CEMAP 1 - UKFS&R

Question 1

Which body “looks at the economy in broad terms to identify and address risks that may threaten the stability of the whole (or large parts of the) economy”?

Question 1 options:

a)

The Bank of England.

b)

The Monetary Policy Committee.

c)

The Financial Policy Committee.

d)

The Prudential Regulation Authority.

Answer 1

c)

The Financial Policy Committee.

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Question 2

‘A person knowingly gives out false or misleading information in order to influence the price of a share for personal gain’ is a definition of:

Question 2 options:

a)

pecuniary advantage.

b)

insider dealing.

c)

market manipulation.

d)

whistleblowing.

Answer 2

c)

market manipulation.

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Question 3

Which part(s) of the Financial Conduct Authority Handbook contain(s) binding obligations for firms?

Question 3 options:

a)

Rules and guidance.

b)

Rules only.

c)

Evidential provisions only.

d)

Guidance and evidential provisions.

Answer 3

b)

Rules only.

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Question 4

The Financial Conduct Authority’s objectives do not include which of the following?

Question 4 options:

a)

Ensuring that relevant financial markets function well.

b)

Securing an appropriate degree of protection for consumers.

c)

Limiting competition in the interests of consumers.

d)

Protecting and enhancing the integrity of the UK financial system.

Answer 4

c)

Limiting competition in the interests of consumers.

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Question 5

Which of the following is false in relation to the fair treatment of customers?

Question 5 options:

a)

It applies to all stages of the product and sales cycle.

b)

It is the responsibility of senior management in a firm.

c)

It is based on six specific rules.

d)

It requires high-quality advice to prevent mis-sales.

Answer 5

c)

It is based on six specific rules.

-The FCA has six outcomes to ensure fair treatment of customers. These are things a firm should strive to achieve, rather than rules that it must follow.

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Question 6

The main benefit of principles-based regulation is that it:

Question 6 options:

a)

provides firms with guidance rather than any specific rules.

b)

provides firms with absolute clarity about the processes they must follow.

c)

ensures firms follow the detailed principles contained in the regulator’s rules.

d)

allows firms to take decisions on how to achieve expected regulatory outcomes.

Answer 6

d)

allows firms to take decisions on how to achieve expected regulatory outcomes.

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Question 7

In relation to the FCA’s Principles for Businesses, which of the following is false?

Question 7 options:

a)

A requirement for firms to consider affordability when advising clients is covered by Principle 4 ‘Financial prudence’.

b)

Principle 3 ‘Management and control’ covers the way firms should address risks facing the business.

c)

Principle 11 ‘Relations with regulators’ requires a firm to report itself in the event of a breach of FCA regulations.

d)

The fair treatment of customers is mainly covered by Principle 6 ‘Customers’ interests’.

Answer 7

a)

A requirement for firms to consider affordability when advising clients is covered by Principle 4 ‘Financial prudence’.

-Principle 4 ‘Financial prudence’ requires firms to maintain adequate financial resources.

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Question 8

In relation to the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS), which of the following is true?

Question 8 options:

a)

The FCA and the PRA are jointly responsible for both schemes.

b)

The PRA is responsible for the FOS and the FCA is responsible for the FSCS.

c)

The PRA and the FCA are jointly responsible for the FOS, and the FCA is responsible for the FSCS.

d)

The PRA and the FCA are jointly responsible for the FSCS, and the FCA is responsible for the FOS.

Answer 8

d)

The PRA and the FCA are jointly responsible for the FSCS, and the FCA is responsible for the FOS.

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Question 9

Which of the following is subject to a specific Conduct of Business sourcebook in the FCA Handbook?

Question 9 options:

a)

Consumer credit.

b)

Mortgages and home finance.

c)

Professional firms.

d)

Credit unions.

Answer 9

b)

Mortgages and home finance.

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Question 10

Which Act of Parliament saw the creation of a number of new regulatory bodies and the abolition of the FSA?

Question 10 options:

a)

The Financial Services Act 1986.

b)

The Financial Services and Markets Act 2000.

c)

The Financial Services Act 2012.

d)

Bank of England and Financial Services Act 2016.

Answer 10

c)

The Financial Services Act 2012.

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Question 11

FCA rules require a firm to seek references from previous employers before an individual can be appointed to a senior manager or certification function. The references must cover what period?

Question 1 options:

a)

The last 3 years.

b)

The last 5 years.

c)

The last 6 years.

d)

The last 10 years.

Answer 11

c)

The last 6 years.

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Question 12

A firm has taken disciplinary action against a senior manager for a breach of FCA conduct rules. Within what period must the firm report the breach to the FCA?

Question 2 options:

a)

7 days.

b)

10 days.

c)

14 days.

d)

28 days.

Answer 12

a)

7 days.

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Question 13

Which of the following is not an FCA-regulated activity?

Question 3 options:

a)

Debt collecting.

b)

Foreign currency exchange.

c)

Accepting deposits.

d)

Mortgage administration.

Answer 13

b)

Foreign currency exchange.

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Question 14

Which of these roles would not be subject to the FCA Tier 1 conduct rules?

Question 4 options:

a)

New business assistant.

b)

Mortgage adviser.

c)

IT technician.

d)

Claims manager.

Answer 14

c)

IT technician.

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Question 15

Which of the following is not an FCA enforcement power?

Question 5 options:

a)

Seek an injunction.

b)

Withdrawal of a permitted activity.

c)

Prosecution.

d)

Redress.

Answer 15

c)

Prosecution.

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Question 16

Geoff is a financial adviser, specialising in non-MiFID investments. For how long must Geoff’s firm keep records of his training and competence after he leaves the firm?

Question 6 options:

a)

As long as the firms deems to be appropriate.

b)

At least three years.

c)

At least five years.

d)

Indefinitely.

Answer 16

b)

At least three years.

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Question 17

The Senior Managers Regime includes four specific conduct rules for those covered by the regime. Which one of those rules is incorrectly stated below?

Question 7 options:

a)

SM1: take reasonable steps to ensure that the business of the firm is controlled effectively.

b)

SM2: take reasonable steps to ensure that the business of the firm for which you are responsible complies with the relevant requirements and standards of the regulatory system.

c)

SM3: take reasonable steps to ensure that any delegation of your responsibilities is to an appropriate person and that you oversee the discharge of the delegated responsibilities effectively.

d)

SM4: disclose appropriately any information of which the FCA or PRA would reasonably expect notice.

Answer 17

a)

SM1: take reasonable steps to ensure that the business of the firm is controlled effectively

-SM1 should read: you must take reasonable steps to ensure that the business of the firm for which you are responsible is controlled effectively.

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Question 18

Compliant Finance is a small firm of advisers that have been categorised as a flexible portfolio firm for supervision purposes. This means that the firm:

Question 8 options:

a)

is supervised by a named individual.

b)

only deals with retail customers.

c)

is able to add new regulated activities without seeking permission.

d)

is supervised through the FCA customer contact centre.

Answer 18

d)

is supervised through the FCA customer contact centre.

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Question 19

Misha started a role as a trainee investment adviser with a firm of independent financial advisers in January 2022. By when must Misha pass an appropriate qualification?

a)

March 2024.

b)

December 2025.

c)

January 2026.

d)

December 2026.

Answer 19

c)

January 2026.

-Misha must achieve the qualification within 48 months of starting the role.

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Question 20

Jeremy’s firm is assessing his fitness and propriety and is considering his complaints record. Which element of the test would this be considering?

Question 10 options:

a)

Capability.

b)

Financial soundness.

c)

Competence.

d)

Honesty, integrity and reputation.

Answer 20

d)

Honesty, integrity and reputation.

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Question 21

The Basel Committee acts under the auspices of the:

Question 1 options:

a)

European Central bank.

b)

International Monetary Fund.

c)

Bank for International Settlements.

d)

World Bank.

Answer 21

c)

Bank for International Settlements.

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Question 22

The EU Directive, Solvency II, aims to:

Question 2 options:

a)

increase the amount of available capital for a bank to meet liquidity demands.

b)

restrict banks’ lending to a percentage of their capital.

c)

reduce the risk of an insurance company being unable to meet its claims.

d)

ensure banks and building societies keep customer deposits separate from its own funds.

Answer 22

c)

reduce the risk of an insurance company being unable to meet its claims.

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Question 23

The Basel III net stable funding ratio, requires that a bank’s:

Question 3 options:

a)

income and profits meet certain stability standards.

b)

assets meet specified quality requirements.

c)

long‑term financial resources exceed long‑term commitments.

d)

short-term financial resources exceed short-term commitments.

Answer 23

c)

long‑term financial resources exceed long‑term commitments.

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Question 24

Although it has adequate assets, Blazing Bank is unable to meet customers’ demands to withdraw cash. This means it has a:

Question 4 options:

a)

liquidity problem.

b)

solvency shortage.

c)

capital adequacy problem.

d)

liability concentration problem.

Answer 24

a)

liquidity problem.

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Question 25

The Capital Requirements Directives (CRDs) apply to banks, building societies and insurers.

Question 5 options:
a) True
b) False

Answer 25

b) False

-It applies to Banks, Building Societies and investment companies

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Question 26

Total loss‑absorbing capacity (TLAC) requirements apply to:

Question 6 options:

a)

Investment companies.

b)

All banks and deposit-takers.

c)

Insurance companies.

d)

Globally systemically important banks.

Answer 26

d)

Globally systemically important banks.

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Question 27

Under Basel III regulatory capital requirements, which of the following assets would have the lowest risk weighting?

Question 7 options:

a)

Secured loans.

b)

Unsecured loans.

c)

Mortgages.

d)

Gilts.

Answer 27

d)

Gilts.

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Question 28

Basel III liquidity coverage ratio requires a bank’s available high‑quality liquid assets to exceed the net cash outflows expected over the next:

Question 8 options:

a)

7 days.

b)

14 days.

c)

28 days.

d)

30 days.

Answer 28

d)

30 days.

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Question 29

When looking at capital adequacy, a firm’s solvency ratio is its:

Question 9 options:

a)

capital reserves as a percentage of its turnover.

b)

risk-adjusted assets as a percentage of its capital.

c)

capital as a percentage of its risk-adjusted assets.

d)

liabilities as a percentage of its risk-adjusted assets.

Answer 29

c)

capital as a percentage of its risk-adjusted assets.

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Question 30

Under Basel II, the capital required to cover operational risk is gross annual income multiplied by:

Question 10 options:

a)

0.10.

b)

0.15.

c)

0.20.

d)

0.25.

Answer 30

b)

0.15.

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Question 31

Yvonne’s customer is about to sign applications for a term-assurance policy and a personal pension. What is the position with Yvonne’s remuneration?

Question 1 options:

a)

She can receive commission from the pension provider but can only take an adviser charge from the customer for the life policy.

b)

She can receive commission from the life company but can only take an adviser charge from the customer for the pension policy.

c)

She can receive commission from both product providers.

d)

She cannot receive commission from either provider, but can take an adviser charge from the customer for both products.

Answer 31

b)

She can receive commission from the life company but can only take an adviser charge from the customer for the pension policy.

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Question 32

A division of a major bank needs some advice on an investment matter. They would be classified as:

Question 2 options:

a)

A retail client.

b)

A professional counterparty.

c)

An eligible counterparty.

d)

A professional client.

Answer 32

d)

A professional client.

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Question 33

Which product would not require the adviser to give the customer a key information document (KID) as part of the product disclosure requirements?

Question 3 options:

a)

Derivatives.

b)

An investment trust.

c)

A unit-linked endowment.

d)

A personal pension.

Answer 33

d)

A personal pension.

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Question 34

What is the cooling-off period for a whole-of-life assurance policy?

Question 4 options:

a)

14 days from the later of the date the contract begins or when the customer receives contractual terms.

b)

14 days from the date the application is received from the customer.

c)

30 days from the later of date the contract begins or when the customer receives contractual terms.

d)

30 days from the date the application is received from the customer.

Answer 34

c)

30 days from the later of date the contract begins or when the customer receives contractual terms.

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Question 35

Which of the following is true in relation to advice and suitability?

Question 5 options:

a)

If a suitable product is not available to an adviser, they can recommend a product that meets some of the need criteria.

b)

An independent financial adviser can use panels of providers to provide advice.

c)

An independent financial adviser cannot offer advice restricted to certain areas of need.

d)

An independent financial adviser must provide advice from all products available in the market.

Answer 35

b)

An independent financial adviser can use panels of providers to provide advice.

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Question 36

A suitability report is not required for:

Question 6 options:

a)

Whole of life assurance policies.

b)

Mortgages.

c)

Open-ended investment companies.

d)

Personal pensions.

Answer 36

b)

Mortgages.

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Question 37

Harminder is an investment adviser who makes decisions and executes investments for his customer without seeking permission each time. As part of initial disclosure for a new customer interested in that service, what additional document must Harminder present at the beginning of the relationship, specifically due to the nature of his services?

Question 7 options:

a)

A product disclosure document.

b)

A written client agreement.

c)

A services disclaimer document.

d)

An initial disclosure document.

Answer 37

b)

A written client agreement.

-Harminder would have to present an initial disclosure document anyway, as part of the COBS requirements. Due to the nature of his services, he would also have to present a client agreement.

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Question 38

An investment firm is producing promotional material for one of their unit trust funds, which has been running for 20 years. Any performance figures used must show the fund’s performance for what minimum period? The past:

Question 8 options:

a)

12 months.

b)

5 years.

c)

10 years.

d)

20 years.

Answer 38

b)

5 years.

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Question 39

Bobbie has declined her adviser’s recommendation and instructed them to arrange a different product. This means Bobbie will be regarded as:

Question 9 options:

a)

a professional client.

b)

an execution-only client.

c)

an exception client.

d)

an insistent client.

Answer 39

d)

an insistent client.

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Question 40

For which product might a customer not receive a full refund of money paid to the provider when exercising their statutory cancellation rights?

Question 10 options:

a)

An annuity.

b)

Unit-linked investment bond.

c)

Unit-linked whole-of-life policy.

d)

Personal pension.

Answer 40

b)

Unit-linked investment bond.

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Question 41

Which of the following customers would not be considered vulnerable under MCOBS?

Question 1 options:

a)

John, who is exercising his statutory Right‑to‑Buy.

b)

Sarah, who is buying a shared-ownership flat.

c)

Dorothy, who is applying for a lifetime mortgage.

d)

Andy, who is entering a sale‑and‑rent‑back agreement.

Answer 41

b)

Sarah, who is buying a shared-ownership flat.

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Question 42

For how long must a firm keep a record of a non-real-time financial promotion for mortgages after it was last used?

Question 2 options:

a)

12 months.

b)

24 months.

c)

36 months.

d)

Indefinitely.

Answer 42

a)

12 months.

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Question 43

Jane’s adviser has explained that they will only provide advice on pensions for her. This is an example of:

Question 3 options:

a)

generic advice.

b)

simplified advice.

c)

basic advice.

d)

focused advice.

Answer 43

b)

simplified advice.

-basic advice = general advice, not one area
-simplified advice = specific area e.g. pensions but not products level of advice.
-focused advice = specific products and options

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Question 44

In terms of mortgage regulation, which of the following is not one of the criteria for a mortgage to be regulated by MCOBS?

Question 4 options:

a)

The dwelling must occupy at least 40% of the land.

b)

The mortgage must be secured on land.

c)

The mortgage is taken out by an individual or trustees.

d)

The land or property must be in the UK or the European Economic Area.

Answer 44

d)

The land or property must be in the UK or the European Economic Area.

21

Question 45

Mahir and Salena are arranging an interest-only mortgage, supported by an ISA, to buy their new home. What obligations does their lender have?

Question 5 options:

a)

To advise them on their choice of ISA or refer them to an IFA.

b)

To check at least once during the mortgage term that the ISA is still in place.

c)

To insist that they have appropriate life cover in place for the mortgage.

d)

To check the performance of the ISA at least annually.

Answer 45

b)

To check at least once during the mortgage term that the ISA is still in place.

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Question 46

Which of the following is true regarding the Payments Services Directive?

Question 6 options:

a)

Banks do not have to give third‑party providers access to accounts in order to carry out transactions.

b)

In cases not involving fraud or negligence, the maximum a payer can be obliged to pay for an unauthorised payment is €150.

c)

Payments are not covered by the Directive if one of the payment service providers is outside the European Economic Area.

d)

Payment service providers must respond to complaints within 15 working days of receipt.

Answer 46

d)

Payment service providers must respond to complaints within 15 working days of receipt.

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Question 47

When a lender makes a mortgage offer, MCOBS requires that the:

Question 7 options:

a)

offer cannot be conditional under any circumstances.

b)

borrower must be given at least seven days to decide whether to accept the offer.

c)

offer is binding on the lender and the borrower.

d)

offer must remain valid for at least three months.

Answer 47

b)

borrower must be given at least seven days to decide whether to accept the offer.

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Question 48

The lender has just discovered that Dave and Sheila are in arrears with their mortgage. Within what period must the lender write to them with specified information about the arrears?

Question 8 options:

a)

7 working days.

b)

10 working days.

c)

15 working days.

d)

30 working days.

Answer 48

c)

15 working days.

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Question 49

When assessing affordability, MCOBS considers council tax to be what type of expenditure?

Question 9 options:

a)

Basic essential.

b)

Cost of living.

c)

Discretionary.

d)

Committed.

Answer 49

a)

Basic essential.

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Question 50

In which one of the following situations would a mortgage be classified as a consumer buy-to-let mortgage?

Question 10 options:

a)

Tim and Penny, who intend to raise a further mortgage on their property to buy a second property to rent out as a business.

b)

Stephen, who has just moved into his new wife’s property and intends to raise a mortgage on his own property to bring it to a standard to let out long-term.

c)

Clare, who owns three rental properties and will use one as security for a mortgage to buy another rental property.

d)

Clyde, who has inherited a house that needs major renovation. He needs a mortgage to complete the refurbishment before letting it out until he has decided on his next step.

Answer 50

d)

Clyde, who has inherited a house that needs major renovation. He needs a mortgage to complete the refurbishment before letting it out until he has decided on his next step.

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Question 51

The 2006 Consumer Credit Act introduced an Unfair Relationships Test, which enables borrowers to challenge a credit agreement:

Question 1 options:

a)

through a statutory tribunal.

b)

through the courts.

c)

by referring the case to the FCA.

d)

by reference to the Financial Ombudsman Service.

Answer 51

b)

through the courts

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Question 52

Gyorgy has had an application for credit declined due to an unsatisfactory credit reference agency report. Which of the following correctly describes the lender’s position?

Question 2 options:

a)

The lender Is under no obligation to disclose anything to Gyorgy about the reason for the refusal.

b)

The lender must ask the credit reference agency to liaise with Gyorgy to correct any inaccuracies.

c)

The lender must notify Gyorgy of the reason and give him contact details for the credit reference agency.

d)

The lender must show Gyorgy the report and allow him to challenge inaccuracies.

Answer 52

c)

The lender must notify Gyorgy of the reason and give him contact details for the credit reference agency.

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Question 53

Which of the following unsecured loans would not be subject to the rules contained in the FCA Consumer Credit sourcebook?

Question 3 options:

a)

A loan of £10,000 to help Millie refurbish her nail bar.

b)

A second charge of £30,000 on Jack’s home.

c)

Karen’s credit card with a £10,000 credit limit.

d)

A loan of £30,000 for Gary to buy a family car.

Answer 53

b)

A second charge of £30,000 on Jack’s home.

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Question 54

For the purposes of the Consumer Credit Act, a small partnership has how many partners?

Question 4 options:

a)

Two or fewer.

b)

Three or fewer.

c)

Four or fewer.

d)

Five or fewer.

Answer 54

b)

Three or fewer.

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Question 55

The annual percentage rate of charge applies to which of the following?

Question 5 options:

a)

Mortgages only.

b)

Credit cards and hire purchase agreements.

c)

Mortgages, personal loans and credit cards.

d)

Mortgages and personal loans.

Answer 55

a)

Mortgages only.

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Question 56

Joseph visited his local bank to discuss a car loan for £15,000 and signed the application form while talking to the adviser. What cooling-off period applies to the agreement?

Question 6 options:

a)

He is not entitled to a cooling-off period.

b)

7 days.

c)

14 days.

d)

28 days.

Answer 56

a)

He is not entitled to a cooling-off period.

-A cooling-off period doesn’t apply because the agreement was signed on the lender’s premises.

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Question 57

High-cost, short-term credit must include the message: “Warning: Late repayment can cause you serious money problems. For help, go to moneyhelper.org.”

Question 7 options:
a) True
b) False

Answer 57

a) True

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Question 58

When recommending a credit product to a customer, which of the following must the lender provide?

Question 8 options:

a)

An explanation of alternative options.

b)

A demands and needs statement.

c)

An adequate explanation of the product.

d)

A suitability report for the product.

Answer 58

c)

An adequate explanation of the product.

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Question 59

The EU Credit Directive requires that a representative APR must be shown in any advert that shows an interest rate. The representative APR must apply to at least what percentage of successful applicants for the credit product?

Question 9 options:

a)

26%.

b)

51%.

c)

76%.

d)

81%.

Answer 59

b)

51%.

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Question 60

Which of the following is one of the restrictions the FCA has placed on high‑cost, short‑term credit?

Question 10 options:

a)

Interest and fees cannot exceed 0.8 of the loan per day.

b)

Fees and charges can never exceed 75% of the amount borrowed.

c)

Default fees cannot exceed £20.

d)

Loans cannot be rolled over.

Answer 60

a)

Interest and fees cannot exceed 0.8 of the loan per day.

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Question 61

What would not be acceptable evidence of identity under money laundering legislation?

Question 1 options:

a)

Utility bill or statement.

b)

Electoral roll statement.

c)

Photo driving licence.

d)

Mobile phone bill or statement.

Answer 61

d)

Mobile phone bill or statement.

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Question 62

Barry has been found guilty of recklessly making false and misleading statements related to money laundering. What is the maximum applicable penalty?

Question 2 options:

a)

An unlimited fine.

b)

5 years in prison, an unlimited fine or both.

c)

3 years in prison or a fine.

d)

2 years in prison, a fine or both.

Answer 62

d)

2 years in prison, a fine or both.

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Question 63

EU member states must keep a central register of the beneficial owners of legal entities. A beneficial owner is someone who owns or controls at least what percentage of the entity?

Question 3 options:

a)

10.

b)

20.

c)

25.

d)

49.

Answer 63

c)

25.

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Question 64

The Money Laundering Regulations 2017 define a politically exposed person as anybody in a senior position in a national or international governing body.

Question 4 options:
a) True
b) False

Answer 64

b) False

-It is defined as individuals who, because of their position, are considered to be more vulnerable to corruption.

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Question 65

To meet money laundering obligations, what is the minimum length of time an organisation must keep supporting evidence of a transaction after it was executed?

Question 5 options:

a)

12 months.

b)

3 years.

c)

5 years.

d)

For the length of the client relationship.

Answer 65

c)

5 years.

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Question 66

Charlotte is suspicious that a bank customer may be trying to launder money through an account.

Question 6 options:

a)

The local police.

b)

The National Crime Agency.

c)

Her line manager.

d)

The bank’s money laundering reporting officer.

Answer 66

d)

The bank’s money laundering reporting officer.

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Question 67

The primary money laundering offences do not include:

Question 7 options:

a)

concealing.

b)

acquiring.

c)

obscuring.

d)

arranging.

Answer 67

c)

obscuring.

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Question 68

Freddie is making a single premium payment into a life assurance policy. What is the minimum level of premium that will require the firm to carry out due diligence?

Question 8 options:

a)

€1,000.

b)

€2,500.

c)

€10,000.

d)

€15,000.

Answer 68

b)

€2,500.

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Question 69

Jenny is facing a money laundering charge of tipping off. What is the maximum sanction she could face?

Question 9 options:

a)

Five years in prison, an unlimited fine or both.

b)

Three years in prison or an unlimited fine.

c)

Two years in prison, an unlimited fine, or both.

d)

An unlimited prison sentence or an unlimited fine.

Answer 69

a)

Five years in prison, an unlimited fine or both.

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Question 70

Graham wondered if a customer might be using his bank account to launder money, but decided it was too much trouble to tell anyone. Later on, it was shown that Graham’s suspicions were correct. What could be the consequences for Graham?

Question 10 options:

a)

He would receive an automatic fixed penalty.

b)

He could be prosecuted for tipping off.

c)

None. As he had no proof, he had no obligation to report his suspicions.

d)

He could be prosecuted for failure to disclose.

Answer 70

d)

He could be prosecuted for failure to disclose.

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Question 71

Which of the following is true in relation to UK domiciled alternative investment funds (AIFs)?

Question 1 options:

a)

UK AIFs sold in EU countries are subject to UK marketing rules.

b)

Passporting rights give UK AIFs the facility to be marketed in EU member states under a streamlined process.

c)

AIFs is the term used for UK UCITS wishing to market into the EU since Brexit.

d)

UK AIFs can be marketed cross-border to a retail investor using the marketing passport.

Answer 71

c)

AIFs is the term used for UK UCITS wishing to market into the EU since Brexit.

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Question 72

A firm subject to the Markets in Financial Instruments Directive must seek authorisation in each EEA country it intends to operate in.

Question 2 options:
a) True
b) False

Answer 72

b) False

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Question 73

Which of the following data protection principles is incorrectly stated?

Question 3 options:

a)

Principle 1: data must be processed lawfully, fairly and in a transparent manner in relation to individuals.

b)

Principle 2: data must be collected for specified, explicit and legitimate purposes.

c)

Principle 3: data must be adequate, relevant and limited to what is necessary in relation to the purposes for which they are processed.

d)

Principle 5: data must be kept in a form which does not identify data subjects in any circumstances.

Answer 73

d)

Principle 5: data must be kept in a form which does not identify data subjects in any circumstances.

-Principle 5 allows data to be kept in a form which permits identification of data subjects for no longer than is necessary for the purposes for which the personal data are processed, although archiving is allowed in certain circumstances.

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Question 74

The Markets in Financial Instruments Directive applies to advising on:

Question 4 options:

a)

mortgages.

b)

personal pension.

c)

unit trusts.

d)

life assurance.

Answer 74

c)

unit trusts.

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Question 75

The Insurance Mediation Directive and the Insurance Distribution Directive do not apply to tied agents of an insurance company.

Question 5 options:
a) True
b) False

Answer 75

a) True

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Question 76

The EU Consolidated Life Directive (2002) does not apply to which of the following?

Question 6 options:

a)

Annuities.

b)

Whole of life assurance.

c)

Personal pensions.

d)

Income protection.

Answer 76

c)

Personal pensions.

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Question 77

Which of the following is defined as a special category of personal data under data protection legislation?

Question 7 options:

a)

Age.

b)

Sex.

c)

Race.

d)

Address.

Answer 77

c)

Race.

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Question 78

The Pension Protection Fund does not protect members of personal pension schemes.

Question 8 options:
a) True
b) False

Answer 78

a) True

-protects people with defined benefit pension when the employer becomes insolvent

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Question 79

What is not a power available to the Pensions Regulator?

Question 9 options:

a)

Issuing compensation notices for personal pension mis-sales.

b)

Issuing contribution notices.

c)

Imposing fines or prosecuting offences through courts.

d)

Disqualifying trustees who are not considered fit and proper.

Answer 79

a)

Issuing compensation notices for personal pension mis-sales.

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Question 80

With regard to oversight, which of the following is true?

Question 10 options:

a)

Compliance officer is not a senior management function under the Senior Managers and Certification Regime.

b)

Unit trust trustees are the legal owners of the trust assets.

c)

External auditors are concerned with a firm’s processes and risk management.

d)

Internal auditors are responsible for making sure a firm’s financial statements are accurate.

Answer 80

b)

Unit trust trustees are the legal owners of the trust assets.

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Question 81

Jenny has complained about the sale of a life policy. For what minimum period must the firm keep a record of the complaint?

Question 1 options:

a)

1 year.

b)

3 years.

c)

5 years.

d)

10 years.

Answer 81

b)

3 years.

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Question 82

Adam and Angie had £210,000 in a joint deposit account when the bank became insolvent. What compensation, if any, would they receive through the Financial Services Compensation Scheme?

Question 2 options:

a)

Nothing initially, they must first go through the Financial Ombudsman Service.

b)

£85,000.

c)

£170,000.

d)

£210,000.

Answer 82

c)

£170,000.

-£85k each

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Question 83

Under the Consumer Rights Act Alternative Dispute Resolution options, adjudication decisions can be appealed through courts

Question 3 options:
a) True
b) False

Answer 83

a) True

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Question 84

Within what timescale must the FCA respond to a super-complaint?

Question 4 options:

a)

30 days.

b)

60 days.

c)

90 days.

d)

120 days.

Answer 84

c)

90 days.

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Question 85

Sarah made a complaint to her bank and is not satisfied with the response. If she wants to refer the complaint to the Financial Ombudsman Service, she must do so within what period of the response?

Question 5 options:

a)

30 days.

b)

4 weeks.

c)

3 months.

d)

6 months.

Answer 85

d)

6 months.

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Question 86

The Consumer Rights Act 2015 does not cover which of the following?

Question 6 options:

a)

Unfair contract terms.

b)

Consumer rights when services are not provided.

c)

Consumer rights when goods are faulty.

d)

Compensation limits for successful claims.

Answer 86

d)

Compensation limits for successful claims.

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Question 87

In relation to the Financial Services Compensation Scheme (FSCS), which of the following is true?

Question 7 options:

a)

Small businesses are not eligible to make claims to the FSCS.

b)

Compensation cannot be awarded for stock market losses.

c)

Oversight of the FSCS is solely the responsibility of the FCA.

d)

Home finance claims are limited to £85,000 per mortgage.

Answer 87

b)

Compensation cannot be awarded for stock market losses.

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Question 88

Which of the following would result in full settlement of a claim to the Financial Services Compensation Scheme?

Question 8 options:

a)

Saleem, whose car insurer became insolvent before his accident claim was settled.

b)

Greg, who is not happy with his bank’s final resolution letter in response to his claim for £4,000 compensation for a product mis-sale.

c)

Will, whose home contents claim has been refused by his insurer.

d)

Dolores, who lost £90,000 as a result of her investment adviser’s insolvency.

Answer 88

a)

Saleem, whose car insurer became insolvent before his accident claim was settled.

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Question 89

Sahan has been awarded £160,000 compensation by the Financial Ombudsman Service. Sahan and the firm are not satisfied with the result. Which of the following is true?

Question 9 options:

a)

The award is not binding on either party and either party can appeal through court.

b)

The award is binding on the firm, but Sahan can appeal through court.

c)

The award is binding on Sahan, but the firm can appeal through court.

d)

The award is binding on both parties.

Answer 89

b)

The award is binding on the firm, but Sahan can appeal through court.

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Question 90

Which of the following would not be eligible to refer a complaint to the Financial Ombudsman Service?

Question 10 options:

a)

A charity with annual income of £5.5m.

b)

A trustee of a trust with net assets of £5.5m.

c)

Jordan, who has a complaint about a consumer buy-to-let mortgage.

d)

James, on behalf of his business, which has 45 employees and annual turnover of £5.5m.

Answer 90

b)

A trustee of a trust with net assets of £5.5m.

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