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Understanding the Regulators' Key Principles 1-6

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Mind Map on Understanding the Regulators' Key Principles 1-6, created by her5000 on 28/02/2014.
her5000
Mind Map by her5000, updated more than 1 year ago
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Created by her5000 over 11 years ago
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Understanding the Regulators' Key Principles 1-6
  1. Principles based outcomes focussed regulation
    1. Advantages
      1. FCA focus on priority issues
        1. Conflicts
          1. customer outcomes
          2. Reinforce Snr Mgmt responsibility
            1. Freedom for firms - interpretation
              1. Flexibility for FCA - don't need to create new rules all time
                1. Reduce need for consultation - lower cost of regulation
                2. Challenges
                  1. Need clarity/consistency - standards
                    1. C3/C4 - no dedicatedsupervisors
                    2. Relies on firms judgements
                      1. less safe harbours so need wide understanding of FCA priorities
                      2. Outcomes focussed may need new compliance skills
                        1. Principles - SYSC high level standards - Rules & Sourcebooks
                      3. Developments
                        1. Pre FSA rule based
                          1. 2006 - John Tiner - focus on principles
                            1. 2008 - Hector Sants - reinforce commitment to principles
                              1. FSA 2009/10 Business Plan - Hector Sants - "outcomes focussed"
                                1. Credit Crisis - PRA - rules for liquidity, capital and prudential
                                2. FCA - conduct of business
                                  1. ICOB - ICOBS
                                  2. DISP less prescriptive
                                  3. Principles, Rules & Standards
                                    1. SYSC
                                      1. Key Reqmts
                                        1. Snr Mgmt Arrangements - apportionment of responsibilities
                                          1. Apportionment & Oversight CF - CEO
                                            1. Controlled Functions
                                              1. CF10 - Compliance Oversight - designated investment business
                                                1. Criteria
                                                  1. honesty, integrity, reputation
                                                    1. competence & capability
                                                      1. financial soundness
                                                        1. comply with APER - Stmts of Principles and Code of Practice for Approved Persons
                                                          1. fine - 2008 - Mohammed Suba Miah
                                                            1. strict notification timelines & approval rqmts
                                                              1. 2006 - Besso Limited
                                                          2. action against individual or firm
                                                            1. 2008 Land of Leather CEO
                                                              1. 2008 - Mohammed Suba Miah
                                                          3. systems & controls
                                                            1. Organisation & structure
                                                              1. Business strategy
                                                                1. Compliance monitoring
                                                                  1. high level rqts
                                                                    1. appropriate to firm - nature, scale & complexity
                                                                      1. arrangements must be appropriate & effective
                                                                        1. responsibilities & reporting lines clear
                                                                          1. resources adequate
                                                                            1. staff competent & appropriate knowledge
                                                                              1. independent of day to day activities
                                                                                1. appropriate access to firm's records
                                                                                2. fine - 2004 - Carr Sheppards Crosthwaite Ltd
                                                                                  1. compliance manual
                                                                                    1. monitoring
                                                                                      1. roles, responsibilities, reporting lines
                                                                                    2. MI
                                                                                      1. Independent Review
                                                                                        1. IT Risk Mgmt
                                                                                          1. Fin Crime risk
                                                                                            1. Nationwide
                                                                                              1. Norwich Union
                                                                                                1. HSBC
                                                                                                  1. Mitsui Sumitomo
                                                                                                2. Outsourcing
                                                                                                3. SYSC3.2.6R (FCA only) sys & ctrls inc countering risk of fin crime
                                                                                                  1. risk based
                                                                                                    1. See fin crime mind map
                                                                                              2. 1. Integrity
                                                                                                1. 2009 Newcastle Home Loans
                                                                                                  1. 2010 Standard Life
                                                                                                  2. 2. Due skill, care & diligence
                                                                                                    1. 2004 Carr Shepards Crosthwaite
                                                                                                      1. 2006 - Capita Financial Administrators Ltd
                                                                                                      2. 3. organise and control
                                                                                                        1. 2013 Swinton Insurance Group
                                                                                                          1. 2013 lloyds Banking Group
                                                                                                            1. 2012 Coutts & Co
                                                                                                              1. 2011 Credit Suisse
                                                                                                                1. 2009 HSBC
                                                                                                                  1. 2006 - Capita Financial Administrators Ltd
                                                                                                                    1. 2007 Nationwide
                                                                                                                    2. 4. financial resources
                                                                                                                      1. threshold conditions
                                                                                                                        1. inc. capital adequacy
                                                                                                                          1. Insurers
                                                                                                                            1. ICAS - Individual Capital Adequacy Standards
                                                                                                                              1. Solvency II
                                                                                                                              2. Banks, building socks & investment firms
                                                                                                                                1. Bank for Int'l Settlements
                                                                                                                                  1. BASEL III Framewoek
                                                                                                                                    1. EU- 4th Capital Rqts Directive (CRD IV)
                                                                                                                                      1. PRA - BIPRU
                                                                                                                                2. Issues
                                                                                                                                  1. Northern Rock
                                                                                                                                    1. HBOS
                                                                                                                                    2. Penalties
                                                                                                                                      1. withdrawal of authorisation - Part IV Permissions
                                                                                                                                        1. 2010 Templedale Limited
                                                                                                                                          1. 2009 Platinum Estates and Mortgages Limited
                                                                                                                                          2. 2008 Blake Independent Financial Services Limited
                                                                                                                                    3. 5. Market Conduct
                                                                                                                                      1. ctrl market abuse
                                                                                                                                        1. strategic objective - confidence in mkt
                                                                                                                                          1. concept from FSMA
                                                                                                                                            1. not criminal offence
                                                                                                                                              1. fine, discipline & prosecute thru courts
                                                                                                                                                1. behaviour assessed against standards of regular user
                                                                                                                                              2. forms of market abuse
                                                                                                                                                1. misuse of info
                                                                                                                                                  1. misleading practices
                                                                                                                                                    1. manipulating / distorting mkt
                                                                                                                                                    2. Rules
                                                                                                                                                      1. FCA Code of Market Conduct (MAR 1)
                                                                                                                                                        1. Applies to everyone whether authorised or not
                                                                                                                                                          1. unlimited fines proven cases
                                                                                                                                                            1. Code of Market Conduct
                                                                                                                                                              1. 3 mkt abuse offences
                                                                                                                                                          2. EU Market Abuse Directive (MAD) 2005
                                                                                                                                                            1. narrower than UK rules so imposed over top - multi layered criminal & civil
                                                                                                                                                          3. Safe Harbours
                                                                                                                                                            1. Sys & Ctrls
                                                                                                                                                              1. documented procedures
                                                                                                                                                                1. procedures to disclose inside info asap
                                                                                                                                                                  1. Ctrls over confidential info
                                                                                                                                                                    1. procedures to disclose personal share dealing
                                                                                                                                                                      1. SAR reporting
                                                                                                                                                                        1. Procedures to ensure info about research methods are disclosed
                                                                                                                                                                      2. Penalties
                                                                                                                                                                        1. Rigby & Bailey
                                                                                                                                                                          1. Phillipe Jabre
                                                                                                                                                                            1. GLG Partners
                                                                                                                                                                            2. Winterflood securites
                                                                                                                                                                              1. Barclays
                                                                                                                                                                                1. southwark crown court
                                                                                                                                                                                  1. Patrick Sejean & Stefan Chaligne
                                                                                                                                                                                    1. Michael Coscia
                                                                                                                                                                                  2. 6. Customers Interests
                                                                                                                                                                                    1. 6 TCF Outcomes
                                                                                                                                                                                      1. TCF principles so applies to all firms
                                                                                                                                                                                        1. 1. TCF central to corp culture
                                                                                                                                                                                          1. culture & attitudes
                                                                                                                                                                                            1. Clive Adamson speech
                                                                                                                                                                                              1. Key Drivers of FCA culture framework
                                                                                                                                                                                                1. leadership
                                                                                                                                                                                                  1. strategy
                                                                                                                                                                                                    1. decision making
                                                                                                                                                                                                      1. controls
                                                                                                                                                                                                        1. recruitment
                                                                                                                                                                                                          1. reward
                                                                                                                                                                                                      2. 2. Products & Services meet needs
                                                                                                                                                                                                        1. product development & design
                                                                                                                                                                                                        2. 3. clear information & kept informed
                                                                                                                                                                                                          1. Marketing & advertising
                                                                                                                                                                                                          2. 4. Suitability of Advice
                                                                                                                                                                                                            1. Sales & Advice
                                                                                                                                                                                                            2. 5. Products perform as expected
                                                                                                                                                                                                              1. After sales services
                                                                                                                                                                                                              2. 6. no barrier to claim/complain
                                                                                                                                                                                                                1. complaints handling
                                                                                                                                                                                                                2. need MI to assess compliance
                                                                                                                                                                                                                3. Good Practice documents development
                                                                                                                                                                                                                  1. 2006 Towards a Fair Outcome for Consumers
                                                                                                                                                                                                                    1. 2007 Treating Customers Fairly Initatve: A Progress Report
                                                                                                                                                                                                                      1. 2007 Deadline set of Mar 2008 - TCF MI
                                                                                                                                                                                                                        1. End of 2008 expected to demonstrate TCF
                                                                                                                                                                                                                          1. Jan 2009 - TCF in all ARROWs with retail component
                                                                                                                                                                                                                            1. testing of customer outcomes
                                                                                                                                                                                                                              1. assessment of culture
                                                                                                                                                                                                                            2. Distribution
                                                                                                                                                                                                                              1. 2007 Retail Distribution Review
                                                                                                                                                                                                                                1. commission structures
                                                                                                                                                                                                                                  1. emphasis on volume
                                                                                                                                                                                                                                    1. product bias, provider bias & churn
                                                                                                                                                                                                                                      1. poor persistency of pensions & life policies
                                                                                                                                                                                                                                        1. low profitability of sector
                                                                                                                                                                                                                                          1. RDR fully implemented Dec 2012
                                                                                                                                                                                                                                        2. Rulebooks
                                                                                                                                                                                                                                          1. COBS
                                                                                                                                                                                                                                            1. ICOBS
                                                                                                                                                                                                                                              1. MCOB
                                                                                                                                                                                                                                                1. BCOBS
                                                                                                                                                                                                                                                  1. TC Training & Competence
                                                                                                                                                                                                                                                    1. DISP Complaints
                                                                                                                                                                                                                                                      1. some of early prescriptive measures replaced in favour of principles
                                                                                                                                                                                                                                                    2. Penalties
                                                                                                                                                                                                                                                      1. Sesame Ltd
                                                                                                                                                                                                                                                        1. Alliance & Leicester
                                                                                                                                                                                                                                                          1. Egg Banking
                                                                                                                                                                                                                                                            1. DB UK Bank
                                                                                                                                                                                                                                                              1. Combined Insurance Company of America (CICA)
                                                                                                                                                                                                                                                                1. Policy Administration Services Ltd (PAS)
                                                                                                                                                                                                                                                                  1. HomeServe Membership Limited
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