Chapter 7 & 8 Flashcards
Past paper Q63. Following settlement of a Financial Ombudsman Service (FOS) case, the complainant was awarded compensation. The complaint related to a loss that occurred in March 2019. The FOS recommended monetary award was £200,000. If the complaint was referred to the FOS on 1 August 2019 excluding interest, how much was the respondent obliged to pay the complainant? A. £100,000 B. £150,000 C. £160,000 D. £200,000
C - just gonna have to remember
£160k < April 2020 < £355k
Past paper Q64. An authorised firm must report changes to its business, in line with the Financial Conduct Authority’s ad hoc reporting requirements, in which circumstances shown below?
i The appointment of a new director
ii The appointment of a new customer services manager
iii New head office premises being established
iv The appointment of a new pension transfer adviser
v Reissuing a sales aid
A. i, iii and iv only.
B. i, and iv only.
C. ii, v and v only.
D. iii iv and v only.
A
Past paper Q65. Three financial advisers have transacted business over the past 12 months as follows
Rob Pension transfers, life assurance
Derek Pension transfers, regular contribution stakeholder pensions
Tim Cash ISAs, equity release
From this information, it can be deduced that
A. Tim will not need to keep his suitability records indefinitely.
B. Rob will be subject to the greatest supervisory monitoring requirements.
C. Derek will need to keep his Training and Competence records the longest.
D. Rob and Derek are likely to be supervisors.
A
Past paper Q66. The Financial Ombudsman Service (FOS) received a complaint in May 2020 in relation to a financial loss that occurred in September 2019. The FOS has recommended a monetary award of £230,000 for financial loss and £3,000 for interest. Assuming that the FOS make the judgement that the respondent should meet the claim against them, the amount that is binding on the respondent is A. £150,000 B. £160,000 C. £230,000 D. £233,000
D
Past paper Q67. Under the terms of the Financial Conduct Authority Handbook, which category of client may be referred to as a per se eligible counterparty? A. An institutional investor. B. A government of a country. C. A large public limited company. D. A local authority.
B
Past paper Q68. Several financial transactions have taken place as follows
i) Direct life office Internet Retail Term assurance
ii) Independent In person Professional Whole of life
iii) Single tied Direct offer Retail Stocks and shares ISA
iv) Multi tied Postal Retail Savings endowment
v) Direct life office Internet Professional Income protection insurance
For which of the transactions is a client agreement required?
A. ii and iv only.
B. iii and v only.
C. i, ii and iv only.
D. i, ii, iii, iv and v.
A - Direct offers dont need client agreements as all relevant information should be included in the offer presumably
Past paper Q69. An authorised firm arranged the following products for retail clients on the 1 January
i A stakeholder personal pension
ii A cash ISA
iii A level term assurance policy
iv An Enterprise Investment Scheme
v An open-ended investment company (OEIC) product
Which of these products would still be within their cancellation period on the 28 January? A. i only. B. i and iii only. C. i, iv and v only. D. ii, iii, iv and v only.
B - I guess the other three are just typical investment products whereas i & iii are pensions and protection so they get longer?
Past paper Q70. A financial adviser recommends that a retail client makes a top-up contribution to an existing annual premium personal pension policy and also makes payments into an open-ended investment company (OEIC) and a unit trust. When preparing a suitability report, the financial adviser must give his reasons for recommending the
A. top-up contribution only.
B. top-up contribution and the OEIC only.
C. OEIC and the unit trust only.
D. top-up contribution, the OEIC and the unit trust.
C - the top up contribution isn’t a change in recommendations so there will be a suitability report justifying it from before
Past paper Q71. Man and Julia, both aged 19, have existing Help to Buy ISAs that commenced in 2018. What maximum amount of contributions may be invested, in total for Matt and Julia, each year, in their Help to Buy ISAs? A. £2,400 B. £3,400 C. £4,800 D. £6,800
C
2021 mock paper Q 63. If a solicitor assisted a client with a claim on a life policy would FCA authorisation be required?
A. Yes. as this type of work is classed as a regulated activity
B. No. as long as it was a one-off activity
C. Yes. as the client will have received advice
D. No. this is classed as incidental to their professional services
D
2021 mock paper Q 64. Which of the following would NOT give rise to a potential compensation claim?
A. An adviser failing to consider the tax implications of the investment recommended
B. A portfolio increasing in value by 20% but being in an investment vehicle outside the client’s risk parameters
C. A portfolio losing 50% of its value due to a stock market crash
D. An adviser not considering current pension contributions when recommending a new pension contribution
C
2021 mock paper Q 65. What is the definition of money laundering?
A. Where criminals convert illegally obtained money into apparently legitimate funds
B. The process of withdrawing regular amounts of cash from an investment bond
C. A series of transactions through financial products
D. Investing money under a false identity
A
2021 mock paper Q 66. What is the maximum compensation the Financial Ombudsman Service can award that is binding on the respondent for complaints about actions or omissions by firms that occurred on or after 1 April 2020?
A. £158000 plus the claimant’s costs and interest
B. £160.000 plus a maximum of 5% interest
C. £350,000 plus the claimant’s costs and interest
D. £355.000 plus the claimant’s costs and interest
D
2021 mock paper Q 67. What is the maximum pay out under the Financial Services Compensation Scheme for home finance mediation activities?
B - 100% of £85,000
2021 mock paper Q 68. Who has responsibility for ensuring that procedures are implemented to meet the six consumer outcomes that a firm should strive to achieve to ensure the fair treatment of customers? A. The Financial Conduct Authority B. The advisory firm C. The Financial Policy Committee D. The Association of British Insurers
B
2021 mock paper Q 69. If a single-tied agent does NOT have a product which will meet a particular clients needs, what can they do?
A. Sell the client the next best product in their range
B. Introduce the client to an IFA
C. Sell the client a product from a different provider’s range
D. Refer the client to a colleague in the company to help
B
2021 mock paper Q 70. Which of the following statements regarding stakeholder products and basic advice is FALSE?
A. There is a long-term deposit-based stakeholder product
B. A firm providing basic advice must explain why it chose the stakeholder product
C. Basic advice initial disclosure information must be given on first contact
D. There is no requirement to ‘know your customer’
A
2021 mock paper Q 71. The rule that all communications concerning financial promotion of regulated business must be fair. clear and not misleading does NOT apply to;
A. A personal quotation or illustration
B. A poster highlighting a fund’s past performance
C. An advertisement detailing charges under a product
D. Web based advertising covering claim statistics for I P
A
M88. Which of the following firms, authorised prior to the FSMA, would have been automatically re-authorised by the FSA and since recognised by the FCA and PRA? Tick all that apply.
A. Appointed representative of investment firms
B. A solicitor’s firm authorised by their Recognised Professional Body (RPB) under the Financial Services Act 1986
C. Firms authorised under the Insurance Companies Act 1982
D. Firms authorised under a Self- Regulating Organisation (SRO) under the Financial Services Act 1986
CD -
7A1 & 7A3
"Firms previously authorised under the:
- Banking Act 1987
- Insurance Companies Act 1982
- Financial Services Act 1986's
- Securities and Investment Board
- Self-Regulating Organisations
were automatically re-authorised by the then FSA for their previously authorised activities."
Firms previously authorised by an RPB were not grandfathered in presumably because the FCA didn’t want to trust their decision making.
Appointed representatives are exempt from authorisation.
M89. What must a firm establish before it can appoint someone as an appointed representative (AR)? Tick all that apply.
A. The appointment won’t prevent the firm from satisfying the threshold conditions
B. The firm has adequate controls over the person’s regulated activity
C. The AR is already, and will continue to be. an authorised person
D. The AR will act solely by making introductions and distributing advertisements
AB -
7B6 (7/17)
~”Before an appointed representative is appointed, the principle must establish:
- the appointment doesn’t prevent the principle from satisfying the threshold conditions
- the AR is solvent (not in financial trouble)
- the AR has no close links which would be likely to prevent the effective supervision of the person by the firm
- the firm has adequate controls over the AR’s regulated activities”
