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CISI UK Financial Regulation (REGS) Exam – Actual
Correct Questions and Verified Detailed Answers |
Frequently Tested Questions and Solutions | Graded A+ |
Latest Updated Version | Guaranteed Pass
What is the PRA responsible for?
Prudential regulation, promoting the safety and soundness of banks and other deposit-taking
firms.
Statutory objectives of PRA (3)
1. promote safety and soundness of PRA authorised firms
2. contribute to the securing of an appropriate degree of protection for those who are/ may
become insurance policyholders
3. facilitate effective competition
What is the FCA responsible for?
Prudential and conduct regulation, authorisation
Who is the PRA accountable to?
unit of B of E, to Parliament
Who is the FCA accountable to?
HM Treasury & Parliament
What are dual-regulated firms and who are they regulated by?
- Deposit takers, insurers and investment firms
- regulated by FCA & PRA?
What are solo-regulated firms (1) and who are they regulated by? (1)
- Non-dual-regulated firms i.e. most investment firms
- FCA
How many times a year does the FPC meet?
4
How many times is the BoE's Financial Stability Report produced and who is responsible for it?
Semi-annually
FPC (Financial Policy Committee)
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FCA objectives (4)
1. Strategic: ensure markets function well
Operational:
2. Protect consumers
3. Integrity
4. Competition
PRA objectives (3)
1. Promote the safety and soundness of PRA-authorised firms (prevent instability/ failure)
2. secure appropriate protection for those that may become policy holders
3. facilitate effective competition
FSMA's rule making powers? (general powers of FCA)
Empowers regulator to:
1. Grant authorisation (permission) of firms, approval of individuals and recognition of other
bodies
2. Rule-making of above
3. Supervision, enforcement, sanctions & disciplinary work
4. Prosecute for financial crimes
HMT (His Majesty's Treasury) Powers (4)
1. appoint/ dismiss FCA board
2. assess annual reports from FCA
3. can comission independent reviews and investigations of FCA
4. through parliament, can change the nature of the FCA's role
Recgonised Investment Exchanges & Clearing Houses
Recgonised by FCA, exempt persons, can be UK or overseas and offers services to UK clients
Designated Investment Exchanges
well regulated overseas exchanges, no direct access to UK clients, excluded from UK activity e.g.
NYSE
Designated Professional Bodies (DPBs)
can carry on certain activities without FCA authorisation, incidental to main service e.g. lawyers
What do Consumer Duty rules apply to and which principles do they replace?
1. Apply to regulated activity in the UK regarding:
- Consumer credit
- Deposit taking (retail)
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- Insurance (not reinsurance)
- Investments (not professional)
- Mortgages (regulated)
2. Replace Principles 6 & 7
When does FTOC apply?
Where a firm is out of scope of customer duty requirements.
What is FTOC?
Development of principle 6 - firm must act honestly, fairly, professionally in accordance with
best interest of its clients (the clients best interests rule').
6 consumer outcomes.
Where will you find Senior Management Arrangements?
In the Senior Management Arrangements, Systems and Controls (SYSC) sections of the FCA
handbook
Examples of senior managers breaching prescribed responsibility
- misconduct by senior manager's (SM) firm
(where SM responsible for management and of firm's misconduct & SM didn't take steps to avoid
misconduct)
Pre-emption Rights
UK company law stating that existing shareholders must be offered new share issuances first
Provisions relating to reduction of share capital
if:
- articles of association allow it
- special resolution is passed (75% acceptance)
& unique condition for plcs only:
- courts approve the action
Creditors can object to reduction of company's capital (3 examples)
1. extinguishing the liability on partly paid shares
2. return of capital which is surplus to company's needs
3. reducing the liability on partly paid shares
Financial Assistance section of Companies Law
PLCs must not assist financially in the purchase of shares in itself
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Who can request investigations by inspectors?
Shareholders
(they have right to ask Department for Business and Trade to appoint inspector)
Notice of meetings for AGM
plcs: 21 calendar days
ltd: 14 calendar days
Notice of meetings for GM
14 calendar days
% of voting shareholders that oblige company to call GM?
5%
Resolutions (voting decisions) by shareholders
ordinary resolutions e.g. approving dividends need >50%
special resolutions e.g. waive rights issues, share buybacks need at least 75%
What does S793 refer to? (shareholder rights)
PLC can require any investor to disclose an interest, failure to do so can lead to removal of
voting/ division rights
Inspectors investigating companies powers (3)
1. obtain and require documentation (interviews)
2. search premises (warrants)
3. Pass on info to Secretary of State
Requirements to become a PLC
company constitution (filing legal docs with companies house):
- memorandum (basic info)
- articles (detailed info)
Proportion of voting rights needed to consent to Scheme of reconstruction under the Companies
Act (Part 26)
majority in number and 75% in value must approve
Under what circumstances could private companies have public offers of shares
1. offer to people known to company e.g. employees or family members
2. if firm intends to become PLC within 6 months of share issuance date
CISI UK Financial Regulation (REGS) Exam – Actual
Correct Questions and Verified Detailed Answers |
Frequently Tested Questions and Solutions | Graded A+ |
Latest Updated Version | Guaranteed Pass
What is the PRA responsible for?
Prudential regulation, promoting the safety and soundness of banks and other deposit-taking
firms.
Statutory objectives of PRA (3)
1. promote safety and soundness of PRA authorised firms
2. contribute to the securing of an appropriate degree of protection for those who are/ may
become insurance policyholders
3. facilitate effective competition
What is the FCA responsible for?
Prudential and conduct regulation, authorisation
Who is the PRA accountable to?
unit of B of E, to Parliament
Who is the FCA accountable to?
HM Treasury & Parliament
What are dual-regulated firms and who are they regulated by?
- Deposit takers, insurers and investment firms
- regulated by FCA & PRA?
What are solo-regulated firms (1) and who are they regulated by? (1)
- Non-dual-regulated firms i.e. most investment firms
- FCA
How many times a year does the FPC meet?
4
How many times is the BoE's Financial Stability Report produced and who is responsible for it?
Semi-annually
FPC (Financial Policy Committee)
,2|Page
FCA objectives (4)
1. Strategic: ensure markets function well
Operational:
2. Protect consumers
3. Integrity
4. Competition
PRA objectives (3)
1. Promote the safety and soundness of PRA-authorised firms (prevent instability/ failure)
2. secure appropriate protection for those that may become policy holders
3. facilitate effective competition
FSMA's rule making powers? (general powers of FCA)
Empowers regulator to:
1. Grant authorisation (permission) of firms, approval of individuals and recognition of other
bodies
2. Rule-making of above
3. Supervision, enforcement, sanctions & disciplinary work
4. Prosecute for financial crimes
HMT (His Majesty's Treasury) Powers (4)
1. appoint/ dismiss FCA board
2. assess annual reports from FCA
3. can comission independent reviews and investigations of FCA
4. through parliament, can change the nature of the FCA's role
Recgonised Investment Exchanges & Clearing Houses
Recgonised by FCA, exempt persons, can be UK or overseas and offers services to UK clients
Designated Investment Exchanges
well regulated overseas exchanges, no direct access to UK clients, excluded from UK activity e.g.
NYSE
Designated Professional Bodies (DPBs)
can carry on certain activities without FCA authorisation, incidental to main service e.g. lawyers
What do Consumer Duty rules apply to and which principles do they replace?
1. Apply to regulated activity in the UK regarding:
- Consumer credit
- Deposit taking (retail)
,3|Page
- Insurance (not reinsurance)
- Investments (not professional)
- Mortgages (regulated)
2. Replace Principles 6 & 7
When does FTOC apply?
Where a firm is out of scope of customer duty requirements.
What is FTOC?
Development of principle 6 - firm must act honestly, fairly, professionally in accordance with
best interest of its clients (the clients best interests rule').
6 consumer outcomes.
Where will you find Senior Management Arrangements?
In the Senior Management Arrangements, Systems and Controls (SYSC) sections of the FCA
handbook
Examples of senior managers breaching prescribed responsibility
- misconduct by senior manager's (SM) firm
(where SM responsible for management and of firm's misconduct & SM didn't take steps to avoid
misconduct)
Pre-emption Rights
UK company law stating that existing shareholders must be offered new share issuances first
Provisions relating to reduction of share capital
if:
- articles of association allow it
- special resolution is passed (75% acceptance)
& unique condition for plcs only:
- courts approve the action
Creditors can object to reduction of company's capital (3 examples)
1. extinguishing the liability on partly paid shares
2. return of capital which is surplus to company's needs
3. reducing the liability on partly paid shares
Financial Assistance section of Companies Law
PLCs must not assist financially in the purchase of shares in itself
, 4|Page
Who can request investigations by inspectors?
Shareholders
(they have right to ask Department for Business and Trade to appoint inspector)
Notice of meetings for AGM
plcs: 21 calendar days
ltd: 14 calendar days
Notice of meetings for GM
14 calendar days
% of voting shareholders that oblige company to call GM?
5%
Resolutions (voting decisions) by shareholders
ordinary resolutions e.g. approving dividends need >50%
special resolutions e.g. waive rights issues, share buybacks need at least 75%
What does S793 refer to? (shareholder rights)
PLC can require any investor to disclose an interest, failure to do so can lead to removal of
voting/ division rights
Inspectors investigating companies powers (3)
1. obtain and require documentation (interviews)
2. search premises (warrants)
3. Pass on info to Secretary of State
Requirements to become a PLC
company constitution (filing legal docs with companies house):
- memorandum (basic info)
- articles (detailed info)
Proportion of voting rights needed to consent to Scheme of reconstruction under the Companies
Act (Part 26)
majority in number and 75% in value must approve
Under what circumstances could private companies have public offers of shares
1. offer to people known to company e.g. employees or family members
2. if firm intends to become PLC within 6 months of share issuance date
