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RO1 Keys > 1 > Flashcards

1 Flashcards

1
Q

Financial services 4 essential functions

A

Protect customer savings
Allow savings to be lent to others
Provide protection against risk
Disperse risk

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2
Q

GILT

A

Pay a fixed level of interest over a term then the investment is returned

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3
Q

Discretionary management

A

Act within a remit for client so do not ask for permission per transaction

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4
Q

Advisory management

A

Need to ask permission per transaction

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5
Q

Fiscal policy

A

Government’s control of taxation and their borrowing and spending

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6
Q

Monetary policy

A

Control interest rates and supply of money

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7
Q

Quantitative easing

A

creating new money and then using it to ‘buy back’ loans from institutions, such as banks and companies

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8
Q

Customers hierarchy of needs

A

BMBPSRET - budgeting no. 1

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9
Q

What did MAPS replace?

A

Pension wise, pension advisory service and money advice service

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10
Q

Debt repayment plan

A

Informal agreement with creditor

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11
Q

Debt management plan

A

Agent carries out agreement with credit for repayment of debt

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12
Q

IVA

A

75% of creditors must agree, carried out by an insolvency practitioner, pay back % of overall debt

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13
Q

Brankruptcy

A

Min. Of £5k, carried out by a trustee and lasts 12months

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14
Q

Home reversion scheme

A

Sell a % of the house which is repaid upon death or sale of property. Pay rent whilst live i property for proportion not owned.

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15
Q

Peppercorn rent

A

Rent paid for home reversion scheme

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16
Q

Fixed repayment lifetime mortgage

A

An agreed premium is added to debt each month for sale of property and no interest is paid.

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17
Q

Diminishing Musharaka

A

The firm facilitating the arrangement buys the property and each repayment transfers a share of the property to the purchaser

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18
Q

Convertable term assurance

A

Gives the opportunity to turn into a life policy without further medical questioning

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19
Q

Renewable term assurance

A

Can renew policy for additional term without further medical questioning

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20
Q

Whole of life assurance

A

Life assurance with no end date

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21
Q

HTB ISA

A

Max. Of £12k put I on own, can put in £200pm, max of £1,200 for first instalment, 16+

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22
Q

LISA

A

£4k max. Per year, latest opt in 40 and last payment at 50 then withdraw from 60, stocks and shares aswell as cash, 18+

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23
Q

Personal savings allowance

A

£12,750 plus £5k for savings income

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24
Q

Derivative

A

This is the option to buy shares at a price in the future, set now.

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25
Q

Tax evasion

A

Illegally dodging tax

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26
Q

Self employment NIC

A

2 & 4

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27
Q

Limited liability partnership

A

Separate legal identity but same tax as sole trader so class 2 & 4 NIC

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28
Q

Limited liability company

A

Must be set up with memorandum of association and pay corporation tax

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29
Q

Public limited company

A

25% min. must be on stock exchange

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30
Q

Difference between insolvency and bankruptcy

A

Business goes insolvent and a person goes bankrupt

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31
Q

Bankruptcy order of repayment preference to corporate insolvency

A
  1. Fees 2. Preference debts 3. Unsecured debts
  2. Secured debts 2. Fees 3. Preference debts eg wages 4. Unsecured debts 5. Interest
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32
Q

What is needed for a contract to be valid

A

Offer, acceptance and intention

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33
Q

How to buy freehold

A

Must have 21 years remaining on lease and have lived in the property for 2 years and must have 50% agree to it if block of flats

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34
Q

General power of attorney
Enduring power of attorney
Lasting power of attorney

A

General - ends at mental incapacity

Enduring - continues beyond mental incapacity but no provision for health care

Lasting - provisions for health care also

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35
Q

What is the only thing to effect a lasting power of attorney

A

Bankruptcy stops health and welfare decisions

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36
Q

Where is a lasting power of attorney registered

A

Office of public guardian

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37
Q

Requirements for a valid will

A

2 people as witness and in writting

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38
Q

Actions that revoke a will

A

Marriage/civil partnership, writing a new will, deliberately destroying a will

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39
Q

What happened with estate if died intestate

A

With wife then spouse gets all chattels plus £270,000 then 50% over this

Children - grandchild - parent - sibling - grand parent - aunt/uncle

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40
Q

Grant used for with and without will

A

Will - probate
Intestate - grant of administration

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41
Q

Types of trust
Express
Implied
Resulting
Bare/absolute
Successive
Power of appointment
Interest in possession
Discretionary
Statuatory

A

Express - expresses wishes
Implied - implied as a result of an action
Resulting - takes effect when another will fails
Bare/absolute - fixed or unchangeable beneficiary
Successive - passed to family successors
Power of appointment - get to assign trust to appoint within class of beneficiaries
Interest in possession - person has immediate right to income
Discretionary - trustees have openness and power to choose within a group of beneficiaries
Statuatory - created by law eg intestate

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42
Q

FCA 3 operational objectives

A

PIC
Protection, integrity, competition

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43
Q

Occupational pensions registary and what other register is kept by the TPR

A

This register is to help individuals who are trying to trace old company schemes and other register is for those that are banned from acting as a trustee

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44
Q

Max punishments by The Pension Regulator

A

£5k for individuals and £50k for businesses and daily charges of £400-£10k for on-going issues

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45
Q

Information commission officer

A

Enforce compliance for GDPR

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46
Q

EU decisions, directives and regulations

A

Decisions - enforceable immediately and measures that effect an individual or state eg something that effects an individuals rights
Directives - binding but state decides how to reach within date
Regulations - do not require ratifications and immediately effect state eg change to currency

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47
Q

How are you subject to MiFID II

A

If you hold client moneys

48
Q

What did MiFID do?

A

Widen scope of investment products, easier to trade across EU and capital requirements introduced, changes to advice process eg recording advice or disclosure

49
Q

Basel II pillars

A

Min. capital requirement
Need for additional capital above min.
Public risk management and capital stats

50
Q

FCA 8 regulatory principles

A

Efficiency and economy
Proportionality
Sustainable growth
Responsibility of consumers
Responsibility of SM
Recognition of business differences
Openness and disclosure
Transparency

51
Q

3 FCA areas of responsibility

A

Authorisation, supervision, enforcement

52
Q

How long does FCA have to process an application

A

6 months if complete and 12 months if incomplete application

53
Q

Fixed and flexible portfolio firms

A

Fixed - larger, higher risk companies and supervised to pillar 1

Flexible - most firms who carry smaller risk to markets and supervised to pillar 2 & 3

54
Q

3 pillars of supervision

A
  1. Proactive
  2. Event driven
    3 Thematic
55
Q

Who sets punishment for FCA and who can you appeal to if disagree

A

Regulations Decision Comittee and if appeal Upper tribunal

56
Q

Free asset ratio

A

Surplus assets, usually for life office

57
Q

Temporary transition power

A

Allow UK to switch rules from EU

58
Q

On shoring process

A

Amending EU rules to UK only

59
Q

Short selling

A

Trader borrows shares and speculates on price movements

60
Q

Types of FCA fees

A

Application - starts at £2.5k and if wishes to vary authorisation then is 50% of application fee but if not changing fee block then flat £250 fee

Periodic - paid annually and tariff based

Special projects - special requests eg mergers

61
Q

Fixed overheads

A

Costs to enable a firm to run day to day. Classed as fixed as they do not change much. Eg rent, staff, etc.

62
Q

Smaller firms must fulfill capital resource requirement of?

A

25%

63
Q

Acceptable capital within CRD

A

Tier 1 - permenant share capital
Tier 2 - non permenant capital
Tier 3 - company debts that have short term maturity

64
Q

Retail distribution review ensured any payment can only be made to intermediary unless?

A

Intermediary waives right and passes to customer

Another firm has been involved

Is a packaged product

65
Q

Can commission increase with volume?

A

No

66
Q

Record keeping

Record of any benefits received
Sales referrals

A

Benefits - 5yrs
Referrals - 1yr

67
Q

What report is done for insurance?

A

Demands and need statement

68
Q

Insurance cooling off periods

A

General - 14 days
Protection - 30 days

69
Q

PPI cap?

A

20% of amount recovered

70
Q

Mortgage market review brought in what 3 new things

A

More stringent affordability tests

stress tests

FCA accountability on advisors

71
Q

Mortgage credit directive three new things

A

New disclosure method

7 day reflection period

New categories of BTL mortgages

72
Q

When are you subject to MiFID?

A

If you hold client monies

73
Q

Market abuse directive brought in what 2 things

A

Insider dealing

Market manipulation

74
Q

Who decides FCA punishments and who controls them. Then who can you raise that to under point of law only?

A

Upper tribunal and Lord Chancellor’s Department and raise to court of appeal

75
Q

Complaints commissioner must receive a complaint by when and how long to til they reply?

A

3months and reply in 3 days, keep you updated every 4 weeks and resolve within 12 weeks

76
Q

Consumer credit agreement was for how much?

A

Under £25k

77
Q

Cooling off period for a credit agreement

A

7 days

78
Q

Consumer credit agreement brought in what?

A

removed the £25,000 limit, but it also introduced two new exemptions which are loans:

over £25,000 where these are for business purposes.

where a debtor is categorised as a high net worth individual.

79
Q

FTOC 6 positive consumer outcomes

A

Consumers can be confident… fair treatment of customers is central to the corporate culture.

Products and services… meet needs of identified consumer groups.

Clear information provided before, during and after the point of sale.

Advice is suitable

Product performance and the service provided are as expected.

Consumers do not face un-reasonable post sale barriers

80
Q

Retail distribution review brought in what 3 things?

A

minimum qualification levels, difference between sales and advice and changes in how we charge clients for services.

81
Q

Sandier review brought what?

A

Stakeholder products

82
Q

What report is written for stakeholder products

A

Recommendation summary

83
Q

Do you need a qualification to advise on stakeholder products?

A

No

84
Q

Lifestyle fund

A

Find that switches automatically to lower risk 5yrs before retirement

85
Q

Elective client
Per se client
Eligible counter party

A

E - due to knowledge and experience
P - due to nature of role
ECP - both of above

86
Q

If proceeding with an insistent client’s transaction must get what

A

Signed letter stating going against advice

87
Q

Fiduciary duty

A

Highest standard of care

88
Q

Fiduciary

A

The person who has a fiduciary duty

89
Q

Kid must include what things?

A

ARCTIC
Aims, risks, costs, tax implications and cancellation rights

90
Q

CFPPM booklet is provided to what type of insurance?

A

With-Profits fund

91
Q

What has 30 day cooling off period

A

Anything with life, pension or annuity in the name

92
Q

Record keeping for MiFID and non-MiFID and pensions

A

5yrs MiFID
3yrs non-MiFID
Pensions are indefinitely

93
Q

Purpose of supplementary questionnaires on top of fact find?

A

To keep FF streamlined and clients engaged

94
Q

What do you do if a client wishes to change priority from usual priority order?

A

Fully document on the fact find

95
Q

Methods of ethical screening
Neutral approach
Negative screening
Positive screening

A

NA - choose socially responsible firms
NS - avoid certain practices
PS - actively seek out ethical firms

96
Q

For what products are a suitability report not required?

A

Non-regulated activities. NS&I and stakeholder products are two examples of products that use a simplified advice process.

97
Q

If it is FCA rules v principles which one wins?

A

Principles

98
Q

FCA 11 principles

A
  1. Integrity
  2. Skill, care, due diligence
  3. Management and control
  4. Financial prudence
  5. Market conduct
  6. Customers interests
  7. Communications with customers
  8. Conflicts of interest
  9. Customers relationship of trust
  10. Clients assets
  11. Relationship with regulators
99
Q

What must a firm do first if breach FCA principles

A

Inform FCA then carry out remedial action

100
Q

Principle based and outcome based regulation mean

A

P- Encouraging types of behaviour
O - Predicting the future issues

101
Q

Who is responsible for compliance within a firm

A

SM

102
Q

Additional FCA principle

A

Consumer duty principle

103
Q

Consumer duty principle 3 elements

A

Sets a high standard of conduct for marketing activities

Cross-cutting rules - sets key behaviours required

4 outcomes - sets keys for firm to customer relationships

104
Q

FCA 6 key cultural drivers

A

Leadership
Strategy
Decision making
Controls
Recruitment/training
Reward

105
Q

What form is required to give permission to be an authorised person?

A

CF form

106
Q

FCA categories of approved person

A

Governing functions - directors

Significant management function- SM but non executive

Customer dealing function

FCA governing functions - responsible for conduct

107
Q

7 Principles for approved person

A

Integrity
Skill care and due diligence
Market conduct
Openness organisation and control
Skill care and diligence in managing
Compliance

108
Q

Retail distribution review within investment firms require what certification?

A

Statement of professional standings

  • adhere to code of ethics
  • Hold necessary qualifications
  • Completed CPD
  • Comply with code of standards
109
Q

Bribery act 3 new offences

A

Offering, promising or giving a financial or other advantage, intending to bring about improper performance (‘Giving a bung’ basically).

Bribery of a foreign public official.

Failure of a firm to prevent bribery.

110
Q

Aldermanbury declaration

A

general insurance sector signing up to a common set of professional standards in relation to knowledge and conduct.

111
Q

An ethical framework for financial services found what 3 points

A

Be open, honest, responsive and accountable.

Be committed to acting competently, responsibly and reliably.

Relating to colleagues and customers fairly and with respect.

112
Q

Dilemma resolution model

A

‘go around the loop’ more than once until the dilemma is resolved.

113
Q

For MI to be effective it must be…

A

Seen
Challenged
Analysed and monitored
Acted on
Recorded

114
Q

PRA 4 categories for intervention framework

A

Low risk, moderate viability, imminent risk, firm wind up

115
Q

Criminal punishments for:
- money laundering and general prohibition
- failure to report suspicions
- Making misleading statements or insider dealing
- POCA 2002 offences such as concealment of criminal property or assisting others to do this

A

2yrs
5yrs
7yrs
14yrs

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