Certified Financial Advisor

Card Set Information

Certified Financial Advisor
2013-08-08 16:02:18
Regulatory Context

Central Bank Act No.23 of 1964. FIA Act 1993 Securities Industry Act 1995 IA Act 1980 Co Operative Societies Act 1971 Proceeds of Crime Act 2000 Standard of conduct required by market factors Statement of Principle Prospecting Complaints Code of banking Practice
Show Answers:

  1. What is the act that governs the central bank?
    • Act 23 of 1964
    • It was amended in 1994
  2. What are some of the key functions of the central bank under Act 23 of 1964?
    • 1.Exclusive rights to issue and redeem currency
    • 2.Maintain monetary stability
    • 3.The central bank as banker and advisor to the government 
    • 4. They also act as banker to the commercial banks
    • 5. They protect the external body of currency
    • 6.They manage the countries external reserves
    • 7. They take steps to preserve financial stability
    • 8.They have the right to review legislation affecting the financial system and developments in the field of banking and financial services.
  3. Who can bank with the central bank?
    • Government
    • Commercial banks
    • Central banks of other countries
    • International Financial Institutions
    • Other Foreign Banks
  4. What act governs the financial institutions?
    Act 1993 and it was amended in 2008 and again in 2011
  5. What does this act contain?
    • This act provides for the regulation of banks and other financial institutions which engage in the business of banking and the business of a financial nature.
    • The licensing of financial institutions
    • Accounting procedures
    • Reserve requirements
    • The fitness of management and directors
    • Limitations in lending
  6. What is licensing of financial institutions?
    Only companies registered and licensed by the central bank shall carry on any banking business or business of a financial nature in T&T
  7. What is banking business?
    Banking business is receiving deposits of money from the public which may be drawn on demand
  8. What is the business of a financial institution?
    Collection of funds in the form of deposits , shares, loans & premiums
  9. What are the accounting procedures for Financial Institutions?
    Section 40:46 of the financial institution legislation. It states that financial institutions are suppose to publish bank statements within 3 months of the closing of the financial year.
  10. What is the reserve requirement?
    This is in Section 25 and it states that each bank must have not less than 10% of their net profit after tax deductions.
  11. What is fitness of management of directors states?
    THis is in Section 20 & 21
  12. What is the limitations of lending?
    • This is covered in Section 22 of the FIA. 
    • They have a limit to how much they can lend.
  13. What companies fall under the Financial Institution Act?
    • Leasing corporation
    • Merchant bank
    • Mortgage Institutions
    • Trust company
    • Unit Trust
    • Credit Card Business
    • Financial Services
    • Financial house/company
    • Confirming/Acceptance House
  14. What is the securities industries act?
    This is the act of 1995. It pertains to the to commercial banks and registered non banking financial institutions. There is an amendment to the act securities bill 2010 it is proposed and not passed as yet.
  15. What is a securities company?
    A securities company is a company which carries on a business of trading in securities on the behalf of others. It includes a company which carries on a business as a broker, dealer, underwriter, advisor to the value of the securities and any combination of two or more of the above.
  16. What is a broker?
    A broker is a person engaged in the business of effecting transactions in securities for the account of others.
  17. What is a dealer?
    A dealer is a person engaged in the business of buying and selling securities for his own account who holds himself out at normal times that's willing to buy and sell securities at prices specified by himself.
  18. Who is an issuer?
    An issuer is a person that has securities, outstanding, issues or proposes to issue as securities to the public.
  19. What is the function of the commissioner of securities?
    • Maintain surveillance over the securities market and ensure orderly, fair and equitable dealings
    • Register, authorising and regulating all market actors
    • Controlling and supervising the activities of all market actors with a view to maintaining proper standards of conduct and professionalism in the securities business.
    • Protecting the integrity of the securities market against insider trading
    • Creating and promoting conditions that will ensure the orderly growth and development of the capital market.
    • Advise the minister of all matters relating to the securities industry
  20. What is an investment advisor?
    • Independent- That is an agent for the investor
    • Appointed representative- either salespeople representing a company or employees of an organisation tied to a particular company
  21. What is the insurance act?
    • The act of 1980 amended in 2003 and again in 2013.
    • The new bill gives central bank more regulatory authority and corrective and preventative measures.
  22. What is authorisation of issuers?
    • Corporate under the companies act
    • Must be registered by the supervisor of insurance
    • Must have a share capital not less than $3 million dollars in cash
  23. What are the accounting procedures for Insurance companies?
    • Revenue account for the year in respect to each class of insurance, business carried on by it
    • A profit and loss account for that year
    • Balance sheet as of the end of the year
    • Audited annually by its auditors
  24. What is the statutory fund?
    • Anybody in the business of insurance must start and maintain a statutory fund in each such business.
    • They must place in trust in T&T assets equal to its liability and reserves less than the amount deposited on the account of such a business.
  25. What is conduct of an insurance company?
    • No insurance company may appoint a person as managing director or CEO
    • Notice is given to the supervisor of insurance to be appointed in such a position and no objection is written back
    • The supervisor of insurance has notified their is no objection to the appointment
  26. What acts deal with the control and interventions of power of the supervisor?
    • Section 64:1
    • Section 67:1
  27. What is the co-operative societies act?
    • Act of 1971
    • It organises the credit unions
    • Supervision is done by the commissioner
  28. Registration and membership of a co-operative society
    • You can not be a credit union unless you are registered under the Co-Operative Act
    • A credit union is defined as a society which has as its objectives the promotion of thrift and the creation of a source of credit for its memebers
  29. What is the business of credit unions?
    Under section 28 of the co-operative society act it states that the a co-operative society may make advances via way of loan to its members in accordance to its by laws
  30. What is the dispute for resolution for co-operative societies?
    Matters are refered to the commissioner for a decision. A credit union can't be sued you have to go to the commissioner if you have a problem
  31. What sections are defences and penalties covered under?
    Section 69,70 and 72
  32. What are the arbitration procedures?
    This is how the commissioner deals with problems that arise.
  33. What is money laundering?
    • You make payments and transfers from one account to another
    • You hide the source and the beneficial ownership of the money
  34. What are the policies that deal with money laundering?
    • Compliance Unit 
    • Know your customer
  35. What is the definition of money laundering?
    It is defined as the process by which criminals attempt to conceal the true origin an ownership of their criminal activities. If undertaken successfully it also allows them to maintain control over those proceeds and ultimately to provide illegitimate cover for their source of income.
  36. What is the process of a contract law?
    • Offer
    • Acceptance
    • Consideration
    • Intention to create -Express
    • Legal relations- Implied
  37. What is a contract?
    A contract is a legally binding promise or set of promises between two or more parties. It can be oral or written and some instances in must be done via deed
  38. What is an offer?
    An offer is an expression of willingness to contract on terms which are ascertained or capable of being ascertained which when accepted by the offerer a contract is formed
  39. What is an acceptance?
    An acceptance is the final and unqualified acceptance of the terms of an offer
  40. What are some things to terminate an offer?
    • Rejection by the offerer
    • Lapse of time
    • Death
    • Revocation
    • Counter-offer
    • Terminating condition
  41. What are the moods of communicating an acceptance?
    • Post 
    • Writing
    • By delivery
  42. What is consideration?
    • To get something you must give something
    • It means something if value in the eyes of the law e.g. money
  43. What is intentions to create legal relations?
    • The parties should themselves intend that their agreement is to have legal affect 
    • In making an agreement the parties may say it is or is not intended to create legal relations
  44. What is an implied agreement?
    Made in the course of businesses or commercial matters
  45. Who may enter into a contract?
    • An individual over 18 years old
    • Companies
    • Partnership
    • A person trading as
    • mentally challenged persons
    • A drunk or intoxicated person
  46. What are the factors that affect the validity of a contract?
    • Misrepresentation
    • Mistake
    • Duress & undue influence
    • Illegality
  47. What is duress and undue influence?
    • Duress is forcing someone to take a contract
    • Undue influence involves pressuring someone in such a way that it is not a free choice
  48. What is void?
    Void is when the contract is so flawed it never existed
  49. What is voidable?
    Voidable is a contract that can be set aside at the option of the injured party