Regulatory Bodies and Their Roles Flashcards

What is the 'twin-peaks' model of financial regulation in the UK?

Answer: The separation of conduct regulation (FCA) and prudential regulation (PRA) into two distinct regulators

The UK's twin-peaks model, established by the Financial Services Act 2012, separates financial regulation between the FCA (responsible for conduct) and the PRA (responsible for prudential regulation of deposit-takers, insurers, and major investment firms).

What is the Prudential Regulation Authority (PRA)?

Answer: A part of the Bank of England responsible for prudential regulation of banks, insurers, and major investment firms

The PRA is part of the Bank of England and is responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers, and major investment firms, focusing on their safety and soundness.

What is the role of HM Treasury in financial regulation?

Answer: It sets the overall legal and policy framework for financial regulation, including proposing legislation

HM Treasury is the government department responsible for the overall legal and institutional framework for financial services regulation. It proposes legislation, sets policy direction, and appoints the boards of regulatory bodies.

What is the Bank of England's Financial Policy Committee (FPC)?

Answer: A committee responsible for identifying and addressing systemic risks to UK financial stability

The FPC is a committee of the Bank of England responsible for macroprudential regulation. It identifies, monitors, and takes action to remove or reduce systemic risks to protect and enhance the stability of the UK financial system.

What is the Payment Systems Regulator (PSR)?

Answer: An independent economic regulator for payment systems in the UK, promoting competition and innovation

The PSR is an independent subsidiary of the FCA that regulates payment systems in the UK. It promotes competition, innovation, and the interests of service users in payment systems.

What is the role of the Competition and Markets Authority (CMA) in financial services?

Answer: It promotes competition across all markets including financial services, and can investigate anti-competitive practices

The CMA promotes competition across all sectors, including financial services. It can investigate anti-competitive practices, review mergers, and conduct market studies. It works alongside the FCA, which has concurrent competition powers.