Professional Documents
Culture Documents
On 1st April 2013 there emerged a new Financial Services Act 2012 to
strengthen regulation.
Reforms for financial stability has been split between the Treasury, the
BOE and the FCA.
The FCA replaced the FSA who came in to being in 1998 after taking over
responsibility from the BOE. The chancellor announced that the FSA will
cease to be on 1/6/2010.
The Bodies
1. Financial Policy Committee (FPC) Accountable to parliament but
is part of BOE with overall regulatory powers. FPC is also expected
to prevent macro-economic issues (economy and financial markets)
as well as investigating systematic risks that occur in and out of the
UK (from January 2011). The conduct of Business regulator (FCA)
is responsible for progressing interests of all users and participants.
2. Prudential Regulation Authority (PRA) Part of BOE with regulatory
powers. The PRA is also accountable for supervision of individual
firms (i.e. building societies, banks, credit unions etc.) to ensure
safety and soundness and will manage balance sheet risks.
3. Financial Conduct Authority (FCA) Will ensure customer
protection and ensure practices follow the rules (market integrity).
Business must be seen to improve the interests of all participants.
4. The role of the BOE and Treasury is clearly stipulated. If there is a
financial crisis (threat to financial stability and public funds), the
Chancellor of the Exchequer is empowered to instruct the BOE.
Bank of England
Under the current regime the BOE is charged with the oversight of macroprudential responsibility.
BOE is UKs central bank, granted the Royal Charter by William 111 but
was founded by wealthy London Merchants in 1694.
Formalised and Nationalised in 1946 with a unique relationship with the
Crown and Parliament.
The mission is to enhance the good of the UK people by protecting and
maintaining monetary and financial stability in the system.
The BOE is owned and backed by UK government, which is the sole
authority for issuing money (notes and coins).
The European zones central bank is called European Central Bank (ECB).
The USAs central bank is called the Federal Reserve.
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Unit linked
Endowment
No GSA
Not guaranteed to
pay back the
mortgage. Maturity
value depends on
fund performance.
GSA is equal to
mortgage amount.
Guaranteed to pay
the mortgage loan
at maturity.
Reversionary
Bonuses and
Terminal bonuses
(not guaranteed) but
may provide a cash
surplus in
favourable times.
Reversionary
Bonuses and
Terminal bonuses
Plus, GSA should
pay back the loan at
maturity.
No Reversionary
bonuses and
Terminal
Bonuses.
Non profit
Inflexible policy,
difficult to increase
premiums or extend
term.
Inflexible policy,
difficult to increase
premiums or extend
term.
Flexible policy,
possible to
increase/decrease
premiums or extend
term.
Inflexible policy,
fixed sum assured
payable at the end
of the term.
Smoothing Effect
Company will
maintain bonuses
out of reserve
in the years when
the fund has not
performed well.
Smoothing Effect
Company will
maintain
bonuses out of
reserve in the years
when the fund has
not performed well.
No Smoothing
Effect.
Value of the plan is
the current fund
price multiplied by
the units held in the
plan.
Non Profit
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Non-profit
Endowment
Law of Agency
Power of Attorney
From October 2007 (Mental Capacity Act 2005), LPAS replaced EPAS.
Old EPAS are still valid but all new arrangements are LPAs.
LPAS will be established when an individual has a mental capacity but
would only take effect after the individual becomes mentally incapable or
has come into agreement with the rights registered.
A significant change is that whereas the EPA could only decide on
financial/property matters the LPA is empowered to make decisions about
financial matters as well as personal and health matters.
The Public Guardianship Office is now renamed Office of Public Guardian.
Powers can still be revoked or created by the Court of protection.
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Home Finance
The Secretary of State for Works and Pensions appoints the Pensions
Ombudsman.
The ombudsman deals with Complaints relating to misadministration,
(financial loss, distress, delay or inconvenience) and Disputes
(disagreements about fact or law), of occupational pension schemes and
some aspects of personal pension schemes.
Complaints by individuals, managers, trustees and employers
Complaints may be made by scheme members and ex members,
spouses of members and ex members, dependants including widows of
the deceased and those representing interests e.g. solicitors.
A complaint or dispute must be first referred to the schemes manager.
If unresolved The Pensions Advisory Service (TPAS), a voluntary
organisation, will use mediation and conciliation to try to resolve issues.
Decisions made by OPAS are not binding and if parties are still unhappy
they can then go to the Pensions Ombudsman for consideration, whose
decision is then binding on all parties.
Complaints and disputes must be communicated to the pension
ombudsman within 3 years.
Parties are not penalised for the time spent at TPAS or at the scheme
trying to resolve these issues.
The Pensions ombudsman has now merged with the Pension protection
fund (names of both still remain) to form one tribunal. This was decided
under the Governments reorganisation of Quangos
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The decisions and Supervisory actions that can call for appeal are
1. Varying the Part IV permission of a firm
The Provisions
Security breaches e.g. losing data should be notified to the DPA within 24
hours to avoid legal sanctions.
Public authorities and businesses (more than 250 employees) can appoint
an independent data protection officer.
Data subjects need to give the explicit consent before their data can be
collected and used, and have the right to be forgotten (all data held by
businesses to be deleted including photographs, social network etc.).
Where the regulation is breached, the fine could be up to 5% of the
establishments annual global turnover or 100m Euros (the higher figure is
enforced).
The Act regulates most types of lending including personal loans, second
charges and revolving credits.
It is also to protect individuals from rogue lenders.
Loans, which are termed Regulated Mortgage Contracts by the FCA, are
not covered.
Loans that are secured on a dwelling but not first charge - but used for
other purposes other than home improvement are covered.
Further advances borrowing additional money secured on a dwelling
from the same lender are not covered regardless of what the money
raised is used for.
However, second charges are covered raising extra money on a
property usually with a different lender.
Those who supply loans and services (Act defined) must register with the
FCA.
Information held on an individual by a credit agency must be disclosed if
requested and corrected if wrong.
A copy of the loan agreement must be given to the client.
Loans for mixed purposes are separated into regulated or unregulated
parts.
Market practices must be desirable e.g. do not mislead through an advert.
Must give a cooling off period so that the client can re-consider the loan
proposition, except the agreement is signed on the lenders premises.
The annual percentage rate (APR interest rate plus additional costs and
fees charged while arranging the loan) must be quoted on all loans, to
allow for fair comparison of loan prices between lenders. Please note that
the APR is a CCA initiative.
The actual rate charged on the loan will be lower than the APR, which
takes two factors into consideration: the rate of interest (daily, monthly or
annually) and additional costs and fees into consideration (loan
arrangement fees e.g. application fee
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The Consumer Credit Act 2006 is an updated version of the 1974 Act with an
intention of providing better service levels (rights and redress- more efficient
options in solving disputes) for clients; enhancing fair practices of customer
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