Exam Questions Flashcards by Jennifer Barker

Which body sets interest rates in the UK and what is its inflation target?

a) The Treasury; 2% CPI
b) The Treasury; 2% RPI
c) The Monetary Policy Committee; 2% CPI
d) The Monetary Policy Committee; 2% RPI

c) The Monetary Policy Committee; 2% CPI

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Mohammed is concerned about how he would cope financially in the event of long term sickness. Which type of insurance policy is MOST likely to satisfy this need?

a) Accident sickness and unemployment insurance
b) Mortgage payment protection
c) Private medical insurance
d) Income protection insurance

d) Income protection insurance

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John and Janet owned a property as tenants in common. On Janet’s death:

a) the entire property would pass straight to John as surviving joint owner
b) her children would automatically become legal owners of the full property
c) her share of the property forms part of her estate and is distributed accordingly
d) her share of the property would be held in trust for her adult children

c) her share of the property forms part of her estate and is distributed accordingly

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A ‘directive’ is a form of EU legislation. This requires Member States to implement the directive:

a) to achieve a set outcome, but how this is achieved is left to each State
b) in its entirety with no discretion about how it is implemented
c) by introducing high level principle-based regulation that underpin the directive
d) only if they choose to do so

a) to achieve a set outcome, but how this is achieved is left to each State

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Which regulator is charged with ensuring that competition between businesses is a benefit to customers and the economy as a whole?

a) The Office of Fair Trading
b) Competition Commission
c) The Prudential Regulation Authority
d) Competition and Markets Authority

d) Competition and Markets Authority

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ABC Advisers Ltd have been granted a Part 4A permission. This means that the organisation can now:

a) act as a Designated Professional Body
b) proceed to appoint some Appointed Representatives
c) undertake the regulated activities applied for
d) advise on a whole of market basis

c) undertake the regulated activities applied for

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How much notice does the Financial Conduct Authority need to give before conducting an enforcement visit on a regulated firm?

a) None
b) 3 working days
c) 5 working days
d) 7 working days

a) None

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Smith and Wesson are insurance brokers who also undertake mortgage and investment advice. Which conduct of business rule book(s) will they need to comply with?

a) ICOBS only
b) COBS and MCOB only
c) COBS, ICOBS and MCOB only
d) BCOBS, MCOB and ICOBS only

c) COBS, ICOBS and MCOB only

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Under S.19 of the Financial Services and Markets Act 2000, it is an offence for someone to carry out a regulated activity unless they are:

a) authorised or exempt
b) a Designated Professional Body
c) recognised by a relevant professional body
d) licensed under the Consumer Credit Act

a) authorised or exempt

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George is in the process of applying to be a financial adviser with a UK bank. Under the certification regime, who will decide that George is competent and suitable for this role?

a) The CII
b) The Financial Conduct Authority
c) His employer
d) The Prudential Regulation Authority

c) His employer

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Under which of the following circumstances must the FSA notify a person who is subject to an investigation?

A. Possible insider dealing investigation
B. Market abuse investigation
C. Falsely describing oneself as authorised
D. A misleading statement investigation

C. Falsely describing oneself as authorised

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What must be included within a client agreement? – tick all that apply

A.    Regulation by the FSA
B.    The IFA’s contact details
C.    The IFA’s opening hours
D.    Any restrictions
E.    Risk warnings
F.    Services provided by the IFA

A. Regulation by the FSA
D. Any restrictions
E. Risk warnings
F. Services provided by the IFA

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Why is income relevant in determining the amount of protection a client needs?

A. Because income and expenditure analysis will determine the shortfall
B. Lower income levels suggest a lower standard of living
C. To determine the amount of cover required and affordability
D. Higher income levels are normally associated with higher employment benefits

C. To determine the amount of cover required and affordability

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Under which of the following circumstances would the powers granted under an ordinary Power of Attorney NOT be revoked?

A. In the event of mental incapacity
B. If the donor leaves the country
C. In the event of bankruptcy
D. In the event of death

B. If the donor leaves the country

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Under a commission disclosure, what forms of remuneration must a firm disclose to a retail client before selling a packaged product via its agent? – tick all that apply

A. Any commission due from the packaged product
B. Proper value of the agent’s car
C. The explicit value of the agent’s salary
D. Proper value of the agent’s pension benefit
E. The equivalent of the actual cash commission an IFA would receive
F. Proper value of the agent’s support services that are not available to IFAs

A. Any commission due from the packaged product
B. Proper value of the agent’s car
D. Proper value of the agent’s pension benefit
F. Proper value of the agent’s support services that are not available to IFAs

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A governments fiscal policies are concerned with the control of;

a) taxation, borrowing and government spending methods
b) taxation and interest rates
c) The money supply, borrowing and government spending methods
d) interest rates and money supply

a) taxation, borrowing and government spending methods

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The UK government is looking to slow down the ecomony. If it solely uses monetary policies ti acheive this, what action is it likely to take?
a) increase public expenditure in infrastructure projects
b) increase Interest rates
c) Increase levels of government borrowing
Increase income tax

b) increase interest rates

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If the moneytary policy committee increases interest rates, who is most likely to benefit?

a) Savings account holders
b) borrowers
c) shareholders
d) people receiving state benefits

a) savings account holders

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Andy works for a firm that has just bought a financial instrument from the Debt Management Office. This means that they have just invested in’

a) a new issue of UK government held shares
b) existing UK government held shares
c) exisitng government gilts
d) a new issue of UK government gilts

d) a new issue of Uk government gilts

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Aasha has contacted her bank to give trading instructions for one of her investments. This type of transaction is known as a ….

a) advisory service
b) discretionary investment
c) portfolio management services
d) execution only service

d) execution only service

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The gilt repo amrket is used to influence short term interest rates through the sale of gilts. The repo rate can be defined as:

a) the interest rate implied by the difference between the sale and the repurchase rate
b) the interest rate offered by the seller at a set date in the future
c) the interest rate achieved by the purchaser when the gilts are purchased
d) the interest rate offered by the purchaser when the gilts are purchased

a) the interest rate implied by the difference between the sale and the repurchase rate

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Sonal works for a large pension fund which has agreed to buy stock direct from a large business without using a regulated exchange. This type of trade is know as;

a) execution only
b) over the counter
c) on exchange
d) best execution

b) over the counter

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Big Life PLC is one of the largest UK life insurance companies. As such, who would it be regulated by?

a) The PRA and the FCA
b) the FCA only
c) the PRA and the FPC (financial policy committee)
d) the PRA only

a) The PRA and the FCA

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If the UK government decided to reduce the amount and range of state benefits, what impact is this most likely to have on UK savings, pensions and insurance provision?

a) it will decrease the demand for all of these types of products
b) The demand for pensions is likely to increase but other areas would reduce
c) it will increase demand for all of these types of products
d) The demand for pensions is likely to reduce but other areas would increase

c) it will increase demand for all of these types of products

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Payment systems are important to the financial sector either because they deal with very high values or because they are widely used by customers. Which body regulates Uk payment systems? a) the Payments Council b) the Payments System Regulator c) Payments UK d) the Asscociation of Payment Clearing Services

b) the Payments System Regulator

Sacha and Jane have a young family. They need a policy that provides £200k of life cover throughout its term and would like to keep costs to a minimum. The policy which would provide this cover at the lowest cost is: a) level term assurance b) family income benefit c) convertible term assurance d) whole of life insurance

a) level term assurance

Simon and Sue have recently found a property they want to buy and are now considering their mortgage options. They would prefer a mortgage which has predictable and stable payments. What interest rate option would be the most suitable for this need? a) fixed b) SVR c) Deferred interest d) discounted

a) fixed

Why is establishing a budget for someone who is relying solely on their investment income very important? a) There is not need to establish a budget for someone whose income is derived from investments as they can always access the capital to supplement income if needed b) So that the client can decide where they need to make reductions in their essential expenditure c) Having to withdraw some of thier capital to supplement income will reduce the abiloty to provide the required level of income from the investment d) So that the adviser knows that the clients attitude to risk needs to be

c) Having to withdraw some of thier capital to supplement income will reduce the abiloty to provide the required level of income from the investment

Paul is 39 and is thinking of investing in a Lifetime ISA. If he makes the maximum contribution for the next 10 years, how much Government bonus will be receive? a) £40K b) 50K c) 1K d) 10K

d) 10K

Sarah who is 30, required a term assurance policy with an initial sum assured of £100K. The policy that would have the lowest premium is a; a) decreasing term assurance policy with a 25 year term. b) level term assurance policy with a term of 10 years c) decreasing term assurance policy with a term of 10 years d) level term assurance policy with a term of 25 years

c) decreasing term assurance policy with a term of 10 years

Mo and his family qualify for a range of State Benefits. Mo has been advised that his housing benefit is about to be reduced. What might be the reason for this? a) The total benefits received by the household exceeds the benefits cap b) He has been on the highest rate of housing benefit for the maximum period of time c) He works away during the week and only stays at his rented property three nights per week d) His infirm mother has moved in with him and his family

a) The total benefits received by the household exceeds the benefits cap

Ewan has a renewable term assurance policy. On expiry of the five year term, what is least likely to be an option? a) another similar policy can be taken out b) it will ceased if not renewed c) it can be renewed and the premium will rise d) It can be renewed and the premium will fall

d) It can be renewed and the premium will fall

Mr Jones next door neighbour recently suffered a heart attack and it has prompted Mr Jones to look into arranging some form of protection for himself and his family should be suffer likewise. ideally he would prefer a policy that pays out a lump sum he could benefit from. Which type of protection policy would best meet his needs? a) long term care insurance b) Critical illness cover c) income protection insurance d) private medical insurance

b) Critical illness cover

Roger has UK relevant earnings of £55K. His current pension contributions are £20K PA. Without using carry forward, what is the maximum additional amount he can contribute to a pension in 2019/20 and still get tax relelf? a) £35K b) 15K c) 10K d) £20K

d) £20K

Brenda and Paul have taken out a mortgage on their home. They will receive a lump sum and do not have to pay any interest. Instead, when their house is sold, they will have to pay the lender an agreed sum that is higher that the amount they borrowed. What type of lifetime mortgage have Brenda and Paul taken out? a) Fixed repayment lifetime mortgage b) interest only mortgage c) Home reversion scheme d) Home income plan

a) Fixed repayment lifetime mortgage

Mary died in August 2008, when the Inheritance tax band was £300K. She left a total of £60K to her two children and the balance of her estate was left to her husband. He Died in May 2019. Assuming they did not own any residential property, and that no other gifts or relief apply, the nil tax rate band that will be applied to the estate is: a) £590K b) 585K c) £485K d) 325K

b) £585K

Rachel is about to receive investment advice from an adviser who tells her that he is able to provide advice based on a limited range of providers. Rachel is about to receive advice from an adviser who is; a) A restrcited whole of market b) restricted multi tied c) restricted tied d) indépendant

b) restricted multi tied

If the EU states participating in moneytary union decided that they need to increase interest rates, which regulatory body would do so? a) the european systematic risk board b) the european supervisory authority c) the european banking authority d) the european central bank

d) the european central bank

Gemma works for an organisation that provides and advisory service. They make suggestions to their clients about which holdings they should include within an investment portfolio. She is most likely to work for: a) friendly society b) pension provider c) insurance broker d) bank

d) bank

Bobby has eligible jobholder earnings of £20K. Under auto-enrolment: a) the minimum contribution is based on earnings above the lower earning threshold b) his earnings are below the minimum amount required for auto enrolment c) his contribution will not incur tax relief d) the total minimum contribution is 5% of his earnings in the current 2019/20 tax year

a) the minimum contribution is based on earnings above the lower earning threshold

The Uk government is looking to slow down the economy. It is solely uses monetary policy to acheive this what action is it likely to take? a) increase levels of government borrowing b) increase interest rates c) increase public expenditure in infrastructure projects d) increase income tax

b) increase interest rates

Fatima was born in April 1962, when will she reach state pension age? a) 2027 b) 2029 c) 2028 d) 2026

b) 2029

Which type fo protection policy will morbidity be taken into account during underwriting? a) level term b) flexible whole of life c) Income protection d) family income benefit

c) Income protection

Richard is looking to invest money for the long term but is worried about inflation rates increasing in the future. As he is also relatively risk averse, what would the most suitable investment be? a) cash savings b) NS and I, Premium bonds c) commercial property d) index linked gilts

d) index linked gilts

Peggy is aged 72 and is struggling to make ends meet. To amke things worse, she has had a heart attack and will need care for the remainder of her life. What state benefits is she most likely to be eligible for if she claims them? a) Personal independence payments only b) attendance allowance only c) State pension credit and personal independance payment d) State pension credit and attendance allowance

d) State pension credit and attendance allowance

Stephanie works for the FCA. She is currently dealing with the international standards setting body that is charged with combatting money laundering and related threats to the global financial system. The body Stephanie is liaising with is the: a) international securities market association b) European systematic risk board c) Financial action task force d) European banking authority

c) Financial action task force

James has a well paid job with his employer but became sick in May 2019 and was off work for 14 weeks. He is expected to be off work for a further 10 weeks. What state benefits would be potentially receive? a) statutory sick pay b) personal independance payment c) employment and support allowance d) Statutory sick pay and personal independance payment

a) statutory sick pay

As a result of financial difficulties, Brendan has decided to enter into an IVA. This is more beneficial to him compared with bankruptcy because: a) he should be able to retain the family home b) It means he wont be required to repay any of his creditors c) it wont impact adversly on his credit record d) he will still have unrestricted access to credit

a) he should be able to retain the family home

Which business entities are not subject to income tax on their profits? a) LLP's b) Partnerships c) LTD's d) Sole traders

c) LTD's

A limited company with shares with a nominal value of £20K has applied to be quoted on the Stock Exchange as a PLC. By how much must the nominal value be increased before the company can be quoted on the stock exchange? a) £12500 b) £30000 c) £50000 d) £25000

b) £30000

Gary is a leaseholder in respect of his flat which is in a block of 12 flats. Gary and two other leaseholders are interested in buying the freehold. How many more leaseholders would have to agree to this course of action in order to enforce the sale of the freehold? a) 6 b) 3 c) 8 d) 5

b) 3

Sue died recently intestate leaving an estate of £600K. Sue has no children, no living parents but she does have a brother. Sue's hsuband Steve therefore received 100% of Sue's personal chattels plus: a) £250K plus a life interest in one half of the residue b) £600K absolutely c) £250K, plus one half of the residue d) £300K absolutely

b) £600K absolutely

The Consumer Insurance (disclosure and representations) Act 2012, states that consumers have a duty to: a) Give the insurer sufficient information to put a prudent insurer on notice that it needs to make further enquries b) take reasonable care not to make a misrepresentation c) voluntarily disclose, accurately and fully, all facts material to the risk being proposed d) Prove they have some financial interest in the assured

b) take reasonable care not to make a misrepresentation

``` TT lanterns Ltd has insufficient assets to repay its creditors. What option might be considered in an attempt to resuce the company as a going concern? a) bankruptcy b) administration c) Liquidation D) winding Up ```

b) administration

Brad, Jack and Harris are the three directors of a LTD. If the company were to close with unsecured debts of £90K, what amount of debt would Brad be personally responsible for? a) £90K b) £30K c) £60K d) None

d) None

Howell is proposing for life assurance. In contract law at what stage is an offer to contract made? a) on receipt of the premium or direct debit mandate b) when the product provider gives him the product information c) when the product provider confirms the terms upon which it will accept the risk d) when Howell completes the application form

d) when Howell completes the application form

Stephanie and Sam are partners. They have unsecured debts of £50K within the business and profits of £40K. If the business were to cease, what is the maximm amount of the debt that Stephanie could be liable for? a) £50K b) £25K c) £20K d) £40K

a) £50K

If the EU issues regulations in respect of the financial services industry, how would the UK be expected to respond? A. It must implement them without any changes. B. It may ignore them if existing national regulations already exist. C. It will amend and then implement them through new UK legislation. D. The regulations must bereviewed by the UK regulators who will decide on the methods of implementation.

A. It must implement them without any changes.

A bank has its own portfolio management team. This would indicate that it A. out sources its compliance responsibilities. B. specialises in wills and executorship. C. owns a life assurance company. D. provides a discretionary management service.

D. provides a discretionary management service.

How are UK gilts issued and traded? A. New issues and subsequent trading are bothcarried out on the London Stock Exchange. B. New issues and subsequent trading are both done through the Debt Management Office. C. New gilts are issued on the London Stock Exchange and subsequent trading is done through the Debt Management Office. D. New gilts are issued by the Debt Management Office and subsequent trading is done on the London Stock Exchange.

D. New gilts are issued by the Debt Management Office and subsequent trading is done on the London Stock Exchange.

``` Public companies usually raise long-term capital by issuing A. bondsonly. B. debentures only. C. shares only. D. bonds and shares. ```

D. bonds and shares.

What discretion, if any, does the Prudential Regulation Authority and the Financial Conduct Authority have over the decision to implement the requirements laid down by the EU in respect of financial services? A. They have no discretion over any requirements. B. They have discretion over Directives only. C. They have discretion over Regulations only. D. They have discretion over Directives and Regulations.

A. They have no discretion over any requirements.

When determining the interaction between the UK and EU on the regulation of the financial services industry, the UK government must always A. seek approval from the European Commission before implementing any new regulations. B. implement new EU Directives by passing acts of Parliament. C. accommodate all EU decisions in existing UK legislation. D. provide copies of new regulations to the European Commission within a reasonable period of time for their approval.

A. seek approval from the European Commission before implementing any new regulations.

Samuel met his financial adviser Charlotte to discuss his financial needs and concerns. Samuel refused to provide details of his income. How should Charlotte react? A. Only arrange stakeholder products. B. Only provide advice on an execution-only basis. C. Record that Samuel refused to provide this detail on the fact-find. D. Refuse to give any advice at all.

C. Record that Samuel refused to provide this detail on the fact-find.

Albert, a widower aged 66, is reviewing his financial needs and priorities with his financial adviser. If his attention is particularly being drawn to tax planning issues, this would most likely be because he has A. amended his will to include his grandchildren. B. a current annual income of £30,000. C. recently downsized his house to fund for long-term care. D. total assets in excess of £1,100,000.

D. total assets in excess of £1,100,000.

Matthew’s financial adviser is considering recommending loan consolidation as a way of managing his debt situation and is satisfied with the affordability of the proposed arrangements. However, this may NOT help Matthew because he has A. demonstrated a consistent history of over-spending and taking credit. B. an existing buy-to-let property investment. C. offered his holiday flat as security, rather than his main residence. D. recently cancelled his bank overdraft facility.

A. demonstrated a consistent history of over-spending and taking credit.

A financial adviser is conducting an analysis of the likely impact of the receipt of State benefits on the amount of cover thought necessary for his client. This will be particularly useful before recommending A. an income protection insurance policy. B. an increasing term assurance policy. C. a joint life, last survivor, whole of life assurance policy. D. a unit-linked maximum investment plan.

A. an income protection insurance policy.

Sally has left gifts for two grandchildren. She wants there to be little flexibility, wants them to be able to access the gifts at age 18 and would like to mininise tax. What would be the most suitable trust? a) statutory b) discretionary c) interest in possession d) bare

d) bare

Mabel works as a financial adviser for Hand M Ltd who is an appointed representative offering tied advice for Miracle Life. When providing regulated advice to clients, in contract law this means she is the agent of: a) herself b) Miracle Life c) the client d) H&M Ltd.

b) Miracle Life

High earners should normally be advised to make contributions to private pension arrangements, this is because: a) high earners cannot benefit from compulsory employer contributions b) the state pension will typically only provide a small proportion of the retirement income they will require c) high earners are not entitled to the State pension d) the government has increased taxes on pensions which has impacted on the size of pension funds

b) the state pension will typically only provide a small proportion of the retirement income they will require

The Financial Services Action Plan is a key element of how financial services is regulated across the EU. The main objectives of the FSAP were designed to: a) remove barriers and increase the cost of raising captial to EU states b) remove barriers and increase competition amoung financial services firms c) significantly strengthen regulation across each memeber state by limiting competition d) increase competition by capping charges allowed on investment and pension products

b) remove barriers and increase competition amoung financial services firms

Peter has been fined £4K by the Pensions Regulator. If he had been fined the maximum, he would have had to pay an additional: a) £6K b) 11K c) £46K d) £1K

d) £1K

Axe Grinders Ltd has an occupational pension scheme and had been fined £32K by the Pensions Regulator. In order to protect the scheme memebers, what other action could TPR take? a) start criminal proceedings b) demand a refund of member premiums c) wind up the scheme d) suspend the scheme

c) wind up the scheme

Kate is concerned about how a Uk based pension provider is using her personal data. Who should she report these concerns to? a) the FCA b) The competition and markets authority c) TPR d) The ICO

d) The ICO

Peter works in Gibraltar as a financial adviser for an authorised firm. Mary works in the IOM also as a financial adviser. They should be aware of that: a) only Peter is subject to the MiFID b) The are both subject to the same regulations and directives c) only Mary is subject to the Insurance mediation directive d) only Mary is subject to the MiFID

a) only Peter is subject to the MiFID

The PRA mainly uses which type of approach when supervising the firms if regulates? a) judgement based b) systematic c) proactive d) Reactive

a) judgement based

An EU legislative act where the desired results are binding on Member states but the methods to acheive them are left to the national authorities to incorporate into the domestic legal system is know as: a) decision b) regulation c) treaty d) directive

d) directive

A newspaper recently announced that the largest two UK insurers were considering a merger. If there were concerns about the impact this could have on competition within the sector, which body is responsible for investigating this? a) The office of fair trading b) the FCA c) the competition and markets authority d) The competition commission

c) the competition and markets authority

A leading Uk bank has been told that it must tie up more of its capital to increase its reserves against future potential uncertainty. This is most likely to be as a result of: a) unilaternal actions taken by the UK government b) the solvency directive c) unilateral actions taken by the FCA d) the Captial Requirements directive

d) the Captial Requirements directive

Finlay is a trustee of his company's occupational pension scheme. If he had concerns about how the scheme is being run, he would need to report these to: a) the occupational pensions authority b) the Pensions regulator c) the FCA d) the PRA

b) the Pensions regulator

Which organisation is primarily responsible for ensuring a stable and efficient monetary and financial framework in the Uk? a) FCA b) Bank of E c) PRA d) HM treasury

b) Bank of E

``` An insurance policy which includes accident and sickness cover would most likely be used in connection with which particular financial need? A. Estate planning. B. House purchase. C. Tax planning. D. Retirement planning. ```

B. House purchase.

Andrew, aged 27, is employed and Samantha, his wife, aged 26, is self-employed. They have just had their first child and are deciding who should stop work to look after the baby. They should be aware that A. Samantha may receive Maternity Allowance for a maximum of 52 weeks. B. Andrew may qualify for Statutory Paternity Pay for up to 2 weeks. C. Samantha cannot claim for Statutory Maternity Pay but may elect for the entitlement to be transferred to Andrew. D. Andrew cannot claim Statutory Paternity Pay but can take up t o4 weeks leave from work and claim Statutory Sick Pay.

B. Andrew may qualify for Statutory Paternity Pay for up to 2 weeks.

Paul, aged 38, wishes to save £1,500 per month to build up a lump sum towards a special holiday for his 40th birthday. He is considering investing in either a cash ISA or a stocks and shares ISA and seeks advice on the best option. He should be aware that A. the amount exceeds his annual ISA limit. B. he may transfer funds between the two forms of an ISA if he wishes to do so. C. the stocks and shares ISA is more suitable as pound cost averaging will protect the value of his investment. D. the stocks and shares ISA will always produce higher returns albeit at greater risk.

B. he may transfer funds between the two forms of an ISA if he wishes to do so.

``` Adam is married with three young children and following a financial review the need for additional life assurance was identified with the proceeds going to someone outside of his family. This was justified because he is A. self-employed. B. the trustee of a deceased estate. C. one of three business partners. D. a discharged bankrupt. ```

C. one of three business partners.

``` The life cover protection need for Ivor, aged 28, is of a reducing nature, tailing off by age 40. However, a decreasing term assurance was not considered to be suitable. What other product is likely to best address this need? A. Convertible term assurance. B. Family income benefit assurance. C. Whole of life assurance. D. Gift inter vivos termassurance. ```

B. Family income benefit assurance.

Keith is considering using the conversion option under his convertible term assurance policy and can easily afford to increase his premiums. What factor is most likely to influence his choice of the two main options typically available under this facility? A. The amount of disability cover he already has in place. B. The degree of risk he is prepared to accept. C. The duration of cover required. D. The state of health of his wife.

C. The duration of cover required.

William required £100,000 of stand-alone level critical illness cover, but was quoted a prohibitively expensive first year premium. How was he able to immediately reduce the premium whilst maintaining the same cover? A. He increased the deferred period. B. He increased the premium payment frequency. C. He elected for a reviewable premium basis. D. He acted on an execution-only basis.

C. He elected for a reviewable premium basis.

James, aged 64, is planning to retire at age 65 and has a large retirement fund. Despite having considerable cash deposits the most likely reason for him to take his pension commencement lump sum is that A. it will reduce his potential In heritance Tax liability. B. it will allow him to apply for State Pension Credit. C. he plans to exercise his open market option. D. it is tax efficient to do so.

D. it is tax efficient to do so.

Damian and Collette have been business partners for over 20 years and are reviewing their finances with Jack, their financial adviser. They are keen to mitigate against the risk of being personally responsible for any debts of the business and therefore Jack has advised them to consider A. becoming a limited liability partnership. B. becoming sole traders and employing each other. C. taking out a reinsurance policy to ring-fence future profits. D. taking out separate indemnity insurance policies and assigning them to the other partner.

A. becoming a limited liability partnership.

Karen and Julia both have leases within the same building. They both wish to exercise the right to purchase the freehold of the building. Why can only Karen exercise this right? A. Julia has a commercial lease. B. Karen has an original lease for 20 years and Julia has an original lease for 25 years. C. Karen has lived there for 1 year and Julia has held her lease for 3 years. D. Julia is not one of th eoriginal tenants.

A. Julia has a commercial lease.

Customer X is in liquidation and customer Y is in administration. This confirms that A. customer X and customer Y are both subject t oIndividual Voluntary Arrangements. B. customer X and customer Y are both companies. C. only customer Y has debts in excess of £100,000. D. only customer Y has previously been declared bankrupt.

B. customer X and customer Y are both companies.

Alfred died intestate aged 88 leaving a spouse and one sister. If his estate is valued at £500,000, how will it be distributed? A. It will all go to his spouse. B. His spouse and sister will each receive £250,000. C. £325,000 will go to his spouse and £175,000 will go to his sister. D. £475,000 will go to his spouse and £25,000 will go to his sister.

A. It will all go to his spouse.

Peter applied to an insurer for a term assurance policy on his own life. The insurer was prepared to accept the risk subject to an increased premium as a result of the medical underwriting process. Peter agreed to the revised terms and submitted a direct debit from which premiums would be collected. Which statement regarding the requirements for establishing the contract is true? A. Offer was satisfied by Peter submitting the direct debit mandate. B. Consideration was satisfied by the insurer completing the underwriting process. C. Consideration was satisfied by Peter submitting the proposal form. D. The revised terms offered by the insurer represent a counter offer.

D. The revised terms offered by the insurer represent a counter offer.

``` Claire and Charles are the ordinary unsecured creditors of a debtor in bankruptcy. They are respectively owed £1,000 and £2,000. If after all else is settled, £2,400 remains for their total combined settlement, they will respectively receive A. £400 and £2,000. B. £600 and £1,800. C. £800 and £1,600. D. £1,000 and £1,400. ```

C. £800 and £1,600.

Shirley and Grant are trustees of separate trusts, but Shirley’s duties are much more straightforward than Grant’s. This is most likely to be because A. Grant is also the settlor of his trust. B. they are trustees of an absolute trust and a discretionary trust respectively. C. Shirley is also a beneficiary under her trust. D. they are trustees of a discretionary trust and flexible trust respectively.

B. they are trustees of an absolute trust and a discretionary trust respectively.

Sam, aged 12, has accidentally entered into an online contract whilst using the family computer. What is the legal position regarding this contract? A. It is enforceable as Sam is over the age of 10. B. It is enforceable as he was using a computer owned by his parents. C. It is not enforceable as Sam does not have the capacity to contract. D. It is not enforceable because it is against the rules of the Consumer Contracts Regulations 2013.

C. It is not enforceable as Sam does not have the capacity to contract.

William and George are creating a trust. William is certain who his beneficiaries should be, but George is NOT. Which type of trust(s) should William and George each create? A. Both William and George should create absolute trusts. B. Both William and George should create discretionary trusts. C. William should create a discretionary trust and George should create an absolute trust. D. William should create an absolute trust and George should create a discretionary trust.

D. William should create an absolute trust and George should create a discretionary trust.

Tom and Bobby both run their own businesses but only Tom is personally liable for the debt of his business. This is because A. Tom is self-employed and Bobby is a company director. B. Bobby is self-employed and Tom is a company director. C. Tom is in a limited liability partnership and Bobby is a company director. D. Bobby is in a limited liability partnership and Tom is a company director.

A. Tom is self-employed and Bobby is a company director.

The Competition and Markets Authority (CMA) has submitted a report to HM Treasury following an investigation into retail investment products. If the report requires remedial action to be taken, the most likely immediate outcome will be the A. CMA and HM Treasury will apply the recommendations jointly. B. CMA will issue new regulations. C. Financial Conduct Authority will apply the recommendations unilaterally. D. HM Treasury will provide direction to the Prudential Regulation Authority and the Financial Conduct Authority.

D. HM Treasury will provide direction to the Prudential Regulation Authority and the Financial Conduct Authority.

``` A client has previously written to her former adviser opting out of any marketing activities from the firm or any third parties. However, she continues to receive direct investment offers from the firm. She should complain based on the firm NOT complying with which set of regulations? A. Conduct of Business Rules. B. Consumer Contracts Regulations 2013. C. Data protection legislation. D. Fair treatment of customers. ```

C. Data protection legislation.

The Financial Services and Markets Act 2000 regulates the provision of which type(s) of financial advice? A. Advice to vulnerable individuals only. B. Advice to all individuals. C. Advice to all individuals unless they are elective professional clients. D. Advice to all individuals unless they are per se professional clients.

B. Advice to all individuals.

The directors of an authorised firm have formally appointed an external compliance support company. Why does the authorised firm retain responsibility for the compliance oversight function? A. The authorised firm is not allowed to delegate their regulatory responsibilities. B. The appointment of the compliance support company was not made on the basis of a binding contract. C. The compliance support company does not have suitable professional indemnity cover. D. The compliance support company is not an authorised firm

A. The authorised firm is not allowed to delegate their regulatory responsibilities.

The implementation of financial regulation across EU Member States is carried out under which overarching programme? A. Financial Services Action Plan. B. Financial Services and Markets Act 2000. C. Markets in Financial Investments Directive II (MiFID II). D. Insurance Distribution Directive.

A. Financial Services Action Plan.

Which individual or organisation is directly responsible for overseeing the activities of the Financial Conduct Authority? A. The Governor of the Bank of England. B. HM Treasury. C. The Competition and Markets Authority. D. The Monetary Policy Committee of the Bank of England.

B. HM Treasury.

Two customers have recently purchased an insurance product each. Katie received a 30 day cancellation and Lorna a 14 day. What type of insurance has katie bought? a) car insurance b) critical illness c) annual travel insurance d) contents insurance

b) critical illness

The FCA determines how it supervises an authorised firm based on whether the firm is fixed portfolio or flexible portfolio. an example of a firm which is fixed portfolio would be? a) high street bank, with substantial investment and mortgage operations b) regional IFA firm offering investment and pensions advice c) small regional building society offering mortgages and general insurance d) medium sized credit firm that offers unsecured loans to its customers

a) high street bank, with substantial investment and mortgage operations

The FCA has said that it will publish details of cases where enforcement action is being considered. Under which one of the FCA's regulatory principles is this lkiely to fall? a) efficiency and economy b) responsibility of customers c) transparency d) proportionality

c) transparency

The FCA is carrying out a compliance inspection visit at a small IFA firm. It has requested documents relating to a firms business operations. These documents are most likely to include details of: a) financial promotions b) adviser competence c) anti money laundering procedures d) post sale confirmations

a) financial promotions

Beth has bought her car insurance via the internet on a non advised basis. Juan has also bought motor insurance but in this case it was provided on an advised basis via an insurance broker. How will the process differ at all between Beth & Juan? a) they will be treated equally so there is no difference b) only Juan will received a demands and needs statement that sets out why the policy is suitable c) Only Beth will receive an IDD or terms of business letter d) Only Juan will be asked about his circumstances to establish suitability

b) only Juan will received a demands and needs statement that sets out why the policy is suitable

Highland Independant Financial advisers are looking to cary their FCA permission to now include mortgages. This means that they would like to advise clients on; a) mortgages to commercial clients b) business buy to let mortgages c) property investments d) residential mortgages

d) residential mortgages

An insurance broker must obtain details of a clients curcumstances and needs, including existing policies and give the client a statement of those needs together with the reasons for any recommendations. This is known as: a) summary statement b) suitability letter c) reason why letter d) demands and needs statement

d) demands and needs statement

In the event of a regulatory failure, and where this failsure was due to the FCA actions, the FCA is required to make a report to: a) Government b) Parliment c) The PRA d) The Treasury

d) The Treasury

Flash LTD and authorised firm, has not demonstrated suitable controls voer the mortgage advice it provides. Although other areas of regulated advice are satisfactory, the action taken by the FCA is relation to their mortgage business is most likely to be; a) withdrawal of permission in respect of mortgages b) court injunction c) crimimal proceedings d) public announcement

a) withdrawal of permission in respect of mortgages

Tina has received advice on a general insurance product but has not received a cancellation notice, she has received advice on: a) travel insurance lasting less than a month b) private medical insurance c) level term insurance with a term of a year d) an annuity

a) travel insurance lasting less than a month

``` Which body, set up by the Financial Services and Markets Act 2000, ensures that the investigation and recommendation functions of the Financial Conduct Authority are carried out separately from the determining of any action and issuing of statutory notices? A. Consumer panel. B. Practitioner panel. C. Regulatory Decisions Committee. D. Upper Tribunal. ```

C. Regulatory Decisions Committee.

Gilbert, a financial adviser, has arranged a new investment bond for his client. According to the Conduct of Business Rules, what should Gilbert do on receipt of the policy document? A. Ask the productprovider to retain the document for safekeeping. B. Retain the document until the next annual review. C. Retain the document indefinitely. D. Send out the document to his client as soon as is practically possible.

D. Send out the document to his client as soon as is practically possible

A firm has successfully appealed to the Financial Conduct Authority’s Upper Tribunal. A possible consequence of this would be A. additional regulated activity authorisation being granted. B. guidance notes automatically being issued to the industry. C. existing controlled functions being reduced. D. senior management functions being outsourced.

A. additional regulated activity authorisation being granted.

Carl, an independent financial adviser, has committed a market abuse offence. He has been fined and as a consequence A. all of his clients must be notified. B. all of his clients’ investment contracts must be reviewed. C. it may affect his future employment prospects. D. he will automatically be prohibited from working in the financial services industry.

C. it may affect his future employment prospects.

Jon and Carol are both employed by an authorised firm. The firm’s record-keeping requirements for Jon’s responsibilities are greater than for Carol’s. This is because A. Jon is a senior manager and Carol is a customer adviser. B. Jon is head of compliance and Carol is head of internal audit. C. Jon undertakes a sales function and Carol undertakes a senior management function. D. Jon was previously served with a prohibition order but Carol was not.

A. Jon is a senior manager and Carol is a customer adviser.

``` Keith is a financial adviser for firm X, which is an appointed representative of firm Y. Keith recently arranged a life policy for a client and the paperwork was checked by his supervisor, Mark. Who is deemed to be the principal in relation to this business? A. Mark. B. Keith. C. Firm X. D. Firm Y. ```

D. Firm Y.

n authorised firm of financial advisers holds a client money bank account. The directors of the firm should be aware that A. an annual client money audit and an annual report is required. B. client money must be paid into the client money bank account on the day it is received. C. interest earned on the account can always be retained by the firm. D. reconciliation of the client money bank account must always be performed daily.

A. an annual client money audit and an annual report is required.

Ian and Paula were both financial advisers and were both subject to disciplinary sanctions. As a result, only Ian’s offence warranted criminal prosecution because A. Ian breached a prohibition order whereas Paula failed to properly deal with a complaint. B. Paula lost adviser records whereas Ian failed to properly control his sales force. C. only Paula was a senior manager. D. only Ian provided advice on defined benefit pension transfers.

A. Ian breached a prohibition order whereas Paula failed to properly deal with a complaint.

Freddie is being prosecuted for market abuse. If he is found guilty of a criminal offence, what is the maximum penalty that can be imposed on him? A. A fine of £100,000 only. B. An unlimited fine only. C. A 7-year prison term only. D. An unlimited fine or a7-year prison term.

D. An unlimited fine or a7-year prison term.

Following a recent assessment, the Financial Conduct Authority has advised an authorised firm of its concern over the firm’s efforts to implement the principles for the fair treatment of customers. This was most likely to be because A. the firm was unable to demonstrate the fair treatment of customers across its entire range of activities. B. only four of the fair treatment of customers outcomes were relevant to the firm’s business. C. management information was submitted as evidence for all the fair treatment of customers outcomes being achieved. D. compliance checks were submitted as evidence of the fair treatment of customers outcomes being achieved within the advice process.

A. the firm was unable to demonstrate the fair treatment of customers across its entire range of activities.

Sharon was arranging personal pension plans for her clients, leading them to believe they would be adequate for their retirement needs. A subsequent complaint has indicated that she has failed to meet the requirements of the principles of the fair treatment of customers because she A. created unrealistic client expectations. B. failed to predict a stock market crash. C. failed to take into account possible future changes in State benefits. D. did not take into account the costs of long-termcare.

A. created unrealistic client expectations.

Tom is currently an adviser in an authorised firm. He is about to be promoted to undertake a senior manager’s role. This means that he A. must provide a personal guarantee to the firm. B. will still be allowed to advise clients. C. must become a director of the firm. D. must accept ultimate responsibility for all of the firm’s compliance issues.

B. will still be allowed to advise clients.

An individual is acting in accordance with the Financial Services and Markets Act 2000, despite NOT being directly authorised by the Financial Conduct Authority. This is because they are A. providing advice on investment businessonly. B. providing advice on pension business only. C. the principal of an authorised firm. D. an appointed representative.

D. an appointed representative.

Rachel works in the treasury department of a local authority. How is this activity viewed under the Financial Services and Markets Act 2000? A. She needs to be individually authorised by the Financial Conduct Authority. B. She is exempt but the local authority must obtain authorisation. C. Both Rachel and the local authority must be authorised. D. Neither Rachel nor the local authority must be authorised.

D. Neither Rachel nor the local authority must be authorised.

In what circumstances, if any, must the Financial Conduct Authority notify an adviser of a change in the scope of an ongoing investigation into his conduct? A. There is no requirement to notify of a change of scope. B. If absence of notification may prejudice the adviser. C. If the change is more than six months after the commencement of the investigation. D. If the investigation is likely to lead to criminal charges.

B. If absence of notification may prejudice the adviser.

Caroline and Anne are both financial advisers but only Caroline is a senior manager. In accordance with the regulations, this means that A. the requirement for Caroline to exercise due skill, care and diligence is broader. B. the requirement for Caroline to observe proper market conduct standards lasts for a longer period of time. C. only Anne can be personally fined for an offence. D. only Anne can be imprisoned for an offence.

A. the requirement for Caroline to exercise due skill, care and diligence is broader.

The Financial Conduct Authority (FCA) is able to take action against an individual who is a manager performing a senior management role but is NOT authorised to give investment advice because of A. his contract of employment with the employer. B. the fact that he is regulated by the FCA and must adhere to their rules. C. the provisions within the Senior Management Arrangements, Systems and Controls Sourcebook. D. the wider overarching powers contained within the fair treatment of customers outcomes.

B. the fact that he is regulated by the FCA and must adhere to their rules.

An authorised firm is moving offices and during the move discovers a file relating to a pension transfer made in 2014 for a former client. What must the firm do with this record? A. Destroy it under data protection legislation as it relates to a former client. B. Return it to the client. C. Retain it for a further two years where after it may be destroyed. D. Retain it indefinitely.

D. Retain it indefinitely.

``` Stuart, an employee of an investment management company, is subject to an ongoing Fit and Proper test specifically because he A. isanadministrationmanager. B. is a senior manager. C. is the human resources manager. D. doesnotrequireindividualregistration. ```

B. is a senior manager.

The UK Government seeks to meet its responsibilities under the National Financial Capability Strategy by A. bringing together organisations and interested parties to improve the nation’s knowledge and understanding of personal finance. B. establishing the National Employment Savings Trust (NEST) to promote workplace savings. C. appointing the Financial Skills Partnership to set appropriate and relevant qualifications. D. establishing a module in the national curriculum to deliver financial education in UK schools and colleges.

A. bringing together organisations and interested parties to improve the nation’s knowledge and understanding of personal finance.

When, if at all, can an alternative status disclosure statement be used by an authorised firm? A. Never ,as all firms can only state they are authorised and regulated by the Financial Conduct Authority. B. Only if awaiting regulatory approval, when they must state they are provisionally authorised and regulated by the Financial Conduct Authority. C. Only if they are a law firm carrying out investment business, when they must state that they are authorised and regulated by the Law Society. D. Only if they are a firm from another EU member state using a passporting of authorised permissions, when they must state that they are authorised by their respective regulator.

D. Only if they are a firm from another EU member state using a passporting of authorised permissions, when they must state that they are authorised by their respective regulator.