Cemap Questions

Question 1

Which of the following types of mortgage arrangement became regulated by the FCA under MCOB for the first time from March 2016?

Answer 1

Second charge loans.

Question 2

If it were proved that a mortgage adviser had been influenced by the fee payable when recommending a mortgage product to a customer, which of the following aspects of the FCA’s regulations would the adviser have breached?

Answer 2

Suitable advice.

Question 3

A £12,000 single premium unit-linked investment bond is cancelled by a customer within the cooling-off period. However, during this period, the stock market fell sharply. Consequently, so did the value of the bond. What is the customer likely to receive?

Answer 3

The market value of the bond on encashment.

Question 4

A customer ended his relationship with a lender two years and six months ago. For a minimum of how many more months should the evidence of the customer’s identity be retained by the lender?

Answer 4

30 months.

Question 5

Which of the following courses of action is not an option available to the FCA in enforcing standards for both organisations and authorised individuals?

Answer 5

Awarding compensation.

Question 6

Under the Certification Regime, individuals performing a specific function that isn’t a senior management function but that can have a significant impact on customers must be approved by:

Answer 6

their employing firm.

Question 7

Paula wants to complain about the treatment she received from her final-salary pension scheme. She has been unable to achieve a satisfactory resolution using the scheme’s internal complaints process. She has decided to take the matter to the next formal stage of the complaints process. To which body should she refer her complaint to in order to get a binding decision?

Answer 7

Pensions Ombudsman.

Question 8

The FCA’s supervision model is based on three pillars, which are:

Answer 8

proactive supervision or group supervision, event-driven, reactive supervision and thematic work

Question 9

In order to provide information about the firm, its services and its charges, which of the following documents must be given to a client when giving advice on packaged products?

Answer 9

The firm’s own disclosure documentation.

Question 10

Paul was prosecuted under the Proceeds of Crime Act 2002 and received the maximum sentence of five years in prison and a fine. This means that he must have been convicted of which money laundering offence?

Answer 10

Tipping off.

Question 11

Which of the following is the Prudential Regulation Authority (PRA) responsible for supervising and regulating?

Answer 11

Deposit takers, significant investment firms and insurers.

Question 12

Under the Money Laundering Regulations 2017, the maximum jail sentence for any individual who recklessly makes a statement in the context of money laundering which is false or misleading is:

Answer 12

2 years

Question 13

Which of the following do not pay fixed interest?

Answer 13

Treasury bills.

Question 14

To which body should a firm report a significant breach of handling personal data?

Answer 14

The Information Commissioner.

Question 15

Under the General Data Protection Regulation, the definition of ‘special categories of personal data’ includes all of the following areas, except:

Answer 15

correspondence address.

Question 16

Miranda performs a senior management function in the firm she works for. Which of the following principles does NOT specifically apply to her role?

Answer 16

She must, at all times, act to avoid situations that could lead to risks to the business.

Question 17

Individuals that have a role where

It’s possible for them to cause significant harm to the firm or its clients must be approved by:

Answer 17

The firm under the certification regime

Question 18

Which do the following can be classed as packaged retail and insurance based investment products (PRIIPS)

Answer 18

Derivatives, pensions products & investment trusts

Question 19

In the context of FCA supervision of firms, the term ‘flexible portfolio’ means:

Answer 19

Firms that are supervised by a team of sector specialists

Question 20

Melvin, a financial advisor, is discussing a clients investments and wishes to obtain some facts. Which of the following questions is least likely to help him obtain such information?

Answer 20

How much do you currently have in your building society accounts

Question 21

Justin owns the property he lives in and is purchasing a holiday home for £260k. How much stamp duty land tax will he put on the purchase?

Answer 21

£10,800

Question 22

Which of the following could be described as ‘reactive servicing’?

Answer 22

A letter to the client asking the reason for non-payment of a life assurance premium.

Question 23

Which of the following could be described as proactive servicing?

Answer 23

A telephone call to a client to arrange a pre-agreed review following a salary increase.

Question 24

Peter is going to work abroad for a period of time, so he has appointed Angela, his sister to act as an agent with regard to his portfolio of buy to let properties. Peter explained to Angela that he wanted her to collect rent and ensure that the properties are kept in good order. While Peter is away, Angela decides to evict some troublesome tenants and re-let the relevant property to new tenants. In respect of Angela’s actions this is an example of:

Answer 24

Acting with apparent authority

Question 25

Which mortgage interest rates option involves payment of interest at a rate that is always below the lender standard variable rate (SVR) and may carry penalties if the mortgage is repaid early?

Answer 25

Discounted rate mortgage

Question 26

While exact financial needs will vary from a person to person, it is possible to identify typical needs based on a person’s:

Answer 26

Life stage

Question 27

Jack purchased a holding of shares when the price was relatively high. He was able to justify the purchase because:

Answer 27

He believes the company will have higher than average earnings in the future.

Question 28

Which of the following statements regarding investments by individual UK residents to local authority bonds is false?

Answer 28

They are a form of unsecured lending

Question 29

The holder of a warrant has the right to buy shares

Answer 29

At a future date at a fixed price

Question 30

The insurance distribution directive (IDD) requires insurance intermediaries to hold professional indemnity insurance of at least:

Answer 30

€1,300,380 per case and €1,924,560 in total per annum.

Question 31

What is a bank’s solvency ratio?

Answer 31

Capital as a percentage of the risk adjusted value of assets.

Question 32

Under Basel III, banks in the EU must work towards a minimum solvency ratio of what level?

Answer 32

7%

Question 33

Basel III introduced new measures with regards to a banks capital and asset liability management. Which of these measures as aimed at protecting the long-term financial stability of a bank?

Answer 33

The net stable funding ratio.

Question 34

For new sales of which of the following product types can an independent financial advisor receive commission from a product provider?

Answer 34

Income protection insurance

Question 35

Under the EU fourth money laundering directive, beneficial owners of legal entities are defined as those who own or control what minimum percentage of the legal entity?

Answer 35

25%