Chapter 4

Question 1

28. What are the Bank of England’s two core purposes?
    A. Consumer protection and financial stability
    B. Monetary stability and financial stability
    C. Managing competition and consumer protection
    D. Integrity of UK financial system and managing competition

Answer 1

B - The Bank of England’s core purposes are monetary stability (to maintain confidence in the currency) and overseeing financial stability (detecting and reducing threats to the
economy).

Question 2

29. How does an EU directive differ from an EU regulation?
    A. EU regulation is non-binding, whereas an EU directive is binding
    B. An EU directive requires the member state’s approval but EU regulation overrides the member state’s legislation
    C. Both are binding but under an EU directive the member state determines the method to achieve the objective; EU regulation is binding in its entirety
    D. An EU directive is binding on all member states, but EU regulation is an individual measure addressed to an individual member state

Answer 2

C - An EU directive requires its members to achieve a particular objective but does not dictate how they achieve that objective or the national laws they may enforce to achieve it (the objective is binding but not the method). This differs from an EU regulation in that the result and the method are both binding under EU law.

Question 3

30. Which body has an overarching strategic objective to ensure that financial markets work well?
    A. The Financial Policy Committee
    B. The Bank of England
    C. HM Treasury
    D. The Financial Conduct Authority

Answer 3

D - Most of the UK financial services industry is regulated by the Financial Conduct Authority (FCA), and their overarching objective is to ensure the financial markets work well

Question 4

31. Which of the Competition and Markets Authority (CMA) strategic goals aims to ‘deter wrongdoing, protect consumers and educate businesses’?
    A. Delivering effective enforcement
    B. Extending competition frontiers
    C. Achieving professional excellence
    D. Developing integrated performance

Answer 4

A - The Competition and Markets Authority (CMA) is an independent public body set up to ensure the strengthening of business competition. One of its five strategic goals is to deliver effective enforcement (to deter wrong doing, protect consumers and educate businesses).

Question 5

32. What is the Information Commissioner’s Office’s main duty?
    A. To ensure that the Data Protection Act is updated e.g. to cover text messages
    B. To levy fines on those failing to comply with the Data Protection Act
    C. To ensure consumers are able to access information
    D. To oversee the regulation of the Data Protection Act and enforce compliance

Answer 5

D - The Information Commissioner’s Office (ICO) is an independent body which oversees the regulation of the Data Protection Act (2018). It also has the responsibility of enforcing the General Data Protection Regulation (GDPR).

Question 6

33. Which of the following IFA firms would NOT require its annual accounts to be
    audited?
    A. An unincorporated firm that doesn’t have permission to hold client assets
    B. A sole-trader who has formal permission to hold client assets
    C. A limited liability company who undertakes activity within the scope of the
    Insurance Distribution Directive
    D. A partnership who operates a client bank account specifically to hold client monies with formal permission to do so

Answer 6

A - An IFA firm that does not hold clients’ money does not require its accounts to be
externally audited. A limited liability company, who undertakes activities under the
Insurance Distribution Directive, requires an external audit, as do partnerships and sole traders if they hold client money.