Chapter 6.pdf - Chapter 6 Regulatory Processes...

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Chapter 6 Regulatory Processes: Authorisation - Offence for someone to carry out regulated activity unless person is authorised or exempt (general prohibition) - Punishable max of 2 years imprisonment/fine - Firms previously authorised under the Banking Act 1987, Insurance Companies Act 1982 and the Financial Services Act 1986 - automatically re-authorised firms - Firms previously authorised by a recognised professional body (RPB) -not grandfathered, fresh authorisation needed Regulated activities: Banking E.g. Accepting deposits/issuing electronic money Home finance Advising on home finance/arranging Insurance Carrying out contracts of insurance as principal Assisting in admin and performance of a contract of insurance Scheme operators Establishing, operating or winding-up collective investment schemes/stakeholders Investment intermediary Advising on investments, managing investments, safeguarding investments e.t.c Insurance intermediary Investment Management Credit-related Business Test - For activity to be regulated must be carried out ‘by way of business’ Exempt Status - Firm has exempt status if it has a contract with authorised person whereby authorised person has accepted responsibility in writing for it’s services - Where contracted to authorised person who is responsible their activities/appointed representatives or tied agents - Designated Professional Bodies (DPB) e.g. accountancy or actuaries, don’t need authorisation for incidental regulated activities (exempt professional firms). Known as Authorised Professional Firms
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- E.g. Accountant wouldn’t need authorisation for advice on taxation on investment as incidental - FCA auth would be needed if wanted to advise on life/investments - Authorised Professional firms - Other bodies exempt: - BoE - European Central Bank - Local Authorities - Various Government bodies Applications: - Must apply to regulator for part 4A permission - Since April 2013 new insurance firms must apply to the PRA for authorisation - Successful application - scope of FCA permission - the regulated activities a firm is permitted to do - Firm must meet ‘threshold conditions’ (including capital to cover risks) - Regulator makes decision within 6 months of receiving complete application, or 12 months from incomplete app Change of legal status - If firm is authorised and changing legal status (e.g. partnership to LTD company) new entity needs authorisation - can’t transfer authorisation Responsibilities of regulated firms - Must have systems in place to manage risks they are subject to - Include capital Adequacy Rules - Ensure that all individuals carrying out controlled functions are approved - Individual can carry out significant influence functions on temporary basis for up to 12 weeks in a year without approval (if illness e.t.c) - Responsible for any advice given by representatives - All authorised firms will have nominated compliance officer
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Approved Persons/Controlled Functions - Authorised person -
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  • Winter '12
  • ACCOUNTING
  • Firm, Data Protection Act 1998

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