FSRE Flashcards
1
Q
Regulation needed for?
A
SIP
Stability
Institution Safety
Protect Consumer
2
Q
FSMA 2000 did what?
A
Made FSA single regulator, instead of BoE
‘O others’
3
Q
FSA 2012 did what?
A
‘1+2’
Twin Peaks: PRA, FCA
From ‘Authorities’: FSA, BoE, Treasury
4
Q
EU Withdrawal Act 2018 did?
A
18: ‘Hateeen’
Retain laws as were, ‘correct’ deficiencies
5
Q
F.S.A 2021 did what?
A
‘On the run’
In flight legislation
6
Q
Layers of regulation?
A
PRIA
Parliament
Regulatory Bodies
Institutions
Arbitration
7
Q
FPC responsible for?
Tools?
A
Macro prudential ‘big picture’
Counter Cyclical Buffer: Alter capital of risks on horizon
Sectoral Capital Requirements
8
Q
PRA/FCA Principles of Regulation?
A
STEPCOST
Sustainable Growth
Tailored to each firm
Efficient/Economic use of resources
Proportionality: burdens vs expected benefits
Consumer take responsibility
Openness/Disclosure: incl publishing regulated people
SM responsibility
Transparency: Work as openly as possible
9
Q
PRA statutory objectives?
A
PRA
Protection - For insurance policyholders
Rivalry - Enable competition
Assurance - Safety/Soundness of Institutions
10
Q
PRA achieves objectives how? Using?
A
CLAC
Capital Compliance with Prudential Standards
Liquidity, Assets, Reserves
Annual Risk Ax of Risks
Contingency Plans Ax for Recovery/Exit
Proactive Intervention Framework
11
Q
FCA Strategic Objective? Operational Objectives?
A
Ensure relevant markets function well
PIC
Protection for consumers.
Integrity of UK Financial System
Competition for Interests of Consumers
12
Q
FCA Supervision Characteristics?
A
SCRAPPTC
Strategy Ax: For potential harms
Culture/Governance: Behaviours
Right Systemic Harms
Accountability: Individual & Firm
Proactive: Forward looking
Proportionate (Fixed Portfolio: Largest)
Two away Comms: Consumers-Industry
Co-ordination: By Regulatory Bodies
13
Q
FCA discipline/enforcement tools?
A
PAIR RCD
Permission Variation for firms
Approval withdrawal for people
Injunction: Prevent benefit
Restitution: Forfeit profit to FCA
Redress: Losses to be made good
Criminal Prosecution
Disciplinary Action
14
Q
FCA manages failure of firms; what is the risk stratification?
A
P1: Critical
P2: Significant
P3: Non-Significant
15
Q
FCA Principles for Business?
A
ISMPCICITARG
In Selling My Powers, Conduct In Communication Interests Trusts And Regulators Greatly
Integrity
Skill/Care/Diligence
Management and Control: Responsible
Prudence: Financially
Conduct (Market): Proper standards
Interests of Customers: Treat Fairly
Communication with Clients: Not misleading
Interests (Conflict of) Mx Fairly
Trust for Customer: With suitable advice
Assets Protected (Clients)
Regulatory Relations
Good Outcome
16
Q
Basis of 12th FCA principle?
A
VESPa
Value fair & Reflecting Benefits
Equip consumers to make effective decision
Service helpful: Easy to switch/cancel/complain
Purposed: For Consumers
17
Q
Fair Rx Outcomes?
A
SAPFIE
Suitable Advice Gicen
After sales reasonable
Products meet needs
Fair Rx central
Informed throughout
Expected performance
18
Q
Trainee advisors required to do?
A
Regulatory module of qualification within 48Mths & L4 qualification
19
Q
Ongoing competence requirements?
A
At least 35 hrs CPD + at least 21 hrs structured
20
Q
Corporate culture - consumer harm drivers?
A
Governance
Approach to rewarding/Mx people
Leadership
Purpose
21
Q
Conduct Rules?
Senior manager rules?
A
CODIS CRDN
Customer fairness
Open with regulators
Diligence
Integrity
Standard of Market Conduct
Controlled effectively
Regulatory Compliant
Delegate Appropriately
Notify FCA/PRA appropriately
22
Q
Fitness and propriety test?
A
ICS
Integrity
Competence
Soundness financially
23
Q
Good outcomes dependent on?
A
CAR
Competence of Advisor
Ax Suitability
Research and Diligence
24
Q
Suitability reports given when?
For Pension Plans with Cooling Off period?
A
When/ASAP after recommendation & before contract.
Within 14 days of contract.
25
Client Agreements for?
Give when?
keep for how long?
Designated Iv services: discretionary, futures, options (NOT PRIIPs, Pensions, Life Policies). Recognises extra reliance.
Before service/agreement
As long as client relationship.
Indefinitely - Pension Transfers, Opt-Outs, FSAVCs
26
Record keeping requirements?
- Pension Contracts
- Pension Transfers/Opt-Outs
- Life Policies
- MiFID Business (Meaning within EEA)
- Others
Five Years
Indefinitely
Five Years
Five Years
Three Years
27
Cancellation notice runs from?
Iv, Stocks/Shares/Deposit ISAs?
LISA cancellation period how long?
Later of contract conclusion/client receives T+Cs.
14 Days.
30d (Also PPI, LI, Annuities)
28
Economic Policy Objectives?
GUSE
Growth
Unemployment low
Stability of Prices
Equilibirum
29
Corporation tax how much?
When?
25%
9mths post accounting period <1.5m, Quarterly >1.5m
30
Assets from low risk to high risk?
Cash Buys People Safety
Cash Bonds Property Shares
31
Benefits reduced if?
None if?
>£6000
>£16,000
32
Who has 1 responsibility for Market Information Misiconduct?
Serious Fraud Office
33
ID + Transactional Evidence keep for how long?
5 Years
34
Money Laundering offences?
CAP
Concealing
Arranging
Property - Criminal (Acquiring)
35
Features of money?
PADS
Portable, Acceptable to all, Divisible, Sufficient
36
B.S.A 1986 did what?
Allowed demutualisation to bank.
37
FSBRA 2013 did what?
'Ring fenced' customer deposits.
38
Building societies permitted to raise how much on wholesale market?
50%
H.M.T can increase to 75% w/o further legislation.
39
Reasons for Intermediation?
GRAM
Geography
Risk Transformation
Aggregation
Maturity Transformation
40
How many people can be informed with an LPA?
Up to 5
41
EPOA is also know as?
How many people need to be informed?
'Ordinary beyond losing capacity'
At least three people.
42
Valid contract features?
FACTCIL
Free from duress
Agreement
Capacity to consent (18 or over)
Terms Certain & Complete
Consideration
Intention for Legal Relationship
Legality of Object
43
Consumer Insurance Act 2012 --> If deemed 'careless'?
Compensatory remedy:
- Cancel (Not Life insurance)
- Adjust: increase Premiums/Reduce benefits
- Reject and Repay
44
Insolvency Act 1986: Creditor must be owed how much to declare someone bankrupt?
For self-bankruptcy?
£5000 (£3000 in Scotland).
£1500
45
Insolvency Act 1986: If interest is >£1000 what is included?
Trustee can 'attack' prior transactions in what period?
House; if have family have up to twelve months to move.
Preceding 2 years, else need to prove insolvent at time, or became so as a result t get 5 years.
46
Offences for those that are bankrupt?
PLOB
- Public office jobs not allowed
- Limited company not allowed
- Obtaining £500 or more not allowed.
- Business continuing with rename not allowed.
47
Enterprise Act 2012: How long is discharge period?
12 Months.
48
For IVA/CVA?
Keep records for?
Who carries out?
Must owe at least £7000, to at least two creditors. At least 75% of debt represented must agree.
6 Years.
Insolvency Practitioner
49
Debt Relief Order: requirements?
U2, 75, 90, 30, 2, 6
- Unable to pay: Assets <£2k, <£75/mth disposable income
- Pay £90
- £30k Max Debt
- No gifts within 2 yrs (Or DROs/Insolvency within 6yrs)
- If granted; 12 Mth Moratorium
50
Property: Up to how many owners?
Four, then others are equitable (Economic interest, no right to transfer)
51
From when is it compulsory to register land on remortgage/transfer?
1990
52
Joint tenancy vs TiC?
For TiC if survivor wants to sell?
Both own whole property, on death, passes between them. TIC: Each has defined share, on death survivor becomes 'trust in land'.
- Cannot sell alone, have to appoint legal owner if there is not at least two surviving legal owners.
53
How does Quantitative Easing work?
BoE buys government and private bonds, causing price increases, decreasing the yield, decreasing interest rates, leading to: 'NIC'
- New money for FIs to lend
- Inflation
- Conditions in capital markets improve
54
What is M0 Money?
M4 Money?
- M4 Lending?
M0 = Narrow Money = Cash base
M4 = Broad Money = Banks/B.S. deposits, Loan rates
- Influenced by IRs controlling new credits made
55
Difference between CPI and RPI?
RPI includes housing costs (Not House Prices)
56
Interest Rates: Nominal? Real?
Actual. Real = Inflation Adjusted.
57
How many witnesses required for wills?
2 (1 in Scotland).
58
Mirror/Joint will?
Mutual Will?
Leave everything to each other.
Survivor cannot change/revoke will --> Prevent remarriages benefitting.
59
Can executor of will be a beneficiary?
Yes
60
Grant of probate not needed for what type of estate?
Joint tenancy.
'Small Estates': Up to £5k, or as per FIs up to £25k.
61
Disclaimer of Interest?
Deed of variation?
Reject a bequest/gift; usually for IHT within 2 yrs of death.
Collective agreement from beneficiaries.
62
Intestacy undertaken how?
'Administrator' applies for Letter of Administration.
63
If not married Intestacy rules?
Cash Poor Siblings Have Got A Hand
Children, Parents, Siblings, Half Siblings, Grandparents, Avunculi, Half Avunculi
64
If married intestacy rules?
Spouse: Chattels/£270k/Half Estate
Children (Adopted Children): Half Estate
65
Trustee Act 2000: Allows Iv if?
RAD
Reviews regularly, Advice taken, Diversifies
66
Knight vs Knight certainties?
ISO
Intention
Subject
Object
67
Bare trusts?
Tax rules?
If parents involved/set up?
'PETs' in, beneficiary gets. Usually for underage people.
Tax as per child's marginal rate.
If income >£100/yr, taxed as per parents marginal rate.
68
Interest in Possession? E.g.?
Tax rules?
Beneficiary with IIP = Life tenant.
Beneficiaries upon life tenant death/life event = Remainderman.
'Life Interest Trust': Surviving Spouse gets right to income, but capital goes to children.
Any transfer in ('Relevant Property') called ‘Chargeable Lifetime Transfer’; up to 20% IHT.
69
Immediate Post-Death Interest (IPDI)? Tax rules? Used for?
Gift only on death.
Not 'Relevant Property'.
Remarried couples; support surviving spouse until death, then capital to children.
70
Basic state pension is?
Annual tax-relievable allowance?
Lifetime Allowance?
Pensions (Not state) can be taken from?
1/4 of National Earnings Potential.
Greater of £3600/yr or 100% relevant UK earnings.
£1,073,100
Benefits taken from Age 55.
71
State pension taken from?
Age 66
67 in 2028
68 in 2039
72
Tax rules on pension withdrawal?
25% as tax-free cash, then as per tax rates.
73
To qualify for state pension?
Post 2016: Max 35yrs contributions, Min 10 yrs. 'Flat rate, Single Tier'.
Pre 2016: Max 30, Min 1yrs. Employed could 'top up'.
74
Workplace pensions contributions?
'4-3-1'
Employees 4%
Employers 3%
1% Tax Relief
75
Who can get pensions?
Eligible Jobholders: Auto-Enrolled, 22-Pension Age + Earning more than threshold
Non-Eligible: 16-74 earning between Min-Max, 16-21/Pension Age - 74 earning more than threshold.
Entitled: 16-74 earning less than qualifier for Non-Eligible, Employer not obliged to contribute.
76
Hierarchy of financial needs?
LPIPSI
Living, Protection, Income, Pension, Savings, Iv
77
Critical illness?
Tax free sum for illness. Can continue working. Ceases on claim.
78
Income protection?
Can it be cancelled by insurer?
If unable to work; 50-60% income until recovery/term ends/death. Cannot be cancelled by insurer.
79
ASU?
Annually renewable contract; 60-65% of Income, benefits cease after 1-2yrs. Cancellable by insurer.
80
VCTs tax rules?
30% relief on Iv up to £200k, clawed back if sold within 5yrs. No CGT. Tax-free dividends.
81
Enterprise Investment Schemes are?
Direct Iv to small companies: 30% relief up to £1m, clawed bak if sold within 3yrs. No CGT if held for 3yrs.
82
Certification Regime for?
Required how often?
Not SMF but 'Significant Harm Function'.
Within 12mths and annually thereafter.
83
CASS: Client Asset rules?
For inactive money?
Exempt if how small?
Use immediately/by close of following day.
Contact client x3, then can 'Pay Away' Inactive Money (6yrs), Assets (12yrs).
<£25 Retail, <£100 Other
84
Aristotelianism is?
Moral character over action outcome.
85
Conduct ethics includes?
Consequential: Correct Action --> Correct Outcome: 'Relativism'.
Deontological: Adherence to rules, 'means more than ends': 'Absolutism'.
86
Consequential ethics can include?
Egoism: Right if benefits individual.
Utilitarianism: Right if benefits most.
87
Meta-Ethics means?
Whether right/wrong anything more than personal opinion.
88
Applied ethics?
Ethics applied to real life situations.
89
Drivers for ethical business?
'RICS'
Regulation
Information Transparency
Consumers demand higher expectations
Stakeholders/shareholders: want high standards to attract consumers.
90
Authorisation Threshold Conditions?
CRB LOSS
- Capital/Liquidity Adequate
- Resources Adequate
- Business Model
- Legal Status ok
- Offices somewhere
- Suitable Firm/Staff
- Supervision Effective
91
What are Regulated Investments?
- Investments: Shares, GILTs
- Contractually Based Investments: Life Policies, Personal pensions, Options/Futures
92
Complaints within?
Within later of 6yrs of event, 3yrs of awareness.
93
Complaint Resolution within?
Unless resolved within 3 days, provide written acknowledgement 'Promptly'.
Within 8/52, or, letter explaining and right to ombudsman.
94
Report on complaints how often?
6mths.
95
Firms under FMSA fund FOS how?
Binding on?
Max compensation?
Pay general levy and case fees for 26th and beyond.
Firm only.
£355k (Pre 2019: £160k).
96
FSCS protects what amounts?
£85k.
'Temporary High Balances' up to £1m: Primary Residence, Inheritance, Redundancy, Injury Claim, Divorce, Criminal Injury.
97
Pension Regulator Objectives?
ABCD
- Administration of WBPs
- Benefit Protection of WBPs
- Compliance of Employers with duties
- Decrease Claims
98
Pension Scheme complaints by?
Response by?
'Prescribed persons': Members, Relatives, Ceased <6mths.
Formal response within 4 mths. Notified within 15/7 of decision.
99
Data Protection Principles:
FP MASCA
- Fair/Transparent
- Purpose Limited
- Minimised
- Accurate
- Storage Limitation
- Confidential/Integrity
- Accountability
100
Data Protection: Individuals' Rights?
ARI POSER
- Automated Decision Making
- Rectifiable
- Informed of Purpose
- Portability
- Object to Processing for Marketing
- Subject Access: Free unless unfounded/excessive
- Erasure
- Restrict/Prevent Processing
101
Vulnerable clients 2 to?
CRIL
- Capability
- Resilience
- Illness/Health
- Life Events
102
To protect vulnerable clients?
DIPFA TOS
- Design: Vulnerability Considered
- Information: On website re Vulnerability
- Processes + Systems: Support service/flexibility
- Frontline Skills/Recognition
- Awareness of Vulnerability + Record: For future
- Teams In-House: Vulnerability
- Options Straightforward: For delegated to act
- Senior Manager Led
103
Advice as per Regulated Activities Order 2001?
GBSR
- Guidance: Generic
- Basic: Pre-Scripted Qs
- Streamlined: Focussed - Specific need, Simplified - Firm Limited Specific Need
- Regulated 'SIR': 'Personal Recommendation' - Suitable, Iv, Recommendation
104
General/Protection fee requirements?
Others?
NOT subject to fee requirements, so can be paid commission by employer.
Must disclose structure and final charge.
Must reflect service and not vary.
105
Adviser charges: Can they be paid by providers?
Can be paid from product charges by providers.
Cannot seek/ask commission for personal recommendations.
106
Under anti-money-laundering legislation, records of identification obtained from individuals must be held for a minimum of:
Records must be kept for five years after the customer relationship has ended
107
Difference between Key Features Document, KID, Suitability Report?
Suitability Report for LIPO: What and Why. Provided before transaction concluded (ASAP after if distant comms)
PRIIPs —> KID: Basics & SpR. 3 pages.
Non-PRIIPs —> Key Features Document & Illustration with potential returns & charges
108
Suitability reports required for?
'LIPO'
Life Insurance/Annuities
Iv/Unit Trusts and OEICs
Personal Pensions: Within 14d if cooling off period
Opt-Outs/Transfers - Pensions
109
Suitability Reports sent when?
If distant communications?
ASAP on recommending, before concluding contract.
ASAP after transaction.
110
Product disclosure must be given when?
Before sale concluded
111
Product Disclosure: PRIIPs?
In what form?
Including?
Packaged Retail Insurance Iv Products: direct or indirectly involved with capital markets/performance linked.
KID <3 Pages. 'SpR'
Risk Indicator, x3 Performance Scenarios, Stress Scenario
112
Product Disclosure: Non-PRIIPS e.g. Pension Products, Deposits, ISA, GILTs, Purchase Annuities, Non-Life/General Insurance?
Risks must be 'Adequately Disclosed'.
113
Key Features Document (Non-PRIIP) or KIDs must include?
'C CREVAT'
Charges
Consequences
Risk Factors
Elements
Variance of income/capital
Additional Info - Where to Find?
Taxation Implications
114
FCA Obligations?
'BATH RUCS'
- Best Interests
- Assets cared for responsibly
- Trust not abused
- Honest & Open
- Right wrongs
- Understanding of customers when buying products
- Costs and Charges
- Sympathetic when problems occur
115
What is the maximum claim amount for long term care insurance that a married couple could successfully make, under the FSCS?
Long term care insurance claims are protected up to 100% of their value, without upper limit.
116
What is normally the effect of an economic boom in the UK? The rate of inflation tends to:
Inflation will normally rise and the current account will move into deficit as consumers purchase more imports.
117
For what minimum period must an authorised firm keep records of complaint made about an income protection insurance policy?
For life, income protection and critical illness policies, complaints records must be kept for minimum of three years.
118
Does term assurance require a surrender value?
No.
119
Independent Advice must be?
Fair, Unrestricted, Comprehensive, Unbiased
120
What is a AVCs?
FSAVC?
- Additional Voluntary Contributions to enhance pensions. Can be for DC, or, DB.
- Set up independent of employer.
121
Restitution is?
to forfeit any profit made in contravention of the regulations.
122
Which types of pension scheme are regulated by the Pensions Regulator?
Which types are regulated by FCA?
Occupational schemes and group personal or stakeholder schemes only.
- Individual Pensions
123
When can IFAs recommend product outside of panel?
When in clients best interests.
124
Principles for business where in handbook?
High Level Standards
125
SMCR where in handbook?
High Level Standards
126
Market Conduct where in handbook?
MAR in Business Standards
127
Threshold Conditions for Authorisation where in Handbook?
High Level Standards
128
Client Assets where in handbook?
CASS in Business Standards
129
Statements of Principle where in handbook?
High Level Standards
130
ESG where in handbook?
Business Standards
131
The FCA's regulatory regime is primarily based on:
the Principles for Businesses.
132
Which tax has had its rates, allowances and exemptions frozen until the year 2026?
IHT
133
When does the adviser's duty of care to explain fully the nature of the product or investment and the risks involved not apply?
Execution-Only Business
134
Who issues GILTs?
The Debt Management Office
135
When a client cancels a unit trust Iv within cancellation period what price will they receive?
Prevailing Offer Price.
136
Which type of ethical theory is the main focus of business ethics?
Applied Ethics.
137
Which party is responsible for verifying that a financial adviser working for a large firm has completed the required number of CPD hours each year?
Accredited bodies are responsible for this and it forms part of their process for issuing statements of professional standing
138
Requirements for advisers?
A level 4 qualification from the Regulated Qualifications Framework is required and a SPS has to be obtained annually.
139
In providing restricted advice, it is required under FCA rules to:
provide advice based on the products from one company or a limited number of companies only.
140
The cancellation period for a life assurance investment bond, as part of a discounted gift trust arrangement, is?
30 Days
141
FCA Disciplinary Action (pair rcD)?
Private Warning
Statement of Misconduct
Financial Penalty
142
How long do complainants have to complain to FOS?
6 months from receipt of firms final response (or if not heard anything for >8/52)
143
