CII R01 Regulatory Bodies and Their Roles

Question 1

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

Accepted Answer

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

Answer

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).

Question 2

What is the Prudential Regulation Authority (PRA)?

Accepted Answer

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

Answer

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.

Question 3

What is the role of HM Treasury in financial regulation?

Accepted Answer

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

Answer

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.

Question 4

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

Accepted Answer

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

Answer

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.

Question 5

What is the Payment Systems Regulator (PSR)?

Accepted Answer

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

Answer

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.

CII R01 Practice Test

CII R01 Practice Test

CII R01 Regulatory Bodies and Their Roles