilateral |trading |facility |- |privately |
owned |exchange)
OTF |(non |equity |investments |e.g. |bonds, |derivatives)
OTC |(over |the |counter |markets) |- |but |only |if |they |affect |the |above |markets
FCA |supervisory |model |- |3 |steps
1. |Proactive |firm |supervision: |for |fixed |portfolio |firms |only
- |look |at |the |business |model |and |strategy, |and |compare |it |with |statutory |objectives |(preemptive)
2. |Event-driven |work: |for |all |firms
- |Reactive |work: |responding |to |specific |events |(where |things |have |gone |wrong)
3. |Thematic: |for |all |firms
- |Referred |to |as |'Issues |& |Products' |e.g. |market |abuse |surveillance |within |asset |management |firms, |
transaction |reports |(how |well |are |asset |management |firms |monitoring |their |risk |to |market |abuse |and |
how |are |they |identifying |that |risk)
4 |Tools |of |Supervison |under |FCA
Diagnostic: |identify, |assess |and |measure |risks
Monitoring: |track |the |development |of |identified |risks
- |Transaction |reporting: |regulatory |report |by |FCA
- |Complaints |returns |(report |every |6 |months)
