After Test Questions 2

Question 1

If a client wishes to effect a transaction that directly contravenes advice given by an adviser, what action should the adviser take?

Answer 1

Add a note to the customer’s file and then complete the transaction in the normal way.

Question 2

Which of the following is true in relation to the laws of intestacy?

1. A spouse benefits only if they survive the deceased by 30 days.
2. An estranged spouse of the deceased is treated as if still married.
3. Cash held by the deceased qualifies as ‘chattels’.
4. Step-children have the same rights as natural children.

Answer 2

An estranged spouse of the deceased is treated as if still married.

Question 3

Which of the following is not exempt from authorisation under the FSMA 2000?

A life insurer.
An appointed representative.
The Bank of England.
The London Stock Exchange.

Answer 3

A life insurer.

Question 4

Which of the following is responsible for issuing UK gilts?

HM Treasury.
The Bank of England.
The Debt Management Office.
The Financial Conduct Authority.

Answer 4

The Debt Management Office.

Question 5

Ravi is an IFA authorised to hold client money. A client has not made contact or carried out any activity on his account for some time. Ravi is considering passing the cash held in the account to a local registered charity. In order to do so, which of the following would apply?

1. Ravi must write to or email the client at least twice before transferring the cash.
2. Ravi would need FCA permission to make the transfer.
3. There must be at least £500 in the account.
4. There must have been no activity on the account for at least six years.

Answer 5

There must have been no activity on the account for at least six years.

Question 6

Which types of pension scheme are regulated by the Pensions Regulator?

1. All types of UK pension.
2. Occupational schemes only.
3. Occupational schemes and group personal or stakeholder schemes only.
4. Occupational schemes, group and individual personal or stakeholder schemes.

Answer 6

3. Occupational schemes and group personal or stakeholder schemes only.

Question 7

Under its enforcement powers, the FCA can ask the courts to require an individual to forfeit any profit made in contravention of the regulations. This is known as:

Answer 7

restitution.

Question 8

Where an authorised firm provides a recommendation to a customer, the FCA requires that the recommendation must be:

Answer 8

suitable.

Question 9

Which of the following is not a requirement for a policy arranged under the Married Women’s Property Act 1982?

1. It must be an own life policy.
2. It must be for the benefit of the spouse, child or civil partner of the assured.
3. The policy must be taken out in England or Wales.
4. The wording in the policy must refer to the Act.

Answer 9

The wording in the policy must refer to the Act.

Question 10

The requirement for authorised firms to treat customers fairly is embedded within:

Answer 10

the FCA’s Principles for Businesses.

Question 11

Gary is a senior manager at a bank, and he is facing investigation under the Senior Managers Regime. Which of the following is false?

1. Gary must prove that he took reasonable steps to prevent the breach of regulations.
2. The regulator must prove that Gary was a senior manager at the time of the breach.
3. The regulator must prove that Gary was responsible for the department that caused the breach of regulations.
4. The regulator must prove that the bank has breached the regulations.

Answer 11

1. Gary must prove that he took reasonable steps to prevent the breach of regulations.

Question 12

Claudia will receive benefits from her father’s trust only if her brother dies before the age of 25. What type of beneficiary is she?

1. Absolute.
2. Bereaved minor.
3. Contingent.
4. Remainderman.

Answer 12

3. Contingent

Question 13

A firm of independent financial advisers uses a panel of providers to select from, when making investment recommendations. In what circumstances, if any, is the firm permitted to recommend a provider which is outside its panel?

1. In all circumstances.
2. In no circumstances
3. Only if such a recommendation has been notified to the FCA.
4. Only if such a recommendation is in the best interests of the client.

Answer 13

4. Only if such a recommendation is in the best interests of the client.

Question 14

What is normally the effect of an economic boom in the UK? The rate of inflation tends to:

1. fall and the UK current account shows a growing deficit.
2. fall and the UK current account shows a growing surplus.
3. rise and the UK current account shows a growing deficit.
4. rise and the UK current account shows a growing surplus.

Answer 14

3. rise and the UK current account shows a growing deficit.

Question 15

What is the maximum claim amount for long term care insurance that a married couple could successfully make, under the FSCS?

Answer 15

Unlimited.

Question 16

Under an accident, sickness and unemployment policy, benefits typically cease after:

Answer 16

1 or 2 years.

Question 17

Terry received investment advice eight years ago and realised one year ago that he might have been badly advised. Within what maximum further period must Terry submit a complaint to the firm, should he wish to do so?

1. He is unable to complain as he is already out of time.
2. One year.
3. Two years.
4. Three years.

Answer 17

3. Two years.

Question 18

The FCA’s requirement of a firm’s obligations to its customers include the following, except?

1. Act in the best interest of the customer.
2. Not to abuse customers’ trust in the firm.
3. To look after customers’ assets responsibly.
4. The price of products and services represents best value for consumers.

Answer 18

4. The price of products and services represents best value for consumers.

Question 19

In what circumstances, if any, is an independent financial advisers permitted to use a panel of providers?

1. In all circumstances.
2. In no circumstances
3. Only if the panel has been approved by the FCA.
4. Only if the panel is sufficiently broad in composition.

Answer 19

4. Only if the panel is sufficiently broad in composition.

Question 20

What is the latest point in the sales process that a key features document for a personal pension should be given to a client?

Answer 20

Before the sale is concluded.

Question 21

Which of the following statements is true with regard to execution-only business?

Answer 21

The adviser’s duty of care to explain fully the nature of the product or investment and the risks involved does not apply.

Question 22

On the death of an intestate person the Probate Registry issues:

Answer 22

letters of administration.

Question 23

Which of the following roles at an authorised firm is least likely to be subject to the FCA’s conduct rules for individuals?

1. Human resources officer.
2. Marketing director.
3. Non-executive director.
4. Security officer.

Answer 23

4. Security officer.

Question 24

George is a higher-rate taxpayer with a potential income tax liability of £18,000 for the current tax year. He wishes to maximise tax efficiency by investing in new ordinary shares of a venture capital trust (VCT) that meets all qualifying rules. In relation to his objective, which of the following is true?

Answer 24

Any gains made will be exempt from capital gains tax.

Question 25

The FCA’s regulatory regime is primarily based on:

Answer 25

the Principles for Businesses.

Question 26

Daniel is concerned that one of his colleagues, Keith, is having financial problems which are affecting the advice he provides to clients. What is likely to be the most appropriate action for Daniel to take in the first instance?

1. Do nothing, as it is not his concern.
2. Express his concerns to Keith and suggest that Keith should talk to their direct manager about his problems.
3. Report his concerns to the firm’s compliance officer.
4. Report his concerns to their direct manager.

Answer 26

2. Express his concerns to Keith and suggest that Keith should talk to their direct manager about his problems.