3 - Conduct of Business and Client Asset Rules Flashcards
When can a firm execute a client order outside a regulated market or multilateral trading facility?
If there is prior consent from all customers
What is the requirement for record keeping in respect of a firm conducting MiFID business?
5 years
When must a firm must take reasonable steps to manage any conflicts of interest with respect to independent research?
The firm is making a recommendation to the client
When is the latest a confirmation can be sent to a client following a transaction?
The business day after the transaction was arranged
For what sort of trade must a retail client be assessed for appropriate levels of knowledge by the firm?
Executing a deal on an equity warrant
What is the minimum amount of net turnover that a trust must have to be classified as professional client for MiFID business?
€40 million
When a firm is acting as an investment manager, periodic statements must always be sent to which types of client?
Retail and professional clients resident in the UK
What is considered Client Money?
Money held in excess to a client’s obligations
How soon does an analyst need to tell Compliance if they bought UCITS units?
There is no need if the analyst has no management relationship with the CIS
What products can firms sell to retail clients through a cold call?
Generally marketable low volatility packaged product
What is durable media under COBS?
Media which can be accessed by a person and which allows unchanged reproduction of the information stored on it
If a firm communicates with a client solely by telephone, when must information on any agreement be provided?
In good time before the consumer is bound by a distance offer or contract
What must be included in a financial promotion to comply with FCA rules?
Capital at risk products are stated as such
When may a firm treat a client as an elective professional client for non-MiFID business?
The qualitative test is passed and there is a statement that protection will be lost
What information must always be included in a firm’s order execution policy for retail clients?
The process the firm uses to specify relative importance of the execution factors
When can a UK firm communicate an unsolicited real time financial promotion to an overseas person?
When it complies with the UK COBS
What 3 investment services are exempt from the client agreement rules?
-Transactions with authorised persons
-Acting as the trustee of a unit trust scheme
-The supply of published recommendations
When must a firm disclose a conflict of interest?
Only if they are unable to manage it
How long must records of a pensions transfer be kept for?
Indefinitely
What is a Packaged Retail Investment Product?
Any investment whose value is affected by the value or performance of another product (or products) not directly bought by the investor
How often must a retail client get a periodic statement of their non-leveraged security based account?
At least every 3 months
When can a firm aggregate a client’s order with an own account order?
When it is likely that the aggregation will not work to the disadvantage of each of the clients concerned
How long must a firm keep records of any communicated or approved promotion of personal pension schemes?
6 years
When a financial adviser requires information on a client from a third party, what must the adviser receive from the client?
A letter of authority
What compensation does the Pension Protection Fund provide those who haven’t retired if their scheme goes bust?
90%
How long must businesses keep records to enable them to complete and justify a tax return?
6 years
What is the first step in the financial planning process for a retail client?
Establishing the client’s objectives
When must a UK investment firm undertake enhanced due diligence before onboarding a new client?
Where the client is a politician in a country that is not the UK
How often must a statement in funding principles drawn up in relation to an occupational pension scheme be reviewed?
Every 3 years
What can a firm providing investment advice to retail clients use dealing commission to purchase?
Nothing as this would be classed as inducement
What are the 2 main features of a Client Money designated bank account?
-When the bank fails the money is not to be pooled with other clients accounts
-Where the investment firm fails the money is pooled with other clients accounts
What must a firm adopting an alternative approach for its treatment of client money send to the FCA?
Confirmation from external auditors that it has in place the required systems and controls to operate an alternative approach
How often does the FCA require firms to conduct external reconciliations between its accounts and those of 3rd parties holding client money on their behalf?
As often as necessary
