FCA Regulatory Framework Flashcards

What is the primary statutory objective of the Financial Conduct Authority (FCA)?

Answer: To ensure the relevant markets function well

The FCA's strategic objective, as set out in the Financial Services and Markets Act 2000 (as amended by the Financial Services Act 2012), is ensuring that the relevant markets function well.

Which of the following is NOT one of the FCA's three operational objectives?

Answer: Monetary policy stability

The FCA's three operational objectives are consumer protection, market integrity, and promoting effective competition. Monetary policy stability is the responsibility of the Bank of England.

Under FCA rules, what does the term 'approved person' refer to?

Answer: A person approved by the FCA to perform a controlled function

An approved person is an individual who has been approved by the FCA to perform one or more controlled functions within an authorised firm, as defined under the approved persons regime.

What is the FCA's primary source of funding?

Answer: Fees and levies charged to authorised firms

The FCA is funded by the firms it regulates through periodic fees and levies. It does not receive government funding, ensuring its operational independence.

Which legislation established the current UK regulatory framework that created the FCA?

Answer: Financial Services Act 2012

The Financial Services Act 2012 amended FSMA 2000 to replace the FSA with the FCA and the PRA, creating the current twin-peaks regulatory structure.

What is meant by the FCA's 'Threshold Conditions'?

Answer: The minimum standards a firm must meet to be authorised

Threshold Conditions are the minimum requirements that firms must meet, and continue to meet, in order to be permitted to carry on regulated activities. They cover areas such as effective supervision, appropriate resources, and suitability.