Chapter 6 Flashcards
*E-Book 6 - Look at the statements below about the application and purpose of the FCA Principles for Businesses (PRIN).
Select which statement do you think is correct.
a) In the event of conflict between the FCA Rules and the Principles, the Rules will take precedence
b) Breach of a Principle makes a firm liable to disciplinary sanctions
c) The Principles apply to authorised product providers but not to authorised intermediaries
d) The Principles provide a detailed code of practice for senior managers and certified employees
b
PRIN does not represent a ‘detailed’ code of practice; it is a general statement of the fundamental obligations of all authorised firms under the regulatory system, including authorised intermediaries.
All authorised firms must comply with PRIN at all times. In the event of any conflict between the FCA rules and PRIN, PRIN takes precedence.
Breach of a Principle makes a firm liable to disciplinary sanctions. In determining whether a Principle has been breached, it is necessary to look to the standard of conduct required by the Principle in question.
E-Book 6 - Hawk Financial Services, an FCA-authorised investment firm, is writing to one of its retail clients. Under General Provisions (GEN), Hawk must disclose its status on the letter.
How should this be phrased?
a) Authorised by the FCA to conduct investment business
b) Authorised and regulated by the Financial Conduct Authority
c) Authorised under the Financial Services and Markets Act 2000
d) Regulated under the Financial Services and Markets Act 2000 by the Financial Conduct Authority
b
All authorised firms must disclose their ‘statutory status’ in every letter (or electronic equivalent) sent to a retail client (this may therefore include email footers and websites). For an FCA-authorised firm, the prescribed wording is: ‘Authorised and regulated by the Financial Conduct Authority’ (note the name should not be abbreviated to FCA).
E-Book 6 - Below are some statements about the purpose of the Threshold Conditions (COND) in the FCA Handbook. Think about each statement and select which are false.
a) They set out the minimum standards that a firm must satisfy to become and remain authorised by the FCA
b) They provide a general statement of the main obligations of a regulated firm under the Financial Services and Markets Act 2000
c) They provide rules and guidance on how senior management responsibilities are allocated and what systems and controls the firm should have
d) They set out the criteria which the FCA uses to assess whether an individual is suitable to perform a senior management or controlled function
b, c, d
The Threshold Conditions are the minimum conditions that a firm must satisfy, and continue to satisfy, to be given and to retain its permission to conduct investment business in the UK.
For UK firms, the conditions that apply are set out under five main headings:
- Location of offices.
- Effective supervision.
- Appropriate resources.
- Suitability.
- Business model.
GQ 6 - What does the High Level Standards block of PRIN (the Principles for Businesses) do?
PRIN contains a general statement of the main regulatory obligations of the firm.
GQ 6 - What does the High Level Standards block of SYSC (Senior Management Arrangements, Systems and Controls) do?
SYSC contains rules and guidance on how key responsibilities for managing the business should be allocated among the firm’s senior management team, as well as the systems and controls the firm should have in place.
GQ 6 - What does the High Level Standards block of COCON (Code of Conduct) do?
This covers most employees of all firms covered by the senior management and certification regime (SM&CR firm), except approved persons.
GQ 6 - What does the High Level Standards block of COND (Threshold Conditions) do?
It contains the minimum standards the firm must satisfy to become and remain authorised by the FCA.
GQ 6 - What does the High Level Standards block of APER (the Statements of Principle and Code of Practice for Approved Persons) do?
This sets out the conduct requirements for approved persons. These are primarily people carrying out a senior management or customer facing function in a firm which is not covered by the SM&CR (a non-SM&CR firm), e.g. appointed representatives (ARs).
Examples of ARs:
Insurance brokers selling policies under an FCA-authorised insurer.
Financial advisers working under a large investment firm’s authorisation.
Mortgage brokers who operate under a lender’s FCA permissions.
GQ 6 - What does the High Level Standards block of FIT (the Fit and Proper Test for Employees and Senior Personnel) do?
This sets out the criteria which the FCA uses to assess whether an individual is suitable to perform a senior management or certified function.
GQ 6 - What does the High Level Standards block of FINMAR (Financial Stability and Market Confidence Sourcebook) do?
FINMAR contains provisions relating to the gathering of information from firms relating to financial stability, market confidence and short selling.
GQ 6 - What does the High Level Standards block of TC (Training and Competence Sourcebook) do?
TC contains the arrangements a firm needs to have in place to ensure staff are appropriately trained and competent for their role.
GQ 6 - What does the High Level Standards block of GEN (General Provisions) do?
GEN sets out some of the underlying legal framework to FCA regulation and requirements regarding statutory status disclosure.
GQ 6 - What does the High Level Standards block of FEES (Fees Manual) do?
It sets out the fee provisions for funding the FCA, FOS, and FSCS.
Application fee - contribute to the cost of processing applications for authorisation or recognition, or requests for significant variations to the permission of firms that are already authorised.
Periodic fees - Periodic fees are paid annually, to provide most of the funding that the FCA requires to undertake its statutory functions.
Special project fees - meet the costs that the FCA incurs dealing with a range of activities that it undertakes as a result of a request from a fee-payer; for example, insurance company re-organisations, large mergers and demutualisations (privatisation).
GQ 6 - When is the notification of fees?
Annually. In January of each year the FCA produces a consultation paper indicating the proposed fee rates for the coming financial year (1 April–31 March).
GQ 6 - What does the Prudential Standards block of MIFIDPRU do?
MIFIDPRU deals with investment firms subject to the Investment Firms Prudential Regime (IFPR). It requires them to undertake detailed risk assessments and stress-testing scenarios to establish what level of financial resources it is appropriate for them to hold.
It covers specific elements relating to the capital resources calculations, such as: credit risk, market risk, concentration risk, counterparty risk and liquidity.
Some small intermediary businesses are exempt from these rules and, as such, are not required to undertake such a rigorous assessment. Other firms may also have additional capital requirements under IPRU-INV.
GQ 6 - What are the Capital Resource Requirements of MIFIDPRU firms and non-MIFIDPRU firms?
MIFIDPRU: Minimum capital requirement: £75,000 and 25% of fixed overheads (Fixed overheads refer to the regular and ongoing costs a business must pay, regardless of its revenue or trading activity)
Non-MIFIDPRU: £20,000 or Variable CRR of 5% of income (Additional capital is required for those also giving mortgage advice)
GQ 6 - What does the Prudential Standards block of MIPRU do?
MIPRU is the Prudential Sourcebook for Mortgage and Home Finance Firms, and Insurance Intermediaries.
It contains the rules about the financial safeguards the firm needs to have in place, e.g. capital requirements and professional indemnity insurance requirements.
GQ 6 - What does the Prudential Standards block of IPRU-INV (Interim Prudential Sourcebook for Investment Businesses) do?
IPRU-INV is the Interim Prudential Sourcebook for Investment Businesses.
It sets out the professional indemnity insurance and capital requirements for simpler investment firms, being further divided into authorised professional firms, collective portfolio management firms and personal investment firms.
GQ 6 - What does the Prudential Standards block of INSPRU (Prudential Sourcebook for Insurers) do?
It contains the detailed calculation rules for these types of firms.
GQ 6 - What does the Prudential Standards block of IPRU-INS (Interim Prudential Sourcebook for Insurers) do?
It contains all the residual prudential and notification requirements for insurers.
GQ 6 - What does the Prudential Standards block of IPRU-FSOC (Interim Prudential Sourcebook for Friendly Societies) do?
It contains all the prudential and notification requirements for friendly societies
GQ 6 - What does the Prudential Standards block of GENPRU do?
This handbook has been largely removed from use but still contains capital requirements for cross-sector groups.
E-Book 6 - The rules in MIFIDPRU 6 are designed to require those firms caught by them to ensure that their business model has enough liquid capital built in and that the firm will be able to continue to function if certain external stresses are applied.
Which of the following do you think are requirements under these rules?
a)To be self-sufficient and maintain adequate liquid resources
b) To put in place and maintain enhanced systems and controls for the management of liquidity risk
c) To cover all guarantees provided to clients
a & b
Firms are only required to cover a proportion of any guarantees provided to clients, rather than all of them.
GQ 6 - What are the sourcebooks CASS (Client Assets), MAR (Market Conduct) and PROD (Product Intervention and Product Governance)?
CASS - The FCA requirements relating to holding client assets and client money.
MAR - Code of Market Conduct, Price Stabilising Rules, Inter-Professional Conduct, Endorsement of the Takeover Code, Alternative Trading Systems, what is acceptable market conduct and what is market abuse.
PROD - The purpose of PROD is to improve firms’ product oversight and governance processes and to set out the FCA’s statement of policy on making temporary product intervention rules.
GQ 6 - Good product governance under should result in products that what? (3)
PROD 3.3 requires product distributors (such as advisers) to what? (3)
Product governance:
1) meet the needs of one or more identifiable target markets;
2) are sold to clients in the target markets by appropriate distribution channels; and
3) deliver appropriate client outcomes.
Distributors:
1) Understand the financial instruments they distribute
2) Assess the compatibility of the financial instruments with the needs of the clients to whom they distribute investment services, taking into account the manufacturer’s identified target market
3) Ensure that financial instruments are distributed only when in the best interests of the client.
*E-Book 6 - Look at each of the life offices below then decide which of the activities described are acceptable under the FCA Conduct of Business Sourcebook (COBS)(opens in a new tab).
a) Life office A supplies a single bottle of supermarket wine to an independent financial adviser (IFA) as a prize for the intermediary having won a promotional competition run in connection with a new product launch.
b) Life office B offers to pay reasonable travel expenses to an IFA in return for it (as the intermediary) taking part in a market research exercise.
c) Life office C provides free training on and assists an IFA to promote C’s products, so that the quality of service to the intermediary’s clients is enhanced.
d) Life office D offers a comprehensive adviser training programme and some computer software free of charge to a handful of very large firms of IFAs in the hope of generating increased sales of its products from those firms, but it does make the same benefit available to smaller firms
a, b & c
The activities of life offices A, B and C would normally fall into the category of ‘reasonable non-monetary benefits’ which can enhance the quality of the service provided to a client and should not breach the ‘client’s best interests’ rule.
Life office D’s behaviour is likely to impair compliance with the client’s best interest rule. The regulator states that benefits of substantial value should be made equally available to all firms. Furthermore, in respect of the software, adviser firms should be cautious about accepting benefits on which they may have to rely for a period of time.
*E-Book - For which of these product types would an intermediary’s mediation activities be regulated under the FCA Insurance: Conduct of Business Sourcebook (ICOBS)(opens in a new tab)?
a) Decreasing term assurance
b) Whole of life policy
c) Critical illness insurance
d) Income protection insurance
e) Regulated mortgage contract
a, c & d
ICOBS governs the selling and marketing of three product categories: general insurance, pure protection (term assurance, income protection and critical illness cover) and payment protection insurance (PPI).
An intermediary’s mediation activities relating to products containing an investment element (such as a whole of life policy) would be covered in the Conduct of Business Sourcebook (COBS), not ICOBS, and activities relating to regulated mortgage contracts would be covered under the Mortgage and Home Finance: Conduct of Business Sourcebook (MCOBS).
*E-Book 6 - Consider these scenarios. Choose the options where the activities involved in arranging the client’s mortgage are regulated under the FCA Mortgage and Home Finance Conduct of Business sourcebook (MCOB)(opens in a new tab) and why.
a) Alan - I want to arrange a mortgage, secured by a first charge on my home, to fund the purchase of a new workshop for my business.
b) Barbara - I want to arrange a second mortgage on my home to purchase a flat for my elderly mother.
c) Directors of CDE Ltd - As the directors of CDE Ltd, we want to arrange a loan to purchase a holiday apartment for the personal use of our company’s staff. The loan will be secured by a first charge on our UK office building.
d) David - I want to arrange a mortgage secured by a first charge over a property that I’m buying to lease out to students at the local university.
a & b
To be classed as a regulated mortgage contract under MCOBS, the borrower must be an individual or trustee (not business), and the borrower’s obligation to repay must be secured by way of legal mortgage on land in the UK, at least 40% of which is used, or is intended to be used, as a dwelling by the borrower (or ‘relation’).
These criteria rule out the loan to the directors of CDE Ltd because it will be taken out by a business. The loan to David is ruled out because, in order to be classed as a regulated mortgage contract, the property must be occupied by the borrower himself, or a relation, and David intends to let the property to students.
✔ First charge = primary legal claim on your home.
✔ Your home is at risk of repossession if you don’t keep up repayments.
✔ If you already have a mortgage, you may need lender consent or consider a second charge loan instead.
E-book 6 - Assume you work for an IFA and one of your potential clients asks how you handle client money. Which of the following should you tell them?
You can find the rules in the FCA Client Asset Sourcebook (CASS)(opens in a new tab).
a) An IFA must not hold client money under any circumstances and so we ensure that all payments we receive from clients for investments are made out to the relevant product provider
b) An IFA can only hold client money as an agent of the relevant product provider and we have the necessary written agreements to do so
c) An IFA can only hold client money for a maximum period of one business day before transferring the money to the relevant product provider
d) If an IFA is authorised to hold client money it must hold it separately from its own money in a designated client bank account
d
A firm must hold client money separate from its own money in a client bank account. The money must normally be paid into the client bank account within one business day of receipt. The client bank account must be so designated and be with an approved bank. This ensures that the money in the account is effectively held on trust for the client and not available to the creditors of the firm if it becomes insolvent.
Many IFAs do not have the authority to handle client money and so must ensure that all cheques or other payments for investments arranged are payable direct to the product provider. In these circumstances, they do not need client money accounts.
E book 6 - Regarding PROD’s temporary product intervention rules, which of the following statements do you believe to be correct?
a) They may be made without consultation
b) They are limited to a maximum duration of six months
c) They only apply to the manufacture of products
d) They can apply to the marketing of products
a & d
Product intervention rules are rules made under FSMA which apply to specific products (or types of products), product features or marketing practices relating to specific products.
They may be made without consultation and are limited to a maximum duration of 12 months and are referred to as ‘temporary product intervention rules’.
E-book 6 - The Task Force on Climate-related Financial Disclosures (TCFD) set out four recommendations in their final report. Of the options listed below, which do you think are the areas their recommendations relate to?
a) Governance
b) Strategy
c) Risk management
d) Metrics and targets
a, b, c & d
GQ 6 - All sustainability products which use a sustainability label must meet what 4 criteria?
- Explicit objective - Have an explicit sustainability objective which aligns with the specific label it wishes to use and is clear, specific and measurable.
- 70% rule - Have at least 70% of the gross value of the assets invested in accordance with the sustainability objective (with some exceptions such as for investments which are still being fully deployed).
- Robust standards of sustainability - Assets must be selected in line with a robust evidence-based standard that is ‘an absolute measure of environmental and/or social sustainability’.
- No conflicts - Where a product invests in assets which are not in line with its sustainability objective, these must not have attributes which conflict with that objective.
GQ 6 - Explain the these 4 labels describing different approaches to sustainable investing based on the type of assets held and their sustainability objectives: Focus, Improvers, Impact and Mixed Goals
Focus – Investing in already sustainable assets. Uses robust, evidence-based standards to define sustainability. No expectation of improvement—assets must already meet the required sustainability level
Improvers – Investing in assets with the potential to become sustainable. Sets targets and timeframes for assets to meet sustainability standards. Requires evidence that assets have the potential to improve
Impact - Investing in projects with a direct, measurable positive effect. Requires a theory of change (explaining how investments achieve impact). Uses robust measurement methods to track progress.
Mixed Goals – A combination of the above approaches. Invests in a mix of Focus, Improvers, and/or Impact strategies. Fund managers must identify the percentage of assets allocated to each category. Ensures investments meet the respective requirements of the chosen labels.
E book 6 - Which sustainability label is most likely to be used for a fund whose main aim is to invest in assets that have the potential to enhance environmental and/or social sustainability over time?
a) Improvers
b) Impact
c) Mixed goals
d) Focus
a
GQ 6 - What are the main things to remember for consumer facing disclosures of sustainability? What’s the difference between this and the Pre-contractual disclosure?
- No more than 2 A4 pages
- Plain English
- Includes the product’s sustainability objective (‘sustainability goal’)
- Material effects on financial risk and return due to the investment strategy
-Negative environmental or social outcomes from pursuing the objective. - Sustainability characteristics of assets the product will and won’t invest in
- Types of assets invested in for non-sustainability reasons.
Pre-contractual disclosure:
-More detailed
-Contains additions info e.g. whether the manager is a signatory to UK Stewardship Code or the index tracking methodology.
-Doesn’t have to be plain English
*E book 6 - Managers of sustainability funds must produce sustainability reports, whether or not they use the FCA labels.
Managers are also required to produce a sustainability entity report at a firm level which may intersect with the TCFD disclosure requirements in ESG 2.
How often must these reports be submitted?
a) Quarterly
b) Half-yearly
c) Annually
d) Every three years
c
The purpose of the sustainability report at a product level is to demonstrate the product’s progress towards achieving its sustainability objective and its performance against relevant KPIs.
Where explanations to retail clients are required, reports should include relevant contextual information on how they should be interpreted, as well as any assumptions used.
In the case of sustainability impact funds, there are additional requirements to demonstrate how the product’s assets are making progress towards measurable, positive environmental or social outcomes.
GQ 6 - What does the FCA SUP (Supervision) manual outline?
This manual sets out what the FCA does to ensure that firms are complying with their requirements, including the requirements on what information you need to report to the FCA and when.
GQ 6 - What does the FCA DEPP (Decision Procedure and Penalties Manual) outline?
DEPP contains a description of the FCA’s procedures for taking statutory notice decisions (formal decision made by the FCA when taking regulatory action against a firm or individual), as well as the FCA’s policy on the imposition and amount of penalties and on the conduct of interviews.
E Book 6 - Who is correct regarding the main purpose of the Upper Tribunal?
a) Ayesha - ‘To compensate investors who suffer a financial loss due to the insolvency of a regulated firm’.
b) Chris - ‘To conduct investigations into complaints made against the FCA in connection with the exercise of its non-legislative functions’.
c) Dale - ‘To keep the FCA rules and practices under review and to assess their effect on competition’.
d) Chloe - ‘To hear appeals from those aggrieved by decisions of the FCA’.
d
Examples of the kinds of decisions which may be referred to the Tribunal include:
- disciplining authorised firms and approved persons;
- varying a firm’s permission to conduct certain or all regulated activities;
- matters relating to market abuse;
- withdrawing individual approval; and
- making prohibition orders banning people from employment relating to certain or all regulated activities.
Following an appeal, the Tribunal can uphold the FCA’s decision or overrule it. Any person aggrieved by a decision of the Tribunal can appeal against it to the Court of Appeal, but only on a point of law.
GQ 6 - What does the manual DISP (Dispute Resolution: Complaints) outline?
DISP contains the procedures a firm needs to have in place to handle any complaints made by its customers and the rules that apply to firms subject to the FOS.
GQ 6 - What does the manual CONRED (consumer redress schemes) outline?
A consumer redress scheme is a process where a company checks if it has broken any rules while doing business. If it finds that its mistakes have caused customers to lose money or suffer harm, it must figure out how to fix the problem and compensate (redress) the affected customers.
CONRED 2 Specifically covers the Arch Cru investment funds and their suitability.
GQ 6 - What does the manual COMP (Compensation) outline?
COMP contains information on the FSCS (Financial Services Compensation Scheme), which is the scheme to compensate customers if the firm responsible for their loss is not able to pay the claim.
GQ 6 - The COMP (Compensation) rules govern eligibility under and levies for the FSCS.
Who do you think is responsible for the FSCS?
a) The FCA and the PRA jointly
b) The FCA only
c) The Financial Ombudsman Service
d) The PRA only
a
COMP covers qualifying conditions for compensation, gives a list of eligible complainants, and offers guidelines on how to calculate compensation and limits to compensation etc. It features in both the FCA Handbook and the PRA Rulebook.
*E book 6 - Why has the FCA used its powers to restrict short selling?
The Financial Conduct Authority (FCA) uses its powers to restrict short selling in order to protect customers and enhance financial integrity.
Short selling is a trading strategy where investors bet against a stock by borrowing shares and selling them with the intention of buying them back at a lower price.
While this can be a legitimate market activity, it can also have negative effects if it’s used excessively or maliciously, especially in volatile market conditions.
*E book 6 - What does COBS incorporate and introduce?
COBS incorporates the MiFID requirements and also introduces a more principles-based regime for regulated firms.
GQ 6 - What’s the cancellation period for general insurance, pure protection contracts and PPI?
What are the policies without cancellation rights?
General - 14 days
Pure protection contracts and PPI - 30 days
There are no cancellation rights for:
- travel or similar short-term policies lasting less than one month; or
- policies where performance has already been completed (e.g. someone buys event insurance for a concert and the event has already taken place)
General insurance provides coverage for financial losses due to unexpected events affecting physical assets or liabilities. It typically covers damage, loss, or liability rather than just a payout upon a specific event like death or illness.
🔹 Examples:
Home Insurance (covers damage to property)
Car Insurance (covers vehicle damage and liability)
Travel Insurance (covers trip cancellations, medical expenses)
A pure protection contract is designed to pay out only upon a specific event, such as death, critical illness, or disability, without any savings or investment component.
🔹 Examples:
Term Life Insurance (pays out on death)
Critical Illness Cover (pays out on diagnosis of a severe illness)
Income Protection Insurance (pays a monthly benefit if unable to work due to illness/injury)
E book 6 - Insurance Conduct of Business Sourcebook (ICOBS) introduces three product categories. What are these?
General insurance products, pure protection (term assurance, income protection and critical illness cover) and PPI (payment protection insurance).
GQ 6 - What is Stewardship regarding ESG?
Stewardship refers to how institutional investors (e.g. investment managers) influence the companies they invest in to promote long-term value, including financial, social, and environmental sustainability. This is done through actions such as voting rights and engagement with company leadership.
*E book - When an adviser is involved in the distribution of a sustainability product, whose responsibility is it to ensure that retail customers have access to the consumer-facing disclosures?
It is the distributor’s responsibility to ensure retail clients have access to consumer-facing disclosures for sustainability products
GQ 6 - How long to regulators have to deal with complaints for the FCA, PRA and Bank of England? Which regulator processes complaints centrally even if the complaint is about on of the other reg bodies?
Regulators must deal with complaints within four weeks and, where that is not possible, will arrange a timetable with the complainant.
The FCA will process complaints submitted centrally even if the complaints are about one of the other regulatory bodies.
GQ 6 - Who does the Consumer Credit Act 1974 affect? The Act covers credit agreements up to how much? What did the Consumer Credit Act 2006 change?
The Consumer Credit Act 1974 regulates individuals and businesses that provide credit or offer advice on debt repayment. Many financial advisers require a consumer credit license, especially when advising on mortgage repayments or debt restructuring.
Agreements involving credit of not more than £25,000 are regulated by the Act
2006 changed:
- definition of the ‘individual’ entitled to protection from not just being a natural person, but to also include ‘a sole trader, a small partnership (having three or fewer partners) and an unincorporated association
-The £25,000 limit is removed except for Business Loans Over £25,000 and for high net worth individuals (so their loans over £25k are unprotected whilst for others, loans larger than £25k are protected). It ensured consumer protections focused on individuals and small businesses rather than large business loans.
KC 6 - Where an advisory firm has been fined by the FCA, who can the firm appeal to against the decision?
Select one:
a.
The Regulatory Decision Committee.
b.
The Upper Tribunal [Tax and Chancery Chamber].
c.
The Financial Regulators Complaints Commissioner.
d.
The Financial Markets Tribunal.
b
KC 6 - Ivan has appealed against enforcement action that has been taken by the FCA. Who would he appeal to and what power does this body have?
Select one:
a.
The Regulatory Decision Committee and it can award compensation.
b.
The Upper Tribunal [Tax and Chancery Chamber] and it can overrule the FCA decision.
c.
The Upper Tribunal [Tax and Chancery Chamber] and it can award compensation.
d.
The Regulatory Decision Committee and it can overrule the FCA decision.
b
*KC 6 - If the cancellation period for a home insurance policy commenced on 3 July, when will it expire?
Select one:
a.
17 July.
b.
2 August.
c.
24 July.
d.
13 July.
a
The cancellation period for general insurance is 14 days and 30 days for pure protection contracts and PPI.
General insurance provides coverage for financial losses due to unexpected events affecting physical assets or liabilities. It typically covers damage, loss, or liability rather than just a payout upon a specific event like death or illness.
🔹 Examples:
Home Insurance (covers damage to property)
Car Insurance (covers vehicle damage and liability)
Travel Insurance (covers trip cancellations, medical expenses)
A pure protection contract is designed to pay out only upon a specific event, such as death, critical illness, or disability, without any savings or investment component.
🔹 Examples:
Term Life Insurance (pays out on death)
Critical Illness Cover (pays out on diagnosis of a severe illness)
Income Protection Insurance (pays a monthly benefit if unable to work due to illness/injury)
KC 6 - If an authorised firm is exempt from the rules arising from the Capital Requirements Directive, this is most likely to be because it is a[n]:
Select one:
a.
small intermediary business.
b.
bank.
c.
insurance company.
d.
FCA authorised firm.
a
*KC 6 - Boris has just started his own IFA firm and is in the process of having his business cards printed and email footer drafted. He must disclose his regulatory status:
Select one:
a.
on the email footer, and it is good practice to declare the same on his business cards.
b.
on all documents and correspondence, including his email footer and business cards.
c.
on his business cards as he is offering independent advice.
d.
verbally to his clients, but it is good practice to include this information in all documentation and correspondence too.
a
It is a requirement that all authorised firms disclose their statutory status in every letter (or electronic equivalent) sent to a retail client. It is also good practice to include the status disclosure on business cards but it is not necessary in text messages.
KC 6 - Bradley is currently subject to an FCA investigation about his behaviour but he has not been notified about this. The offence being investigated is most likely to be suspected:
Select one:
a.
inappropriate advice.
b.
insider dealing.
c.
carrying on a regulated activity without authorisation.
d.
acting in a manner that constitutes a conflict of interest.
b
KC 6 - An investment fund is using a Sustainability Label and therefore it must meet the ‘70% Rule’. This rule states that 70% of the:
Select one:
a.
fund’s management team must have recognised prior experience investing in sustainable investments.
b.
fund’s assets are held in liquid investments, which could be accessible within ten working days.
c.
fund’s contributions must come from individual investors, as opposed to commercial investors.
d.
gross value of the fund’s assets must be invested in accordance with its sustainability objective.
d
*KC 6 - An authorised firm holds money on behalf of its clients and carries out reconciliation on a Friday at noon, when it discovers a discrepancy. To meet the FCA’s rules, when must this discrepancy be corrected?
Select one:
a.
By noon the following working day.
b.
As soon as possible.
c.
By close of business that Friday.
d.
By noon the following Friday.
c
Interest on client money belongs to the client unless agreed otherwise. Client money reconciliation must be done ‘as often as is necessary’ and at least at intervals of no more than 25 days, with discrepancies corrected by the end of the day on which the reconciliation is performed.
KC 6 - Under the FCA prudential requirements, an exempt MiFID firm will have a base capital resource requirement of:
Select one:
a.
£125,000.
b.
£20,000.
c.
£25,000.
d.
£50,000.
b
KC 6 - The Consumer Credit Act 2006 expanded the definition of an ‘individual’ entitled to protection, so as to include:
Select one:
a.
sole traders, partnerships of three or fewer partners and unincorporated associations.
b.
sole traders, partnerships of four or fewer partners, and private limited companies.
c.
partnerships of two more partners and unincorporated associations.
d.
partnerships of five or fewer partners and private limited companies.
a
*KC 6 - A financial services provider is running training seminars to help intermediaries achieve Chartered status. The provider is in breach of the FCA COBS rules on incentives if it:
Select one:
a.
only pays travelling expenses to selected delegates from intermediaries that gave the provider most support.
b.
offers places to intermediaries generally.
c.
pays the costs associated with providing the venue.
d.
refuses to pay, or to contribute towards, accommodation costs for delegates travelling long distances.
a
training facilities can be supplied (with or without charge) if the provider makes them generally available for intermediaries;
the provider can pay or contribute to any reasonable travelling or accommodation expenses of the intermediary for this training.
*KC 6 - Alpha Finance, an authorised firm, is seeking significant variations to its FCA permissions. The variation has been approved but it causes the firm to fall into a new fee block not allocated before the variation. What would be the application fee, if the fee for a new firm falling into this block would be £2,500?
Select one:
a.
£250.
b.
£1,250.
c.
£500.
d.
£2,500.
b
Any firm applying to the FCA for authorisation has to pay an application fee. These were simplified in 2022 and start at £2,500, with higher levels of fees for firms seeking permissions beyond advising and arranging.
If an authorised firm significantly changes its permissions, it may move into new fee blocks, requiring a VoP fee.
The fee is 50% of the application fee a new firm would pay for those fee blocks (in this case 2,500*50% = 1,250)
If the variation does not result in new fee blocks, a flat fee of £250 applies for adding regulated activities.
KC 6 - Counters Financial Solutions is seeking FCA authorisation. In order to meet the Threshold Conditions, its:
Select one:
a.
head office and registered office must be in the EU, and it must have an adequate structure of systems and controls.
b.
directors must be fit and proper and have no close links with other authorised firms.
c.
directors must be resident in the UK and it must have adequate resources in relation to the regulated activities it wishes to carry on.
d.
head office and registered office must be in the UK, and it must be capable of being supervised by the FCA.
d
KC 6 - Where an authorised firm is dissatisfied about how it has been regulated by the FCA, what scope [if any] does it have to make a complaint?
Select one:
a.
There is no right to make a complaint.
b.
It could complain to the PRA who can recommend that an ex-gratia payment is made.
c.
It could complain to the Complaints Commissioner who can impose a range of sanctions, including an ex-gratia payment.
d.
It could complain to The Financial Regulators Complaints Commissioner who can recommend that an ex-gratia payment is made.
d
KC 6 - Which sustainability label can be used by a fund manager aiming to achieve a pre-defined, positive, measurable impact in relation to an environmental or social outcome?
Select one:
a.
Sustainability Impact.
b.
Sustainability Improvers.
c.
Sustainability Focus.
d.
Sustainability Mixed Goals.
a
*KC 6 - Ki-Jung has applied for a loan that is regulated under the Consumer Credit Acts. If the advance copy of the form of agreement is sent to him on 5 January, what is the earliest date that the actual agreement can be posted to him for signing?
Select one:
a.
19 January.
b.
15 January.
c.
12 January.
d.
10 January.
c
Under the Consumer Credit Acts, loan agreements must include cooling-off provisions to allow borrowers time to reconsider and withdraw if desired.
If the loan is secured on land or property, the borrower must receive a copy of the agreement at least 7 days before signing.
Lenders cannot contact the borrower for another 7 days after sending the agreement to avoid selling pressure.
For certain other loans (excluding those signed on the lender’s premises), borrowers have 5 days to cancel after receiving their second copy of the agreement.
KC 6 - HomeSave offers sale and rent back agreements to borrowers who wish to sell their home but continue to live in it. For every applicant, HomeSave must make sure that the borrowers are:
Select one:
a.
given security of tenure in the form of a two-year minimum fixed tenancy.
b.
not reliant on State benefits as their only source of regular income.
c.
given a 28 day cooling off period to give them more time to make decisions.
d.
able to afford the deal and it is right for them; non-advised sales are not allowed.
d
KC 6 - Within the ESG sourcebook, ESG 4 outlines the rules relating to the:
Select one:
a.
charges applying to ESG funds.
b.
disclosure of climate-related information.
c.
sustainability labelling and naming of investment funds.
d.
disclosure of sustainability-related information.
c
ESG 2 - Disclosure of climate-related information
ESG 4 - Sustainability labelling, naming and marketing
ESG 5 - Disclosure of sustainability-related information
KC 6 -The term ‘stewardship’ would best be described as:
Select one:
a.
how an investment manager can wield influence over the companies into which it invests.
b.
an FCA initiative to apply its anti-greenwashing rules.
c.
rules that are placed around investable assets held by an investment fund.
d.
how an investment manager goes about managing climate-related risks.
a
KC 6 - The Public Interest Disclosure Act 1998 is of particular relevance to which part of the Senior Management Arrangements, Systems and Controls [SYSC]?
Select one:
a.
Systems and controls [SYSC 3].
b.
Compliance, internal audit and financial crime [SYSC 6].
c.
Whistle blowing [SYSC 18].
d.
Conflicts of Interest [SYSC 10].
c
Workers who ‘blow the whistle’ on their employers should be protected if they are aware or suspicious of various activities (or their concealment) such as crimes, failure to comply with laws, miscarriages of justice, risks to health and safety or the environment. Firms must have procedures for whistle-blowing to someone in the firm or to the FCA, and should make staff aware of them. This is a requirement of the Public Interest Disclosure Act 1998.
KC 6 - To what extent, if at all, can a firm insure against financial action being taken against it by the FCA?
Select one:
a.
All costs and financial penalties can be claimed under an insurance contract.
b.
In respect of its own costs in defending FCA enforcement action, and any costs it may be required to pay to the FCA.
c.
Only in respect of the costs of defending FCA enforcement action.
d.
Insurance cannot be arranged to protect against this type of risk.
b
No Insurance for Financial Penalties:
A firm cannot have insurance that covers or helps pay for financial penalties (such as fines) imposed by the FCA or under FSMA. This means that the firm cannot insure itself against the DIRECT financial consequences of regulatory penalties.
Insurance for Legal Defence and Costs:
- A firm can have insurance to cover the costs of defending itself in an enforcement action taken by the FCA.
- The insurance can also cover costs the firm may be ordered to pay to the FCA, such as legal fees or other associated costs related to the enforcement process.
KC 6 - The Upper Tribunal [Tax and Chancery Chamber] can hear appeals against FCA decisions regarding any of these matters, EXCEPT those relating to:
Select one:
a.
varying a firm’s permissions.
b.
a firm’s capital adequacy.
c.
withdrawal of individual approval.
d.
disciplinary action against a senior manager function.
b
Examples of the kinds of decisions which may be referred to the Tribunal include:
- disciplining authorised firms and approved persons;
- varying a firm’s permission to conduct certain or all regulated activities;
- matters relating to market abuse;
- withdrawing individual approval; and
- making prohibition orders banning people from employment relating to certain or all regulated activities.
KC 6 - The FCA is planning to visit High Advice Ltd, a firm of IFAs, on Wednesday 5 June to conduct an investigation into market abuse. What is the latest that High Advice Ltd must be notified of the FCA’s enforcement officers’ visit?
Select one:
a.
The FCA does not need to give notice of such a visit.
b.
Tuesday 4 June.
c.
Wednesday 29 May.
d.
Friday 31 May.
a
KC 6 - Under ICOBS, Able Insurance is only required to provide a brief demands and needs statement to Clive because:
Select one:
a.
the product being sold is term assurance.
b.
the product being sold is represented by a one-year contract.
c.
the sale is being made without the provision of advice.
d.
Clive is a non-commercial customer.
c
Before offering any advice, an intermediary must supply the client with initial disclosures and/or terms of business (ToB), giving details of the services offered and their authorisation status. An intermediary using a panel must also have available for clients a list of insurers with which it deals. It must also advise the client whether it is representing them or acting on behalf of the insurer.
The intermediary must then obtain details of a client’s circumstances and needs, including existing policies, and give the client a statement of those needs together with reasons for any recommendations (this is known as a ‘demands and needs statement’).
The above paragraph does not fully apply to sales made without advice (known as non-advised sales), however the intermediary must still collect sufficient information about the client to be sure that they are eligible to claim the benefits under the policy, and they must provide the client with a brief statement of demands and needs, setting out what the policy covers.
KC 6 - Penny works for a firm which has a Remuneration Code. The Remuneration Code must:
Select one:
a.
set the remuneration of all senior management functions.
b.
set the remuneration of directors.
c.
ensure remuneration policies encourage performance-related pay.
d.
be consistent with sound risk management.
d
KC 6 - Under the Consumer Credit Act 2006, which of the following is protected under the consumer credit legislation?
Select one:
a.
Malcolm, Mark and Mary who are the three partners in an accountancy practice.
b.
Loc8, a property rental partnership with four partners.
c.
Monkey Business, a registered incorporated charity that protects endangered species.
d.
Beauty Box Ltd, a newly incorporated hair and beauty salon with two directors.
a
The Consumer Credit Act 2006 expanded the definition of an ‘individual’ entitled to protection, so as to include sole traders, partnerships of three or fewer partners and unincorporated associations.
KC 6 - Maxine gave her discretionary fund manager £100,000 to invest on a Thursday. Under the client asset and client money [CASS] rules, this money must normally be paid into the firm’s client bank account by close of business the following:
Select one:
a.
day.
b.
Monday.
c.
Tuesday.
d.
Thursday.
a
KC 6 - How would a large UK bank, which is subject to the capital adequacy requirements, establish what level of financial resources it should hold?
Select one:
a.
By reference to an FCA formula linked to the respective sizes of its workforce and customer base.
b.
The figure is set by the PRA on advice from the Financial Policy Committee.
c.
By undertaking detailed risk assessments and stress-testing scenarios appropriate to the business it does.
d.
The figure is set by the FCA on advice from the Financial Policy Committee.
c
*KC 6 - Under the terms of the Mortgage Credit Directive, a[n]:
Select one:
a.
key features illustration must be provided to the borrower, with a minimum fourteen-day reflection period.
b.
mortgage offer is binding on the lender, who must allow the borrower a minimum seven-day reflection period.
c.
explanation must be given of all early repayment charges that apply beyond the first two years.
d.
affordability assessment must be carried out for all mortgage applicants, apart from high net worth borrowers.
b
Adoption of the Directive resulted in some important changes to the MCOB rules, which mean that firms:
- need to provide a binding mortgage offer and seven-day (minimum) reflection period;
- need to give an adequate explanation of a product’s essential features; and
- are subject to new disclosure requirements.
*KC 6 - Able & Co is an authorised firm that is subject to the rules based on the Capital Requirements Directive. It should be aware that:
Select one:
a.
it is allowed four weeks to demonstrate its financial resources once requested to do so.
b.
whether or not the business is growing will have no impact on the capital it requires.
c.
all capital is valued and treated in the same way.
d.
it should constantly know how much capital it has.
d
KC 6 - What would be an example of mortgage advice?
Select one:
a.
Mike, who explains the terms and conditions of a mortgage to an existing customer.
b.
Paula who uses a decision tree to help a client decide upon the best product or option.
c.
Kali, who provides information to a customer about the different mortgages offered by the building society she works for.
d.
Ann, who suggests that an existing mortgage borrower takes out a five-year fixed rate mortgage to replace his standard variable rate mortgage.
d
Advice involves giving an opinion on the merits of a particular product and/or its suitability for a particular customer. This therefore does not include:
- making a general recommendation to switch from, say, a fixed mortgage to a variable mortgage; or
- general advice on the advantages and disadvantages of borrowing in order to buy a property, compared with renting.
a, b and c are all ‘information’, not advice.
*KC 6 - Chin-Hwa has applied for a loan that is covered by the Consumer Credit Acts. If the advance copy of the form of agreement was sent to her on 7 September, what is the earliest date that the lender can contact Chin-Hwa to discuss the loan?
Select one:
a.
17 September.
b.
28 September.
c.
14 September.
d.
21 September.
d
The client must be sent a copy of the agreement at least 7 clear days before the actual agreement for signature is posted to them. During this time, and for a FURTHER period of seven days, the lender must not approach the client, so as to allow them time for further thought free from all possible selling pressure. Total of 14 days should pass between the copy of the agreement and the lender contacting the lender.
KC 6 - Under what circumstances, if any, would Craft Ltd be permitted to use the FCA logo on its own materials?
Select one:
a.
It can use the FCA logo on any financial promotions that have been approved by the FCA.
b.
It would only be permitted to use the FCA logo on promotional literature, and only with the prior consent of the FCA.
c.
It is not permitted to use the FCA logo on any of its own materials.
d.
It can produce its own version of the FCA logo to use on its own materials, but it cannot use the actual FCA logo.
c
KC 6 - For a firm with ‘portfolio management’ permissions and a Prudential Category of MIFIDPRU, the minimum Capital Resource Requirement is £75,000 and there is an overheads requirement of:
Select one:
a.
25% of fixed overheads.
b.
50% of total overheads.
c.
25% of total overheads.
d.
50% of fixed overheads.
a
KC 6 - When two regulated firms merge, what type of additional fees will the new entity be charged by the FCA?
Select one:
a.
An application fee at double the usual rate.
b.
A merger fee only.
c.
A special project fee only.
d.
A special project fee and a merger fee.
c
*KC 6 - A financial services provider is making training facilities available to Hogg Howlett, an insurance intermediary. The provider is in breach of COBS 2 rules on inducements if it:
Select one:
a.
contributes towards the costs of travelling.
b.
does not make the facilities generally available to intermediaries.
c.
provides access free of charge.
d.
pays reasonable accommodation costs.
b
Training facilities can be supplied (with or without charge) if the provider makes them generally available for intermediaries;
The provider can pay or contribute to any reasonable travelling or accommodation expenses of the intermediary for this training.
*KC 6 - Which official within a regulated firm should have overall responsibility for the ‘senior management functions’ within that firm?
Select one:
a.
Chief executive.
b.
Head of compliance.
c.
Chair of the board of directors.
d.
Head of training and competence.
a
*KC 6 - Under ICOBS, a cancellation notice will be sent to which of Nigel’s clients?
Select one:
a.
Miriam, who bought a second hand endowment policy.
b.
Zoe, who bought term assurance with a term of six months.
c.
Tom and Clare, who bought travel insurance with a duration of 25 days for a trip outside the EU.
d.
Chariot Partnership where the three partners arranged partnership protection insurance for the benefit of each other.
d
Since this policy was taken by the partners for each other’s benefit (rather than by the firm for its partners as a group), the exemption does not apply, meaning a cancellation notice must be sent.
A cancellation notice must be sent for all life policies and life annuities (rules out c - travel insurance) except for:
- traded life policies; (rules out a)
- life policies for six months or less; (rules out b)
- policies where the customer, at the time they sign the application, is habitually resident in an EEA State other than the UK, or outside the EEA and is not present in the UK;
- pure protection contracts effected by the trustees of an occupational pension scheme, an employer or a partnership to secure benefits for employees or the partners in the partnership; and
- policies issued to corporate bodies (except for pension scheme trustees).
The cancellation period for general insurance is 14 days and 30 days for pure protection contracts and PPI.
KC 6 - Leaking false or misleading information in order to influence the price of a company’s shares is an example of:
Select one:
a.
arbitrage.
b.
the misuse of inside information.
c.
market abuse.
d.
market collusion.
c
*KC 6 - Trudy’s firm of IFAs has to pay the FCA periodic fees. The fees are based:
Select one:
a.
on the FCA’s business plan for the forthcoming tax year and on how much profit it needs to make.
b.
on the FCA’s expenses in the previous tax year and its expected budget for the forthcoming year.
c.
solely on the firm’s fee block.
d.
solely on the firm’s fee block and the tariff base.
d
The FCA charges annual fees to recover costs based on its Annual Funding Requirement (AFR).
Firms are assigned to fee blocks based on their activities (e.g., A13 for investment advice, A18 for home finance, A19 for general insurance).
Firms conducting multiple activities fall into multiple fee blocks and pay fees accordingly.
Fees are based on a tariff base, which measures a firm’s business size (e.g., income from the previous year).
A firm’s periodic fee is calculated as:
Periodic fee = (Tariff base data) × (Fee block tariff rates)
KC 6 - Under what circumstances can an authorised firm use the FCA’s logo on its own material or website?
Select one:
a.
It will have unrestricted use once it has been authorised.
b.
Under no circumstances.
c.
With permission from the FCA on each occasion.
d.
When required or expressly permitted to do so by the rules.
b
KC 6 - Sound As A Pound, a firm of IFAs, includes the following statement on every letter and email it sends to its clients: ‘Sound As A Pound is authorised and regulated by the FCA’. Why is this statement non-compliant?
Select one:
a.
Because as a firm of IFAs, it is also authorised and regulated by the PRA.
b.
Because the statement should be followed by a list of the activities the firm is authorised to engage in.
c.
Because as a firm of IFAs, it is authorised by the PRA, but regulated by the FCA.
d.
Because the ‘Financial Conduct Authority’ should not be abbreviated to the FCA.
d
*KC 6 - Black and While Ltd is a firm of mortgage introducers. It does NOT require FCA authorisation because it:
Select one:
a.
acts as an intermediary for a single lender.
b.
introduces business to a panel of mortgage lenders.
c.
does not provide advice to clients.
d.
only deals with second charges and bridging finance.
c
KC 6 - Jake works for a firm that operates in the mortgage market. If Jake’s firm is NOT required to be authorised by the FCA, Jake works for a[n]:
Select one:
a.
mortgage adviser.
b.
introducer.
c.
arranger.
d.
lender.
b
KC 6 - Under the FCA’s MCOB rules, what minimum percentage of a property must be used as a dwelling to be regarded as a regulated residential mortgage?
Select one:
a.
60%.
b.
40%.
c.
80%.
d.
20%.
b
*KC 6 - Agreements involving credit of up to £25,000 are regulated by the Consumer Credit Act 1974. The 2006 Act removed this upper limit for:
Select one:
a.
high net worth debtors.
b.
credit card debts only.
c.
all mortgage loans.
d.
all types of commercial business loans.
a
If a loan is over £25,000, it can be exempt from regulation if:
- It is for a business purpose carried out by the debtor OR
- The debtor qualifies as “high net worth” under specific regulations.
Therefore for these loans, they are unprotected above £25k.
KC 6 - If the cancellation period for a payment protection insurance policy commenced on 10 August, when will it expire?
Select one:
a.
24 August.
b.
9 September.
c.
20 August.
d.
31 August.
b
General Insurance - 14 days
Pure protection contracts and PPI - 30 days
KC 6 - Wendy feels that some of the terms of her life policy are unfair. Under the Consumer Rights Act 2015, Wendy may successfully challenge the terms on the grounds of fairness if:
Select one:
a.
the life policy is a pure protection policy.
b.
the life policy has an investment element.
c.
she can demonstrate the terms are insufficiently prominent or transparent.
d.
the life company cannot demonstrate that she relied on the terms to her benefit.
c
The Act states that if a term of a contract is not transparent or prominent, it can be assessed for unfairness. A term is:
- transparent, if it is expressed in plain and intelligible language; and
- prominent, if it is brought to the consumer’s attention in such a way that an average consumer would be aware of it.
GQ 6 - What do these sections of the ESG Sourcebook outline? ESG 2, ESG 4 and ESG 5
ESG 2 - Disclosure of climate-related information
ESG 4 - Sustainability labelling, naming and marketing
ESG 5 - Disclosure of sustainability-related information
GQ 6 - If someone applies for a loan that is regulated under the Consumer Credit Acts how many days in advance before signed must the copy of the agreement be received?
How many days should pass between the copy of the agreement and the lender contacting the lender?
Under the Consumer Credit Acts, loan agreements must include cooling-off provisions to allow borrowers time to reconsider and withdraw if desired.
If the loan is secured on land or property, the borrower must receive a copy of the agreement at least 7 days before signing.
Lenders cannot contact the borrower for another 7 days after sending the agreement to avoid selling pressure. (Total of 14 days should pass between the copy of the agreement and the lender contacting the lender).
For certain other loans (excluding those signed on the lender’s premises), borrowers have 5 days to cancel after receiving their second copy of the agreement.
GQ 6 - How much does a firm have to pay for an application fee to the FCA?
If an authorised firm significantly changes its permissions and it move into new fee block, how much do they have to pay in a Variation of Payment (VoP) fee?
If an authorised firm changes its permissions but it doesn’t move into new fee block, how much do they have to pay in a Variation of Payment (VoP) fee?
Any firm applying to the FCA for authorisation has to pay an application fee. These were simplified in 2022 and start at £2,500, with higher levels of fees for firms seeking permissions beyond advising and arranging.
If an authorised firm significantly changes its permissions, it may move into new fee blocks, requiring a VoP fee.
The fee is 50% of the application fee a new firm would pay for those fee blocks (in this case 2,500*50% = 1,250)
If the variation does not result in new fee blocks, a flat fee of £250 applies for adding regulated activities.
GQ 6 - How often should Client money reconciliation be done?
If discrepancies are found, when should they be corrected by?
Client money reconciliation must be done ‘as often as is necessary’ and at least at intervals of no more than 25 days, with discrepancies corrected by the end of the day on which the reconciliation is performed.
GQ 6 - Where should firms disclose their statutory status? When is it best practice and when is it not necessary?
It is a requirement that all authorised firms disclose their statutory status in every letter (or electronic equivalent) sent to a retail client.
It is also good practice to include the status disclosure on business cards but it is not necessary in text messages.
GQ 6 - What must an intermediary advising a client on insurance provide the client?
What if sales are made without advice?
- Initial disclosures and/or terms of business (ToB). Before offering any advice, an intermediary must supply the client with initial disclosures and/or terms of business (ToB), giving details of the services offered and their authorisation status.
- An intermediary using a panel must also have available for clients a list of insurers with which it deals.
- It must also advise the client whether it is representing them or acting on behalf of the insurer.
- Demands and needs statement. The intermediary must then obtain details of a client’s circumstances and needs, including existing policies, and give the client a statement of those needs together with reasons for any recommendations (this is known as a ‘demands and needs statement’).
Sales made without advice requires the demands and needs statement from the client and brief statement of demands and needs, setting out what the policy covers.
GQ 6 - Under the terms of the Mortgage Credit Directive, what is the minimum reflection period on a mortgage?
7 days
GQ 6 - A cancellation notice must be sent for what type of insurance? What’s the exceptions?
All life policies and life annuities except for:
- traded life policies;
- life policies for 6 months or less;
- policies where the customer, at the time they sign the application, is habitually resident in an EEA State other than the UK, or outside the EEA and is not present in the UK;
- certain pure protection insurance (e.g. income protection) contracts that are arranged by trustees, employers, or partnerships specifically to provide benefits for employees or partners.; and
- policies issued to corporate bodies (other than pension scheme trustees).
GQ 6 - Periodic fee = ?
Periodic fee = (tariff base data for firm) applied to (fee block tariff rates)
The FCA charges annual fees to recover costs based on its Annual Funding Requirement (AFR).
Firms are assigned to fee blocks based on their activities (e.g., A13 for investment advice, A18 for home finance, A19 for general insurance).
Firms conducting multiple activities fall into multiple fee blocks and pay fees accordingly.
Fees are based on a tariff base, which measures a firm’s business size (e.g., income from the previous year).
A firm’s periodic fee is calculated as:
Periodic fee = (Tariff base data) × (Fee block tariff rates)
GQ 6 - What document do mortgage firms need to issue?
European standardised information sheet (ESIS)
This is a mandatory product disclosure document that has replaced the key facts illustration (KFI).
