IAD - UK REGULATION AND
PROFESSIONAL INTEGRITY
CORRECT 100%
What is the PSNCR - ANSWERThe Public Sector Net Cash Requirement is the official
term for the government budget deficit in the united kingdom
What will lead to an increase in aggregate monetary demand - ANSWERIf the
government raises taxes and spending by the same amount
How does the MPC influence interest rates - ANSWERThe monetary policy committee
(MPC) influence rates, by deciding the short-term benchmark repo rates (base rates)
What's a primary market - ANSWERThe market for new issues of shares or other
securities (debt instruments)
What are the FCA & PRA key priorities in relation to international regulation? -
ANSWER- Better regulation
- Enhanced supervisory cooperation to improve oversight of firms operating on a cross
border basis
-Promotion of principles based and risk based approaches in global forums
What is narrow money - ANSWERFinancial assets which are liquid and available to
meet current spending needs
What is broad money? - ANSWERTotal sum of a wider range of assets including some
which are not as liquid as those falling within the definition of narrow money
Chapter 5 - ANSWERThe Regulatory Infrastructure of UK Financial Services
Firms are answerable to - ANSWERThe two regulators (Financial Conduct Authority &
Prudential Regulation Authority)
The regulators are answerable to - ANSWERHis Majesty's Treasury (HMT)
What is the main role of the FCA? - ANSWEREnforce regulation & laws which helps
mitigate conduct risk
What is conduct risk - ANSWERThe risk of detriment (damage to interest financial or
non financial) to customers of financial services firms by poor conduct.
What are some examples of conduct risk - ANSWER- Firms being mismanaged
- Products and services clearly not designed or in the interests of customers
, In the FCAs view how is conduct risk primarily driven - ANSWERBy poor culture within
firms
Employees within firms (poor managers not properly training staff)
What is prudential risk - ANSWERType of systemic risk - risk caused to stability of
financial services industry as a whole, which could be caused by insolvency of a firm
Who appoints board of directors at the FCA - ANSWERHMT - the chair of the board is
appointed by Chancellor
The PRA is part of - ANSWERBOE
For solo regulated firms - who does the prudential & conduct regulation - ANSWERThe
FCA
Who issues directions to the FCA & PRA - ANSWERThe Financial Policy Committee
(FPC)
Who appoints members to the FPC - ANSWERBOE
What does the FPC do biannually - ANSWERIssue financial stability report - sets out
FPC view of financial stability of UK financial system
What firms need to be PRA regulated - ANSWER- Deposit takers - banks, building
societies
- Insurers- anything to do with authorized insurance activities (including insurance
brokers)
- Significant Investment Firm
What is the PRA objective - ANSWERGeneral Objective - to promote the safety and
soundness of PRA authorised firms
- Avoid instability
- Minimize adverse effect the failure of PRA firm would have on the stability of financial
services
Insurance objective- contributing to the securing of protection for those who are or may
be policy holders
What is the FCA strategic objectives - ANSWERRelevant financial markets function well
What is the FCA operational objectives - ANSWERConsumer protection - Secure an
appropriate degree of protection for consumers (Conduct Risk)
Integrity- Protecting and enhancing integrity of the UK financial services - markets
should be stable/sound
Competition- promoting competition in the interest of consumers
PROFESSIONAL INTEGRITY
CORRECT 100%
What is the PSNCR - ANSWERThe Public Sector Net Cash Requirement is the official
term for the government budget deficit in the united kingdom
What will lead to an increase in aggregate monetary demand - ANSWERIf the
government raises taxes and spending by the same amount
How does the MPC influence interest rates - ANSWERThe monetary policy committee
(MPC) influence rates, by deciding the short-term benchmark repo rates (base rates)
What's a primary market - ANSWERThe market for new issues of shares or other
securities (debt instruments)
What are the FCA & PRA key priorities in relation to international regulation? -
ANSWER- Better regulation
- Enhanced supervisory cooperation to improve oversight of firms operating on a cross
border basis
-Promotion of principles based and risk based approaches in global forums
What is narrow money - ANSWERFinancial assets which are liquid and available to
meet current spending needs
What is broad money? - ANSWERTotal sum of a wider range of assets including some
which are not as liquid as those falling within the definition of narrow money
Chapter 5 - ANSWERThe Regulatory Infrastructure of UK Financial Services
Firms are answerable to - ANSWERThe two regulators (Financial Conduct Authority &
Prudential Regulation Authority)
The regulators are answerable to - ANSWERHis Majesty's Treasury (HMT)
What is the main role of the FCA? - ANSWEREnforce regulation & laws which helps
mitigate conduct risk
What is conduct risk - ANSWERThe risk of detriment (damage to interest financial or
non financial) to customers of financial services firms by poor conduct.
What are some examples of conduct risk - ANSWER- Firms being mismanaged
- Products and services clearly not designed or in the interests of customers
, In the FCAs view how is conduct risk primarily driven - ANSWERBy poor culture within
firms
Employees within firms (poor managers not properly training staff)
What is prudential risk - ANSWERType of systemic risk - risk caused to stability of
financial services industry as a whole, which could be caused by insolvency of a firm
Who appoints board of directors at the FCA - ANSWERHMT - the chair of the board is
appointed by Chancellor
The PRA is part of - ANSWERBOE
For solo regulated firms - who does the prudential & conduct regulation - ANSWERThe
FCA
Who issues directions to the FCA & PRA - ANSWERThe Financial Policy Committee
(FPC)
Who appoints members to the FPC - ANSWERBOE
What does the FPC do biannually - ANSWERIssue financial stability report - sets out
FPC view of financial stability of UK financial system
What firms need to be PRA regulated - ANSWER- Deposit takers - banks, building
societies
- Insurers- anything to do with authorized insurance activities (including insurance
brokers)
- Significant Investment Firm
What is the PRA objective - ANSWERGeneral Objective - to promote the safety and
soundness of PRA authorised firms
- Avoid instability
- Minimize adverse effect the failure of PRA firm would have on the stability of financial
services
Insurance objective- contributing to the securing of protection for those who are or may
be policy holders
What is the FCA strategic objectives - ANSWERRelevant financial markets function well
What is the FCA operational objectives - ANSWERConsumer protection - Secure an
appropriate degree of protection for consumers (Conduct Risk)
Integrity- Protecting and enhancing integrity of the UK financial services - markets
should be stable/sound
Competition- promoting competition in the interest of consumers
