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Chapter 7 Flashcards

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1
Q

What is the name and punishment for carrying out regulated activities unauthorised?

A

General Prohibition. 2 Years prison and/or fine.

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2
Q

What is an AR of an MiFID firm also known as?

A

Tied agent

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3
Q

When may a firm be exempt from authorisation?

A
  1. When appointed as an AR. 2. When another profession covers activities incidental to their services. eg a solicitor assisting a client making a claim on a life policy. 3. If they are BoE on various Government bodies
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4
Q

How long does it take FCA or PRA to make authorisation decisions?

A

6 months

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5
Q

What will applicants receive if successful?

A

Scope of permission notice including: 1. Date of permission. 2. Activities they have permission for. 3. Requirements or limitations

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6
Q

What replaced the Approved Persons Regime and what are its aims?

A

Senior Managers and Certification Regime, aims to reduce harm and strengthen market by making individuals more accountable.

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7
Q

What must firms make sure each senior manager has?

A

Statement of responsibilities

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8
Q

What ties together a firms statement of responsibilities?

A

Firm responsibilities map

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9
Q

What do firms need to ensure about senior managers?

A
  1. They are pre-approved to carry out their roles. 2. They are assessed to be fit and proper.
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10
Q

What is am example of a materal risk taker?

A

Staff who pose risk to a firm by giving out advice

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11
Q

How is SM&CR applied proportionally

A
  1. Limited Scope Firms. 2. Core Firms. 3. Enhanced Firms
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12
Q

What are the thresholds for a firm to be considered Enhanced under SM&CR?

A
  1. Asset managers AUM 50B+. 2. Intermediary business revenue 35m+. 3. Consumer credit lending revenue 100m+. 4. Mortgage lenders 10,000+ mortgages. annual thresholds are calculated on a 3 year rolling average
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13
Q

What are the additional requirements for CM&CR Enhanced firms? (4)

A
  1. Additional senior management functions. 2. Additional prescribed responsibilities. 3. Responsibility maps. 4. Handover requirements
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14
Q

How can Senior Management Functions in SM&CR firms be divided? (3)

A
  1. Governing functions. 2. Required Functions. 3. Systems and Controls
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15
Q

What is the limit for FCA being able to bring disciplinary action against an individual?

A

3 years from the date the FCA first knew of the misconduct

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16
Q

What does the Certificate Regime cover?

A

Roles which are not covered by Senior Manegement Functions but still have a significant impact on customers, such as Financial Advisors and Mortgage Advisors

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17
Q

What are the ket issues regarding a fit a proper assessment? (4)

A
  1. Relevant qualification. 2. Is undergoing proper training. 3. Possesses a level on competence. 4. Personal characteristics.
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18
Q

What are the main certification functions? (6)

A
  1. Significant Management Function. 2. CASS Operational Oversight Function. 3. Functions Subject to Qualification Requirements. 4. Client Dealing Function. 5. Material Risk Takers. 6. Algorithmic Trading.
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19
Q

Under what circumstances, and within how many days must a firm report a breach in conduct rules by a certificated function?

A

Within 7 days, if the employee has received a formal written warning, suspension, dismissal or reduction in pay

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20
Q

How long can an AR hold cilent money or assets?

A

Cannot hold client money. Can hold client assets for 28 days

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21
Q

How many days does a firm have to notifty the FCA of an AR appointemnt or contract termination?

A

10 days

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22
Q

What is the difference between an authorised person and an approved person?

A

Authorised person is a person with FCA permission to carry out certain activities. Approved person is an individual approved to carry out one or more controlled functions within the business.

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23
Q

What are the 6 main controlled functions?

A
  1. Director. 2. Non-executive Director. 3. Chief Executive. 4. Partner. 5. Director of Unincorporated Association. 6. Customer Function.
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24
Q

What records should be kept indefinitely?

A

Pension transfers, opt outs, free standing voulntary contributions.

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25
What records should be kept 5 years?
1. Life policies. 2. Pension contracts. Most other cases (Non-MiFID firms only need 3 years in some cases) 6 years for Financial Promotions
26
What are persistency figures and how must they be reported to the FCA?
They show what percentage of policies taken out are still active. Figured for the first 4 years of contracts must be reported annually.
27
How much complaints figures be reported to the FCA?
Reported Twice a year. Broken down into product category, and legnth taken to deal with complaint. 1. Closed within 3 days. 2. After 3 days but within 8 weeks. 3. Closed after 8 weeks. 4 Number closed 5: Number upheld. Reports done within 30days, may result in thematic visits
28
Who do training and competence regulations apply to?
Those who give advice, not those subject to SM&CR
29
How much CPD must be carried out each year?
35 hours, at least 21 structured. For Insurance, at least 15 hours insurance specific.
30
How long should CPD records be kept for?
3 years after employee leaving. 5 years for MiFID firms. Indefinitely for pension transfer specilists.
31
What are the 3 stages of money laundering?
1. Placement. 2. Layering. 3. Integration
32
What percentage of GDP is estimated to be through illegal activity?
2-5%
33
How should firms disclose money laundering suspicions?
Staff should report to Money Laundering Reporting Officer, who reports to the National Crime Agency
34
Which organisation provides guidance on 4MLD and 5MLD?
Joint Money Laundering Steering Group (JMLSG)
35
When must customer due dilligence be carried out?
1. When a firm enters a new business relationship, 2. Carries out an occassional transaction. 3. If they suspect money laundering. 4. If there are doubts about previously obtained information
36
When is further Customer Due Dilligence required? (3)
1. If the customer is not present for the transaction. 2. If the customer is a politically exposed person. 3. If the person is from a high risk country.
37
What is Electronic Identity Verification used for and how does it work?
Uses public and private databases to confirm customers identity. Can give match, non-match or partial match. Quickly flags inconsistencies.
38
What is Personal Data?
Any information that could be used to deduce an individuals identity
39
What are the 7 principles of data processing?
1. Lawfullness, fairness and transparency. 2. Purpose limitation. 3. Data minimisation. 4. Accuracy. 5. Stroage limitation. 6. Integrity and confedentiality. 7. Accountability.
40
What are the individuals rights regarding personal data?
1. Right to be informed. 2. Right of access. 3. Right to rectification. 4. Right to erasure. 5. Right to restirct processing. 6. Right to data portability. 7. Right to object. 8. Rights to exclusion for automatic profiling.
41
What are the possible fines for serious personal data breaches?
17.5m or 4% of turnover
42
Who is eligible to complain to the Financial Ombudsman Service?
1. Consumers. 2. Firms with less than 10 employees, or balance sheet less than £2m. 3. Charities with income less than £6.5m. 4. Trustees with net assets less than £5m. 5. Small business with turnover less than 6.5m and few than 50 employees and balance sheet of under £5m 6. Gaurantors.
43
What are the limits of the redress the FOS can apply to firms?
£445 for events on or after 1 April 2019. £200k for events before 1 April 2019. 8% interest per year applies unless claim was before April 1993.
44
What are the limits of FSCS compensation on Long term and General insurance?
Long term providers: 100%. Long term intermediaries: 90% Compulsory general: 100% Non compulsory general: 90%
45
What are the limits on FSCS compensation for pensions?
100% for insured pensions and annuities. 85k for SIPP operators
46
What are the 5 classes of risk the FSCS uses to fund its levies?
1. Deposits. 2. Investment. 3. Life and Pensions. 4. General Insurance. 5. Home Finance
47
When can and can't you change or transfer authorisation?
Cannot: partnership to LTD Can: S.32 remaining partner aftere ddeath or registration. Also additional or less partners as long as they stay withing businesss.
48
Key Aims of SM and CR:
Clarity of responsibilities Clearer accountability Who runs firm FCA framework for action against Authorisation is firms responsiblty not regualtor.
49
Do paraplanners need to be certified?
it depends, each firm can decide.
50
Who qualify as Directory Persons?
All those providing certification functions: Directors and Senior Managers All staff who are certified. Anyone who undertakes buinesss with clients.
51
What are the rules regarding Certificates?
Be issued by Senior Management Refer to the certification functions Be redone every 12 months
52
Appointed Reps can do what 2 things?
Advise onn investments Arrange deals on Investments
53
What conditions must be met for the appointment of an AR and what body apporves them and under what regime?
Does not prevent firm from threshold coonditions The person: is solvent and no links to supervision Firm: Adequete controls- still organised to comply FCA Aprroved Person Regime
54
What are the time allowances for AR's with regards to appointment and termination?
Appointment: 30 days in advnae and then 10 working days Termination: 10 days
55
What are the new rules regarding oversight of ARs?
In 2002: Enhanced oversight Competence and capacity Monitor risk as their own Yearly review Clear on termination
56
When does a firm need to notify the FCA?
Up to firm, except when: Change of firm info Correcting Firm info Serious regulatory impact
57
Who does training and competence apply to?
Employess exculding SM and CR.
58
When does the FCA need reporting to (4)?
Reduction in competence. TIme expiry of qualification. Cocon failure. Competence and supervsion failure.
58
How much of global GDP is Money laundering?
2-5%
58
3 major criminal offences for Money Laundry?
Taking part, failing to report, tipping off launders.
58
How should you report Money Laundry and what is the penalty?
Via a money laundry officer(if you have one) and via the NCA. 2 years and limited fines.
58
What constitutes a complaint?
Written or oral dissatisfaction, justified or not which results in financial loss, distress or inconvenience
58
When must a firm to its complaints procedure? And who should be required to investigate it.
At the point of sale. Senior individual from a governing function.
59
What is a rapid solution and what must be provided on resolution? And what is the procedure if it takes longer
3 business days. Provided with Summary: Of complaint and resolution Right to complain to FOS with address and info on website Time limits If it takes longer there should be prompt acknowledgment, updates and resolution within 8 weeks. Up to 6 months to go to FOS. MIFID BUSINESS: records for 5 years NON: 3 years.
59
What happens if your firm gets 500 complaints in a year?
They have to report to the FCA twice yearly.
60
What are the 7 considerations for ai in Financial services.
Bias Vulnerable customers GDPR transparency Decision Making Responsibility Compliance Complaints
61
How is the FOS funded and how are professionals charged and refunded?
General levy and case fees Professional reps: £250 (£175 refunded if won) Claims firm: £650 (£175 refunded if won £475 paid.
62
What body provided protection for eligible defined benefit pensions?
The pension protection fund. For db of firms that cease to trade or due to dishonesty
63
What is a data controller? And what are the rules for this?
The firm that collects the data, not to be confused with data processors. The firm must register with the Information Commissioner Office who are in charge of this. Not FCA. data subject is the person. Right to: Ask what data is held in them (1 month and free) Opt out of marketing Compensation for breaks Can be forgotten
64
What are the mian priorities for firms under UK GDPR?
Lawful Fair and transparent Only for purpose it was given Only as much data as you need Accurate Only as long as needed Secure Accountable
65
When should the consumer be informed about using the FOS during a complaint?
During the final response. Not at the start
66
What is the pension ombudsman deal with?
The Pensions Ombudsman deals with maladministration and disputes about pension scheme management or benefits, not mis-selling or investment advice.
67
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