KEY STUFF CHAPTER 4

Question 1

difference in protection for MiFID vs non MiFID

Answer 1

MiFID - all clients protected
non MiFID - only retail protected

Question 2

three investments not included as designated investments

Answer 2

deposits
insurance
mortgages

Question 3

are pensions MiFID

Answer 3

no

Question 4

how do COBS relate to FCAs statutory objectives

Answer 4

allow the FCA to discharge its operational objectives

Question 5

large undertaking conditions for mifid

Answer 5

2/3 of:

balance sheet 20
turnover 40
own funds 2m

Question 6

large undertaking conditions for non MiFID

Answer 6

2/3 of:

balance sheet 12.5m
turnover 25m
250 employees

+ also company with share capital over 5m
+trustee of occupational pension scheme with 50 members and 10m under management

Question 7

can a large undertaking become an elective ECP

Answer 7

yes

Question 8

three conditions for relying on info from a non-mifid firm

Answer 8

info in writing
non mifid firm is independent
non mifid firm is competent

Question 9

which legislation covers financial promotions and what is max penalty

Answer 9

FSMA2000

2 years jail + unlimited fine

Question 10

FCA rules on communications do not cover which 5 things

Answer 10

exempt under FPO
from outside Uk and cant have effect in UK
subject to takeover code
personal quotes or illustrations
one off promos that are not cold calls

Question 11

what 3 types of cold calls are permitted

Answer 11

to an existing client - always permitted

generally marketable packaged products that are not high vol
services to readily realisable securities OTHER THAN WARRANTS

Question 12

what are the 5 packaged products (CLIPS)

Answer 12

CIS (regulated only)
Life policy
Investment trust savings scheme
Personal pension
Stakeholder pension

Question 13

difference between info disclosure generally versus client agreement

Answer 13

all clients get general info in an IID before business

retail and professional get client agreement before biz unless distance comms then immediately after

Question 14

what is the excluded activity from the client agreement rule

Answer 14

when a firm acts as principal in insurance business

Question 15

what three retail investments are not also packaged products

Answer 15

unregulated CIS
share in an investment trust
structured capital at risk products

Question 16

what 4 things are considered PRIIPS and what info document applies to them

Answer 16

investment funds
insurance based investment products
retail structured securities
structured term deposits

KID

Question 17

under RDR, firms making personal recommendations to retail clients must be what

Answer 17

either independent or restricted

Question 18

what must a firm disclose to retail client under RDR and by when

Answer 18

adviser status and costs, before providing the service or the client is bound by an agreement

Question 19

suitability applies to which 2 things only

Answer 19

discretionary services
advisory services

Question 20

when is a suitability report needed, for which clients and products and by when (forget about exemptions for now)

Answer 20

only for retail clients for advisory services only for all products

provided in a durable medium before the contract is concluded

Question 21

5 exemptions to suitability report (when is it not needed)

Answer 21

firm acts as investment manager for retail and makes a recommendation in connection to a regulated CIS

client is resident outside EEA and not in UK at time of ack

small life policies below 50pa

if recommendation is to increase regular premiums to an existing account

if investing further premiums to an existing packaged product where contributions have already been paid

Question 22

suitability report timing for personal pension and how long the advisor keeps it

Answer 22

no later than 14 days after the contract is concluded

keep for 5 years

Question 23

when and who does appropriateness apply to

Answer 23

applies to MiFID business for both RC and PC

applies to direct offers only to RC

only applies when product is complex

only applies to execution only

Question 24

order execution policy type of agreement and how often reviewed

Answer 24

two way agreement monitored annually

Question 25

two conditions for when limit order not executed immediately needs to be made public

Answer 25

customer says
order is greater than normal market size (greater than 10% of daily volume)

Question 26

which 3 things do the CASS rules not apply to

Answer 26

ICVC and UCITS schemes
BCD credit institutions

Question 27

what 3 types of money do CASS rules not apply to

Answer 27

coins held for value of the metal
DvP
money payable to firm

Question 28

which COBS rules include ECPs (there are 5)

Answer 28

client categorisation
most info disclosure rules
conflict of interest rules
occasional and periodic reporting rules
client assets

Question 29

which COBS rules apply only to retail clients

Answer 29

financial promotion rules
suitability REPORT
retail investment product disclosures e.g. KID