Has internal procedure to be
Fair / Consistent / Impartial
UK Government to review of the fairness, transparency, speed
and efficiency of the enforcement decision- making at the
Financial Conduct Authority (FCA) and the Prudential Regulation
Authority (PRA) on 6 May
Must be seen to enforce compliance
They co-operate and exchange information
with other regulators
Requirements imposed for
Corporate Governance and Internal
Systems and Controls within firms
Criminal Law - Offence
the State and impacts
Society e.g Theft, Money
Laundering, Murder
Intent does not need
to be proven in
relation to the guilty
act
Civil Law - Personal to parities involved.
Contracts / Individuals (a Tort) e.g.
Damage to a property or individual
One party sues another - Penalty
is usually compensation
Civil Law are fall into the
following categories -
Obligations (contract agreement)
, Fiduciary duties (legal or
ethical relationship e..g.
Solicitor/client & management
of money) and Consumer or
financial protection (quality of
products or services provided)
Administrative Law - Government departments
completing public duties. Provides accountability for
performance and functions.
Fiduciary Duties - A Legal
or Ethical relationship
between parities. e.g.
Director of a firm to its
Shareholders
FMSA Provided the FSA full range of statutory powers =
authorise, investigate and prosecute under civil law. Financial
Service Act 2012 has passed these powers to the FCA & PRA
DIFFERENT WAYS
TO REGULATE
Rules based approach - Will detail
exactly what the firm must do
Can lead to a tick
based approach to
Compliance focusing
on letter as opposed to
spirit of the rules
Principle base approach - The firm can
interoperate but must act in best
interest of customer and shareholders
Supplemented
by code
FCA/FCA
- MPBR
Address weakness in Principles
approach - More ownership on Snr
Managers to achieve outcomes
Desired Outcome
Outcome based
EUROPEAN REGULATION
Monetary policy in the
Eurozone lies with the
European Central Bank.
Banking supervision is
retained by domestic
regulated authorities
Since 2011- financial
service in Europe
overseen by 'European
System of Financial
Supervision (ESFS)
x3 European
Supervisory Authorities
set up to ensure
cross-sector consistency
1) European Banking Authority (EBA)
2) European Insurance & Occupational
Pension Authority (EIPOA)
3) European Securities
Market Authority (ESMA)
Further Directives
designed to enhance the
single financial market
Market Abuse Directive -
Harmonise laws on
insider dealing and
Market abuse
MIFID 01/11/07 -
Replaced ISD and
introduced additional
requirements for
conduct of business
and internal
organisation
Investment Service Directive (ISD)
Banking Co-Ordinator Directive
Create a passport for securities
and banking business between
home and host state. Allows
regulated business to 'passport'
into host state without the need to
get separate authorisation.
Solvency II - Capital requirements for European Insurance
firms (risk based solvency requirements)
GOVERNANCE AND INTERNAL CONTROLS
Measuring and managing the risk it faces
Conducting business
in a orderly and
efficient manner
Maintaining proper records
Maintaining and
publishing reliable
financial (or other)
information
Keep well adverse of
the regulator
expectations
SYSC Sourcebook
'Conduct of Business Rules'
impose minimum standards
of accepted behaviour upon
regulated business