IOC - COBS and CASS Flashcards by Radleigh Foster

When can a UK firm communicate a real time unsolicited financial promotions to an oversees client?
A: never
B: when it complies with UK COBs
C: when it complies with the host state
D: without any restriction

They can communicate with some restrictions - COBS must be followed

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When will a authorised CIS get classified as a professional client?
A: turnover euro 40m and own funds of euro 2 m
B: turnover euro 40m and balance sheet of euro 15 m
C: it is always a professional client
D: it can never be a professional client

Its authorised

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Which is always a per se professional client?
A: special purpose vehicle
B: a corporate body whose shares are lists
C: public authority

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Which is most likely to have received a professional status via election?
A: local authority
B: national body that manages public debt
C: limited liability partnership
D: designated investment exchange

All others are per se

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A professional or eligible client can be asked for recategorisation in which of the following cases? (Can be more than one)?
A: trade by trade basis
B: General all trades
C: on individual instrument classes
D: only available for complex financial instruments

A,b, c

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A professional client can be assumed to have sufficient knowledge of:
A: risks in all designated investments
B: the risks involved with options
C: the risks involved in designated investments for which they are classed as professional
D: the risks involved with package products

Professional can be for a particular investment or transaction

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A firm may treat a client as an elective professional client for non-MiFID business if:
A: the qualitative test alone is passed
B: the quantitative test alone is passed
C: both the quantitative and qualitative tests are passed
D: the qualitative test is passed and there is a statement that protection will be lost

D
Quantitative test is only used for MiFID business. The qualitative test and a statement of protection are always required.

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If a firm is aware that Bob is acting as an agent for Bill, then bill will be the firms client if:
A: Bob and the firm have agreed in writing to treat bill as the client
B: bill and the firm have agreed in writing to treat bill as the client
C: Bill and Bob have agreed in writing that bill will be treated as a client
D: only if all three agree in writing

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To who should a firm produce a document about compensation claims when carrying ok MiFID business?
A: to professional clients only
B: to retail and professional clients and eligible counter parties only
C: to retail clients only
D: to retail client and professional clients

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Which would not be automatically given retail client protection:
A: a trustees with assets of 5m euros and funds of 1m euros
B: a listed company with funds of 2 m euros and assets of 25 m euros
C: a body corporate with net turnover of 30 m euros and assets of 1 m euros

Funds Greater than 2 m euros and assets greater than 20m euros is professional

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What is client money if the firm is in possession of money that belongs to a client?
A: money as part of a transaction due for settlement within 1 business day
B: money is interest paid on any holidays of client money
C: if the money has been paid to the client or authorised representative of the client

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The custody rules do not apply to DvP if which is met:
A: delivery due within one day or payment
B: delivery is due within 5 days of payment
C: delivery must occur simultaneously wit payment
D: custody rules always apply to DvP

DvP money can be held by a firm for up to 3 bus days before having to apply the custody rules

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If during the reconciliation process discrepancies are notices, what must the firm do?
A: make up for the shortfall
B: notify the FCA by the end of the next business day

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Who does client money rules apply?
A: all clients
B: all customers 
C: retail only
D: professional clients only

Client = customer + eligible counterpart

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Its authorised

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Which is always a per se professional client?
A: special purpose vehicle
B: a corporate body whose shares are lists
C: public authority

All others are per se

A,b, c

Professional can be for a particular investment or transaction

All are true for CASS except:
A: professional clients may opt out of client money protection providing they have given written consent and the firm has warned them of the risks
B: all client accounts must be reconciled on a daily basis
C: interest earned on client money need not be paid to clients

B
Reconciliation does not have to be daily.
The interest need not be paid on client money - only if the firm chooses to will the interest be client money

The firm must keep client money segregated from:
A: money belonging to the firm
B: money belonging to the firm and eligible counterparties
C: the firm and other retail client money
D: the firm and all other client money

All key feature documents must include information:
A: that the firm is passported under MiFID
B: explaining the cancellation procedure
C: commenting on the applicability of stakeholder pensions rather than the product covered
D: containing sufficient material such that a professional client is able to make an informed decision

A firm provides services to many products. In which of the following situations would it need to prepare a key feature document (KFD)?
A: the client has previously received a KFD on the same product
B: the service relates to a unit with a simplified prospectus scheme
C: the client requires advice in a readily realisable share
D: the client wishes to open a cash deposit ISA

KFD is for packages products

When a firm discloses to a retail client their right to cancel an agreement to purchase units in an authorised unit trust?
A: before entering the agreement
B: after the agreement
C: before and after the agreement
D: either before or after the agreement

C
For non-distant contracts there is a cancellation period of 14 days. This must be notified in the KFD, before the client buys and in the confirmation after the client has bought

For an authorised firm to assess the suitability transaction in MiFID business for an elective professional, the firm must assess: A: investment objectives B: investment objectives and financial situation C: investment objectives, investment knowledge and experience D: investment knowledge, experience, financial situation and investment objectives

B | Note, for a per se professional client the answer is A.

``` What sort of financial promotion clay a firm not approve on behalf of an unauthorised firm. A: telephone B: unsolicited mail shots C: online advertising D: tv and radio market ```

A | As they can't approve non- written communication

``` Under RDR financial advisors must perform CPD. How many of these a year must be structured? A: 10 B: 21 C: 35 D: 36 ```

B | 21 structured learning hours, 35 in total

For a marketing campaign to retail clients, which case would the FCAs requirement for direct offers under COBS need to be fulfilled? A: pure protection products such as insurance B: a non-ISA cash deposit C: an ISA cash deposit D: a financial promotion subject to the takeover code

``` According to COBS, which of the following is not considered an execution venue? A: marker maker B: retail broker C: multilateral trading facility D: regulated market ```

``` B Liquidity providers (MMs) can be considered as execution venues ```