MOCK EXAM

Question 1

Invesco LTD is a UK-based insurance company. How can an insurance company help reduce the UK payment deficit?
Select one:

a.Through the purchase of gilts from the government

b.By lending more money to individual UK borrowers

c.By providing a home for short term savings

d. By offering a wide range of insurance services

Answer 1

Borrowing money is one of the ways the UK government reduces the UK payment deficit. One way this is achieved is through the issue of gilts to large investors, such as pension funds and insurance companies.

The correct answer is: Through the purchase of gilts from the government

Question 2

A couple with children aged 12, 15, 17 and 19 wish to start cash ISAs from the current tax year. What is the maximum monthly contribution for this family (please exclude JISAs)?

Select one:

a.£2,500.00

b.£3,333.33

c.£5,000.00

d.£6,666.66

Answer 2

An individual must be 16 or over to set up a cash ISA. In this family 4 individuals meet this age criteria; the couple plus their 17 and 19 year-old children. The maximum annual ISA contribution is £20,000 x 4 ÷12 months= £6,666.66.

The correct answer is: £6,666.66

Question 3

Peter and James are the same age and are retiring shortly. They have the same size pension fund and are looking to purchase an annuity. James’ annuity is lower than Peter’s because?

Select one:

a.James is single whereas Peter is married

b.Peter has requested a level annuity, and James has requested an index-linked annuity

c.James has requested a level annuity, and Peter has requested an index-linked annuity

d.Peter has requested annual income in advance whereas James has requested annual in arears

Answer 3

The more options built into an annuity; the lower the initial income levels will be. The most expensive option in comparison to a level annuity, is index-linking. If James requests an index-linked pension and Peter a level payment, James’ income will be substantially lower to start off with. Their marital status is irrelevant unless they are requesting a spouse’s income. Even if they were, the addition of continued income for Peter’s spouse would reduce his initial income level, not increase it.

The correct answer is: Peter has requested a level annuity, and James has requested an index-linked annuity

Question 4

The Financial Conduct Authority (FCA) sets out a variety of threshold conditions in its Handbook. Which of the following BEST describes how these conditions must be viewed by an authorised person?

Select one:
a.
They are discretionary and only applicable to SM&CR firms
b.

An authorised person must adhere to them whilst applying for Part 4a permission
c.
They must be and must continue to be met by an authorised person
d.

They relate to anyone carrying out a controlled function

Answer 4

FCA threshold conditions must be and must continue to be met by all authorised persons. Otherwise they run the risk of Part 4a permissions being removed

The correct answer is: They must be and must continue to be met by an authorised person

Question 5

Why does a rise in government expenditure have a greater beneficial effect on the economy than a reduction in taxation?
Select one:
a.

Tax reductions lead to a decrease in consumer spending, which does not stimulate the economy
b.

A rise in government expenditure is always spent on importing goods from abroad
c.

Tax reductions mean a greater feel good factor but rarely lead to increased consumer spending
d.

Government increases in expenditure are concentrated in supporting UK companies providing goods and services, which leads to employment and profit stimulation

Answer 5

A reduction in taxation is likely to lead to higher consumer spending, which cannot be easily controlled and channelled into UK goods (it can be spent elsewhere), whereas a rise in government spending can be targeted at UK companies, leading to higher employment and potentially larger profits.

The correct answer is: Government increases in expenditure are concentrated in supporting UK companies providing goods and services, which leads to employment and profit stimulation

Question 6

Jane’s income is about to reduce. She has an interest-only mortgage, a credit card debt of £4,000 with interest charged at 18.9%, and a cash ISA of £22k. Which of the following actions would you recommend to Jane?

Select one:
a.

Pay her credit card with cash from her ISA
b.

Set her ISA interest against her mortgage interest
c.

Take out a secured loan to fund short term needs
d.

Change her mortgage to capital and interest

Answer 6

Of all the options open to Jane, the one that would save her the most money would be using her cash ISA to repay her credit card debt. She is being charged 18.9% interest and is unlikely to be getting anywhere near this from her cash ISA

The correct answer is: Pay her credit card with cash from her ISA

Question 7

The Financial Stability Report is a document published twice a year. Which of the following bodies is responsible for this?
Select one:
a.

Financial Crime Agency
b.

Financial Policy Committee
c.

Financial Conduct Authority
d.

Financial Action Task Force

Answer 7

The Financial Policy Committee publishes the FSR twice a year on behalf of the Bank of England.

The correct answer is: Financial Policy Committee

Question 8

How does the UK government raise money?
Select one:
a.

Through imposing fines
b.

Taxes and borrowing
c.

Via wholesale markets
d.

Through insurance premiums

Answer 8

The UK government raise money via taxes and borrowing

The correct answer is: Taxes and borrowing

Question 9

A retail client makes a claim to the FSCS in the current tax year, for 3 individual amounts of £60,000 relating to a bank deposit, car insurance plan and a home finance plan. What is the maximum compensation the client can expect to receive?

Select one:
a.

£180,000
b.

£171,000
c.

£170,000
d.

£168,000

Answer 9

A

Deposits are 100% protected up to £85,000, so £60,000 compensation will be received. Car insurance is compulsory, so is 100% protected, giving another £60,000. A home finance plan is covered up to the first £85,000, giving another £60,000, so total FSCS protection is £180,000

Question 10

Anna has a renewable term assurance plan. She has asked you to explain what options this gives her. Which of the following statements is the most accurate?
Select one:
a.

The sum assured can be increased at a fixed rate, without further health evidence
b.

The expired policy can be replaced with one identical, without further health evidence
c.

The policy can be converted into either a whole of life plan or endowment
d.

Guaranteed increases can be included subject to underwriting

Answer 10

Renewable term assurance means that the term plan can be renewed without health evidence for another plan, at its term end, for the same sum assured. Premiums are likely to increase though, as the client is older at renewal.

The correct answer is: The expired policy can be replaced with one identical, without further health evidence

Question 11

Peter has been self-employed all his working life and is now approaching state pension age. Which of the following state pensions is he MOST likely to be entitled to?
Select one:
a.

Single-Tier State Pension
b.

Graduated Pension
c.

State Earnings-Related Pension
d.

State Second Pension

Answer 11

Since 2016/17, there is only one type of State Pension and that is the Single Tier State Pension. All the old earnings-related state pensions such as the Graduated Pension, SERPS and S2P no longer exist for individuals now reaching state pension age.

The correct answer is: Single-Tier State Pension

Question 12

John transferred £500,000 into a trust eight years ago. He appointed two trustees and named three beneficiaries. Why are the trust assets still liable to inheritance tax?

Select one:
a.

John is one of the trustees
b.

John is one of the beneficiaries
c.

The trust is an absolute one
d.

The trust is a bare one

Answer 12

John must be one of the trust beneficiaries. This will mean that the trust transfer is classed as a gift with reservation as John is still benefitting from the trust assets. They will therefore still form part of his estate for inheritance tax.

The correct answer is: John is one of the beneficiaries

Question 13

Joe is an IFA. He does not currently have a specialist pension transfer qualification. Which of the following pension products can he give advice on?

I. FSAVC to a personal pension

II. Defined benefit to a stakeholder

III. Defined contribution to a SIPP

IV. Added years AVC to a retirement annuity contract

Select one:

a. I, II, III and IV

b. I and II only

c. I and III only

d. I, II and IV

Answer 13

Joe does not have a specialist pension transfer qualification. He cannot give advice on transferring any pension with any guaranteed element, so the defined benefit and added years AVCs. The other two transfers do not involve any guarantees so, in theory, he could advise on them (but would probably need an internal provider exam to do so).

The correct answer is: I and III only

Question 14

Gary is a trainee IFA under supervision. Which of the following need Gary not include within a suitability report?
Select one:
a.

The client’s needs and shortfalls
b.

The use of clear and plain language
c.

Lists of the products considered but discounted
d.

Full details of all client objectives not included in the advice process

Answer 14

A suitability report does not have to include details about all the client objectives where advice has not been given. All the other options must have been covered.

The correct answer is: Full details of all client objectives not included in the advice process

Question 15

J ake has recently received advice and, as a result, taken out a WOL policy and cash ISA, and made both a pension and ISA transfer. Which of these have a 14-day statutory cooling off period?
Select one:
a.

Cash ISA and WOL policy
b.

Cash ISA and ISA transfer
c.

Pension and ISA transfer
d.

ISA transfer and WOL policy

Answer 15

Remember that products viewed as ‘simpler’ will have shorter cancellation periods. The regulator does not view pensions or life policies as simple. The cash ISA and ISA transfer will both have a 14-day cancellation period

The correct answer is: Cash ISA and ISA transfer

Question 16

Sally has died intestate leaving an estate of £850,000, her wife Helen and son Chris. Who will receive what under the laws of intestacy?

Select one:
a.

Helen will inherit the entire £850,000 estate
b.

Helen will inherit the first £586,000, Chris the remaining £264,000
c.

Chris will inherit the first £586,000, Helen the remaining £264,000
d.

Chris will inherit the entire £850,000 estate

Answer 16

When Sally dies, she leaves an estate of £850,000, and both a spouse (Helen) and issue (Chris). Helen will inherit the first £322,000 plus 50% of the residue (£264,000) = £560,000. Chris will then inherit the other 50%, so £264,000.

The correct answer is: Helen will inherit the first £586,000, Chris the remaining £264,000

Question 17

Joe, a self-employed decorator, has been made bankrupt three months ago. When can he look forward to the end of his bankruptcy period?
Select one:
a.

After one year
b.

After three years
c.

After four years
d.

After seven years

Answer 17

Joe‘s period of bankruptcy is likely to last for one year unless he is deemed to be a culpable bankrupt.

The correct answer is: After one year

Question 18

Robert, age 40, wishes to build up a cash lump sum to purchase a canal barge in 14 years’ time when he retires. Which of the following products would be most appropriate for this purpose?
Select one:
a.

Stocks and shares ISA
b.

Purchased life annuity
c.

Small self-administered scheme
d.

Stakeholder pension

Answer 18

Robert wants to build up a cash lump sum. A purchased life annuity would provide an income and both the SSAS and stakeholder pension could not currently be taken at age 54 but 55 at the earliest. So, the ISA is his best bet.

The correct answer is: Stocks and shares ISA

Question 19

Two clients of yours both have trusts. One has an absolute trust the other a discretionary trust. Which of the following statements is true?
Select one:
a.

The beneficiaries are known for the discretionary trust
b.

You client is sure who will benefit from the discretionary trust
c.

The beneficiaries are unknown for the absolute trust
d.

You client is sure who will benefit from the absolute trust

Answer 19

With an absolute trust, the settlor will be sure who the beneficiaries are. They have an absolute right to the trust assets once they attain capacity at age 18.

The correct answer is: You client is sure who will benefit from the absolute trust

Question 20

Jessica wishes to transfer a portfolio of £400,000 shares she owns to her daughter Samantha. She has asked you, as her financial adviser, to comment on how this transfer will be treated from an IHT perspective. You say that…
Select one:
a.

the transfer will be exempt as it is to her daughter
b.

the transfer will be chargeable as it is above Jessica’s nil rate band
c.

the transfer will be potentially chargeable depending on Jessica’s life expectancy
d.

the transfer will be tax-free as it is within Jessica’s nil rate band

Answer 20

Jessica’s share transfer will be classed as potentially exempt as it is a gift. This means that Jessica must survive for seven years post-gift to avoid any inheritance tax liability.

The correct answer is: the transfer will be potentially chargeable depending on Jessica’s life expectancy

Question 21

John and Ann are friends who purchased a property as tenants in common. Both have a mortgage of £50,000 with no life cover in place. On John’s death, what happens to his mortgage share?
Select one:
a.

It is a debt on Ann
b.

It is a debt on the executors of John’s estate
c.

The property will have to be sold
d.

The property will have to be repossessed

Answer 21

When John dies, his mortgage debt will pass into his estate, as the property has been purchased on a tenant in common basis. It will be dealt with by his executors.

The correct answer is: It is a debt on the executors of John’s estate

Question 22

Jason is a higher rate tax-payer. You are his financial adviser. You are deciding whether to recommend equities and/or deposit- based schemes. Which of the following is likely to be the MOST important factor to discuss with Jason?
Select one:
a.

Ensuring he understands what equity- based investments are
b.

Establishing a budget with Jason so that he can afford any investments
c.

Establishing his attitude to investment risk and capacity for loss
d.

Ensuring you understand his goals and objectives

Answer 22

All the factors mentioned are important for Jason to consider. If he is considering equity-based investment, then his attitude to risk and capacity for loss are extremely key factors.

The correct answer is: Establishing his attitude to investment risk and capacity for loss

Question 23

Mo is an independent financial adviser, but not qualified as a pension transfer specialist or in equity release. He has been asked to give advice on the following cases:

1. DB pension to a personal pension.
2. £300,000 lifetime mortgage.
3. Personal pension to a self-invested personal pension.
4. FSAVC to a personal pension.

Which of the above would Mo be able to advise on?

Answer 23

Mo is not licensed as a pension transfer specialist or equity release. A lifetime mortgage is a form of equity release, so he is unable to give advice here. As he is not a pension transfer specialist, he cannot give advice on DB transfers. He could advise on DC transfers. The two areas he can advise on therefore are the DC transfers, so options 3 and 4 only.

The correct answer is: 3 and 4 only

Question 24

Freddie has carried out some share transactions using best-execution principles. He will receive which of the following cancellation periods?
Select one:
a.

Seven days
b.

14 days
c.

30 days
d.

None as this is classed as execution-only business

Answer 24

will be given, as these are classed as investment transactions.
The correct answer is: 14 days

Question 25

Sam has found some ex-adviser training records in her life company’s basement dated Jan 2015. What is the MAIN factor that will determine whether she can destroy the files? Select one: a. The adviser’s leaving date b. The training material subject c. The adviser’s age d. The adviser’s employment status at the time

Answer 25

The period that training records are kept for starts from the date the individual leaves their firm, whether employed or self-employed. The correct answer is: The adviser’s leaving date

Question 26

A client has a £30,000 deposit put aside for house purchase in one year’s time. What is the main reason that they might they choose a deposit scheme over an equity investment? Select one: a. Capital would remain secure b. It is easier to understand and track c. Interest would be paid tax-free d. Growth is not possible in equities short-term

Answer 26

If the investment is short-term, then deposits are usually the best investment type. Interest is taxable and growth is possible from equities whatever the term. The correct answer is: Capital would remain secure

Question 27

An adviser has noticed that a client has paid £1,200 into each of two separate cash ISAs each month for the last three years. Which of the following actions should the adviser take? Select one: a. Do nothing b. Escalate the issue to their supervisor c. Inform HMRC that the client has been making overpayments d. Advise the client to contact HMRC to discuss overpayments

Answer 27

This is an issue between the client and HMRC. The correct answer is: Advise the client to contact HMRC to discuss overpayments

Question 28

A firm has been fined for submitting their Retail Mediation Activities Report (RMAR) late. How often must this form be submitted to the regulator? Select one: a. Monthly b. Quarterly c. Every six months d. At least annually

Answer 28

A RMAR must be submitted to the regulator every six months The correct answer is: Every six months

Question 29

Suitability is key when recommending a solution to a client. Which of the following would NOT need to be considered? Select one: a. Future tax changes b. Client’s tax status c. Term of the product recommended d. Any client ethical preferences

Answer 29

An adviser cannot take into account future tax changes in financial planning advice as they have no idea what these changes are likely to be. The correct answer is: Future tax changes

Question 30

Which of the following statements best describes an EU directive? Select one: a. Takes effect immediately and does not need to be ratified b. Not legally binding with no need for ratification c. Must be approved by an EU referendum d. Binding on member states with the method of ratification left open

Answer 30

An EU directive is binding on member states, but leaves the method of ratification up to them individually. So, there is a ‘run-in’ period for directives. As the UK is no longer a member of the EU it is no longer subject to future EU directives. The correct answer is: Binding on member states with the method of ratification left open

Question 31

Which of these authorised firms were exempt from MiFID requirements? Select one: a. UK based IFA arranging investments, that does not hold client monies b. UK based IFA arranging investments in unregulated collective investment schemes c. UK based IFA advising clients in other EEA states d. UK based IFA arranging investments in unregulated securities

Answer 31

A UK firm that does not hold client monies was exempt from MiFID requirements The correct answer is: UK based IFA arranging investments, that does not hold client monies

Question 32

Alex is a sole-trader with-profits of £20,000. Which of the following taxes is he subject to? Select one: a. Income tax paid annually via self-assessment and flat-rate National Insurance contributions b. Income tax paid annually via self-assessment and National Insurance contributions paid on a percentage of profits c. Income tax paid bi-annually to HMRC and flat-rate National Insurance contributions d. Income tax paid bi-annually to HMRC and both flat-rate and profit-based National Insurance contributions

Answer 32

Income tax paid bi-annually to HMRC and both flat-rate and profit-based National Insurance contributions The correct answer is: Income tax paid bi-annually to HMRC and both flat-rate and profit-based National Insurance contributions

Question 33

The Competition and Markets Authority (CMA) constantly reviews the impact FCA rules and practices have on market competition. The CMA work closely with which of the following bodies? Select one: a. HM Treasury and the FCA only b. HM Treasury, the FCA and PRA c. The Bank of England, the FCA and PRA d. The Bank of England, the PRA and Treasury

Answer 33

The CMA works closely with both HM Treasury and the FCA. The correct answer is: HM Treasury and the FCA only

Question 34

Under the Consumer Credit Act, businesses that offer goods on credit, lend money, or are involved in activities relating to credit or hire must be licensed. Which body is currently responsible for authorisation in this area? Select one: a. Financial Conduct Authority b. Prudential Regulation Authority c. Competition and Markets Authority d. Office of Fair Trading

Answer 34

Since 1st April 2014 the FCA is now responsible for authorising businesses that offer goods or lend money under the Consumer Credit Act. The correct answer is: Financial Conduct Authority

Question 35

A client of yours requires a regular monthly income with minimum risk involved. Which of the following should you recommend? Select one: a. Personal pension plan b. Medium term GILTS c. Equity based unit trusts d. NS&I Income Bond

Answer 35

Only one of the four product options pays monthly income, this is the NS&I income bond. The correct answer is: NS&I Income Bond

Question 36

Joan is 82 and wants to establish a Lasting Power of Attorney (LPA). She wishes her family to be able to take care of her finances plus make decisions in relation to her health should she be admitted to hospital. In terms of the two elements of an LPA, property and financial and health and welfare Joan should? Select one: a. Use neither and just do a simple power b. Set up both as that is the most comprehensive c. Set up the personal health and welfare element d. Set up the property and financial element

Answer 36

Both elements will be required to achieved Joan’s desired outcomes The correct answer is: Set up both as that is the most comprehensive

Question 37

jo is a newly un-discharged bankrupt. Which of the following statement is the BEST description of her current situation? Select one: a. She must owe at least £2,500 and has six months of bankruptcy to go b. She must owe less than £2,500 and has six months of bankruptcy to go c. She must owe at least £5,000 and has 12 months of bankruptcy to go d. She must owe less than £5,000 and has 12 months of bankruptcy to go

Answer 37

Jo is a newly un-discharged bankrupt. She must owe at least £5,000 to her creditors, and she will be bankrupt for a standard twelve-month period unless she is deemed culpable The correct answer is: She must owe at least £5,000 and has 12 months of bankruptcy to go

Question 38

joe is no longer personally liable for the debts of his business. This is most likely to be because… Select one: a. Joe has retired b. The business has incorporated c. Joe has been declared bankrupt d. Joe has lost mental capacity

Answer 38

With a limited company (incorporation) the company is liable for any debts to the extent of its assets and not the individual themselves. The correct answer is: The business has incorporated

Question 39

The FOS has awarded £50,000 compensation, £30,000 for loss of reputation and £10,000 as a general award to a claimant. The costs of both the claimant and respondent were £5,000 each. The total payment the respondent will need to make will be… Select one: a. £35,000 b. £85,000 c. £95,000 d. £100,000

Answer 39

The FOS can award all the compensation listed, except the respondent’s costs. The correct answer is: £95,000 NOTE ('COMPENSATION' is its own distinct reward)

Question 40

Which of the following institutions is MOST likely to offer portfolio management services? Select one: a. Building societies b. Friendly societies c. Banks d. Mutual societies

Answer 40

Building, friendly and mutual societies/organisations are all variations of the same thing; they exist for the benefit of their members and tend to offer a narrower range of products and services. Banks, on the other hand, have shareholders, and offer a wider range of services, including portfolio management. The correct answer is: Banks

Question 41

Jane is pregnant for the first time and currently works as a part time administrator for an insurance company. She does not qualify for paid parental leave. This is most likely to be because? Select one: a. She is aged under 21 b. She has only worked for her employer for two years c. This is her first pregnancy d. She is earning £100 weekly

Answer 41

To be eligible for paid parental leave an individual must earn at least £123 a week. This is the Lower Earnings Limit, and the minimum threshold for claiming The correct answer is: She is earning £100 weekly

Question 42

The UK historically became subject to a new EU directive around MiFID 2. A directive meant that… Select one: a. its aims became law from a set date, with no requirement for ratification b. the UK could decide how to best implement its aims c. the EU dictated how to best implement its aims d. its aims become law with no ratification required

Answer 42

EU directives allow member states to decide how best to implement them and achieve their desired outcomes. As the UK is no longer a member of the EU it is no longer subject to future EU directives. The correct answer is: the UK could decide how to best implement its aims

Question 43

1. Peter, an additional rate taxpayer, has the following: Deposit account £20,000 Corporate bonds £15,000 Gilts £10,000 Onshore investment bond £25,000 Which of the following statements are TRUE? Select one: a. Interest on his deposits will be within his PSA b. Corporate bonds have a low risk profile c. Gilts will be subject to CGT at 20% d.Top slicing could reduce any bond tax liability

Answer 43

Gilts are CGT free. There is no PSA for an additional rate tax-payer. Corporate bonds are relatively high risk due to the possibility of company insolvency. Top slicing can reduce income tax on an investment bond. The correct answer is: Top slicing could reduce any bond tax liability

Question 44

Which of the following would need to issue a cancellation notice? Select one: a. A life policy with a term of 17 months b. A traded life policy c. A death in service plan d. A life policy with a term of under 1 month

Answer 44

The only option, of the four given, that would need to issue a cancellation notice would be a life policy with a 17-month term. For all the others, this is not required The correct answer is: A life policy with a term of 17 months

Question 45

In which of the following circumstances must a suitability report be produced by a financial adviser? Select one: a. Execution-only cases b. Stakeholder pensions advice c. General insurance cases d. Financial protection advice

Answer 45

Of the four options given here, a suitability report would be required for financial protection advice. With execution-only cases, no advice has been given. Stakeholder and general insurance advice do not require a suitability report. The correct answer is: Financial protection advice

Question 46

Paul has taken a cheque from a client for investment purposes at 10am on a Tuesday. When do these monies need to be in his client monies account by? Select one: a. Close of business on the Tuesday b. 10am on the Wednesday c. Close of business on the Wednesday d. 4pm on the Tuesday

Answer 46

Client cheques must be deposited into a client monies account by close of business (COB) the following working day. So, a cheque taken from a client at 10am on a Tuesday must be in the client monies account by COB the following Wednesday, at the latest. The correct answer is: Close of business on the Wednesday

Question 47

Market abuse is treated as a serious offence by the regulator. What is the maximum penalty for criminal offences? Select one: a. 5-year maximum prison term b. Fines of up to £100,000 c. Fines of up to £50,000 d. 7-year maximum prison term

Answer 47

The maximum penalty for criminal market offence abuses is 7 years in prison. The correct answer is: 7-year maximum prison term

Question 48

Which of the following products is NOT covered by the Financial Services & Markets Act 2000? Select one: a. With-profit investment bond b. National Savings income bond c. Non-profit endowment plan d. 10-year term assurance plan

Answer 48

Any products that come under the scope of National Savings and Investments are not classed as regulated activities under FSMA 2000. This is because these products are government-backed, so are highly secure, plus they are deposit-based so cannot be traded, making the inherent risks smaller. The correct answer is: National Savings income bond

Question 49

The FCA have the power to impose a variety of sanctions for offences made by regulated individuals, firms and markets. if something is reported incorrectly by accident, the MOST likely sanction would be… Select one: a. a written warning b. an unlimited fine c. a variation of permissions d. removal of Part 4a permission

Answer 49

Incorrect reporting by accident is usually punishable by a written warning from the regulator. The correct answer is: a written warning

Question 50

Sam has a couple of stakeholder products. What is the maximum annual management charge if he took these policies out 12 years ago? Type of plan Current value Pension £20,000 Stocks and shares ISA £20,000 Select one: a.£300 b.£400 c.£500 d.£600

Answer 50

Medium and long-term stakeholder products such as pensions and stocks and shares ISAs have a 1% AMC after year 10. This will result in a total annual management charge of £400 for these two products in this year. The correct answer is: £400

Question 51

Member A and Member B are both EU states. Member A has to implement some actions immediately whilst Member B has some time to consider. This is because… Select one: a. A is an existing state, but B is new to the EU b. A is implementing a regulation and B a directive c. A is an EU state, but B is within the EEA d. B has negotiated additional powers

Answer 51

An EU regulation immediately becomes law in a member state without the need for ratification, whereas a directive must be ratified, with states allowed to decide how this is achieved. Thus, member A must be implementing a regulation, whereas member B is implementing a directive. The correct answer is: A is implementing a regulation and B a directive

Question 52

Paul has taken out a gift inter vivos policy with his mother, Pam as the life assured. The most likely reason for this is Paul… Select one: a. has received a gift of money or assets from Pam b. has donated monies to charity in Pam’s name c. wishes to protect Pam in case he dies prematurely d. wishes to protect Pam in case he is long term sick

Answer 52

A gift inter vivos policy is used to cover a potential inheritance liability when a gift of money or assets is made to an individual. If the donor survives for 7 years there is no inheritance due, but if they die prematurely there may be a liability, which this policy is designed to cover. The correct answer is: has received a gift of money or assets from Pam

Question 53

Which of the following statements is incorrect? Select one: a. FCA rules are entirely binding b. Legal instruments are the definitive version of any rules made c. FCA rules apply to all regulated firms d. FCA rules are a combination of the rules that are in FSMA 2000 and the Insurance Mediation Directive

Answer 53

The FCA rules originate from several different statutes which include the Financial Services Act 1986, 2012 and FSMA 2000. It is not limited to the FSMA 2000 and the Insurance Mediation Directive, thus this is the incorrect answer. The correct answer is: FCA rules are a combination of the rules that are in FSMA 2000 and the Insurance Mediation Directive

Question 54

Brightling Assurance has total assets of £200m and ongoing liabilities of £50m. What is its Free Asset Ratio? Select one: a. 75% b. 25% c. 400% d. 20%

Answer 54

To work out Brightling Assurance’s FAR we need to follow a 2-stage process. Firstly, calculate the company’s net assets: £200m - £50m = £150m. Then work out what these net assets are as a percentage of the company’s total assets: £150m ÷ £200m x 100 = 75%. This shows their financial strength. The correct answer is: 75%

Question 55

XANAX LTD is a non-MiFID firm. Penny used to work for the company as a pension transfer specialist but has now changed employers. How long must XANAX LTD keep Penny’s T&C records for? Select one: a. 3 years b. 5 years c. 7 years d. Indefinitely

Answer 55

Any records in relation to a pension transfer specialist must be kept indefinitely by the authorised person. So, Penny’s T&C records must be kept forever. The correct answer is: Indefinitely

Question 56

Direct offer financial promotions must contain enough information to enable the client to make an informed assessment. Which of the following information MUST be included? Select one: a. Confirmation of advisor professional qualifications b. Past performance figures over the previous twelve months c. The name of the provider to whom payment should be made d. Details of any promotional gift included in the offer

Answer 56

A direct offer financial promotion is a written advert in a newspaper or magazine. It must show the name of the provider to whom payment must be made, if the offer is accepted. The correct answer is: The name of the provider to whom payment should be made

Question 57

Jake has taken out a whole of life plan for family protection purposes. For how long must records of the financial promotion associated with this sale be kept as a minimum under Conduct of Business Rules? Select one: a. Indefinitely b. Three years for non-MiFID firms c. Five years for MiFID firms d. Six years

Answer 57

Think of a financial promotion as an advert. The word ‘advert’ has 6 letters and the minimum record keeping requirement is 6 years. The correct answer is: Six years

Question 58

John is a financial advisor specialising in complex pension advice. Which of the following best describes the requirement to demonstrate competence? Select one: a. A relevant approved qualification only b. A relevant approved qualification and a successful one-off assessment of competence c. Attaining & maintaining a set level of competence d. Attaining & completing a one-off assessment of competence

Answer 58

John must both attain and then maintain a set level of competence. This will include more than just achieving a relevant qualification or a one-off assessment of his competence. The correct answer is: Attaining & maintaining a set level of competence

Question 59

An IFA is acting for a couple who are divorcing. According to the FCA's Principles for Business, what must the adviser do? Select one: a. Act for both clients and disclose the same information to both b. Continue to act for the client who supplies the most business opportunities and stop dealing with the second client c. Maintain a position of strict neutrality and act fairly at all times d. Stop dealing with both clients immediately

Answer 59

The IFA must maintain a position of strict neutrality and act fairly at all times. The correct answer is: Maintain a position of strict neutrality and act fairly at all times

Question 60

John has £20,000 invested in both a stakeholder pension and equity ISA. Which of the following is NOT required in terms of the advice process with stakeholder products? Select one: a. Charges disclosure b. A key features document c. A cancellation notice d. A suitability report

Answer 60

A suitability report is not required in the basic advice process with stakeholder products. The correct answer is: A suitability report

Question 61

A customer asks a single-tied adviser for a product that his company does not offer. What response should the adviser give to this request? Select one: a. The adviser must inform the customer that his company does not have a suitable product b. The advisor can inform the customer that another product in his range is more suitable c. The adviser should ask his manager to give the advice d. The adviser can sell a product which is a close match

Answer 61

If a single-tied adviser does not offer a suitable product the only option is to refer the client to a WOM/IFA for suitable advice. The correct answer is: The adviser must inform the customer that his company does not have a suitable product

Question 62

John is a financial adviser, Sam his client. John’s advice come under the Insurance Conduct of Business Sourcebook (ICOBS) because he has recommended Sam takes out a… Select one: a. stocks and shares portfolio b. with profits whole of life (WOL) policy c. stocks and shares ISA d. renewable term assurance policy

Answer 62

Pure protection products come under regulator rules in ICOBS. The only product mentioned with no investment value is renewable term assurance. The correct answer is: renewable term assurance policy

Question 63

Henry has opted for increasing term assurance whilst Mary has opted for renewable term. Why is this? Select one: a. Mary is in better health than Henry b. Mary is older than Henry c. Henry wants to combat the effects of inflation d. Henry is not concerned about inflation

Answer 63

Henry must be concerned about the effects on inflation on his sum assured if he has opted for increasing term assurance. The correct answer is: Henry wants to combat the effects of inflation

Question 64

Which of the following is NOT required if an advisor completes an application form on behalf of a client? Select one: a. That the client’s family is present at the time of completion b. That the client checks all the information c. That the client agrees with all the information d. That ideally the client signs a statement allowing this completion by the advisor

Answer 64

If an adviser completes an application form for the client then they should be present, they should check and agree with all the completed information, plus sign a statement agreeing to the adviser completing the form on their behalf. Their family do not automatically have to be present, although this may be deemed appropriate for vulnerable clients. The correct answer is: That the client’s family is present at the time of completion

Question 65

Ian has instructed his financial advisor to purchase a portfolio of unit trusts on his behalf. He knows the trusts he requires and the quantities. What is this type of advice known as? Select one: a. Limited advice b. Best-execution c. Insistent client d. Execution-only

Answer 65

Ian requires and has asked for no advice. This transaction would therefore be categorised as execution-only. The correct answer is: Execution-only

Question 66

Lisa and Eric are married. Lisa has discovered that their insurance company holds personal information about Eric but sensitive personal information about her. Which of the following is MOST likely to be the reason for this? Select one: a. Lisa is a UK resident b. Eric is non-UK domiciled c. Eric has asked for information relating to a product d. Lisa has applied for critical illness cover

Answer 66

If Lisa has applied for critical illness cover, she will have had to provide information on her health. This is one example of sensitive personal information. The correct answer is: Lisa has applied for critical illness cover

Question 67

Which of the following would NOT be classed as sensitive personal data within the meaning of the Data Protection Act 1998? Select one: a. John’s religious beliefs b. Frank’s earnings history c. Mark’s sexual orientation d. Peter’s ethnic origin details

Answer 67

Sensitive personal data relates to areas such as ethnic origin, sexual orientation and religious beliefs as 3 examples. Frank’s earnings history is an example of personal data, rather than sensitive data

Question 68

A client has invested £32,000 in a UK deposit-based product and the provider has become insolvent. What compensation recourse is available? Select one: a. £31,700 compensation is available from the Financial Ombudsman Service b. £31,700 compensation is available from the Financial Services Compensation Scheme c. £32,000 compensation is available from the Financial Ombudsman Service d. £32,000 compensation is available from the Financial Services Compensation Scheme

Answer 68

The FSCS protects clients against the insolvency of a UK based firm. Deposits are 100% protected up to £85,000 per person. This client would have £32,000 compensation available from the FSCS. The correct answer is: £32,000 compensation is available from the Financial Services Compensation Scheme

Question 69

The Financial Ombudsman Service aims to mediate complaints that cannot be resolved within set timeframes. Which of the following statements BEST describes the type of complaint that comes under its jurisdiction? Select one: a. Complaints from an individual against any firm b. Complaints from a professional client against an authorised firm c. Complaints from an eligible counterparty against a firm carrying out regulated activities d. Complaints from an eligible client against an authorised person carrying out regulated activities

Answer 69

Complaints must originate from an eligible client. They must be against an authorised person, so an individual, firm, or market carrying out regulated activities. The correct answer is: Complaints from an eligible client against an authorised person carrying out regulated activities

Question 70

The Single Financial Guidance Body (SFGB) in the UK for Financial Capability is … Select one: a. Pension Wise b. Money and Pensions Service (MaPS) c. Money Advice Service (MAS) d. The Pensions Advisory Service (TPAS)

Answer 70

The Single Financial Guidance Body is the Money and Pensions Service (MaPS) know branded as MoneyHelper. Pension Wise and Money Advice Service were brought together along with The Pension Advisory Service to form MaPS. The correct answer is: Money and Pensions Service (MaPS)

Question 71

Money laundering is usually a three-stage process. Which of these statements best describes these stages? Select one: a. Identity, verification & integration b. Cleaning, placement & collection c. Placement, layering & integration d. Introduction, integration & placing

Answer 71

The three stages of money laundering are placement, layering and integration.

Question 72

Which of the following statements is correct regarding new client identity verification, as required by the Money Laundering Regulations 2003? Select one: a. A copy of a recent utility bill addressed to the client is sufficient b. Proof of identity is only required for individual clients c. Proof of identity is not required if business is transacted face to face d. No business can be completed until proof of identity is established

Answer 72

No new business can be completed until both the name and address of qualifying clients is verified. The correct answer is: No business can be completed until proof of identity is established

Question 73

John is an employee of an authorised firm. He undergoes an annual fit &proper test because… Select one: a. He is not individually registered with the FCA b. He is a senior union representative within the company c. He was not grandfathered over to the FCA d. He undertakes a senior role in the firm

Answer 73

John must be acting in the capacity of a controlled function within his firm to undergo an annual fit and proper test. The correct answer is: He undertakes a senior role in the firm

Question 74

Godfrey and John have been found guilty of market abuse and been given custodial sentences of 6 months and 5 years respectively. Which of the following statements is true? Select one: a. Both have committed criminal offences b. John has not paid his FCA fine c. Godfrey has committed a civil offence d. John has committed a civil offence

Answer 74

Your answer is correct. To have been sent to prison for market abuse, both Godfrey and John must have been guilty of criminal rather than civil offences. The correct answer is: Both have committed criminal offences

Question 75

Jack and John are brothers. They have worked and paid national insurance contributions since age 18. Jack’s Single Tier State Pension is lower than John’s. What could be the main reason for this? Select one: a. Jack fell short of a national insurance payment record of 44 years b. John fell short of a national insurance payment record of 44 years c. Jack fell short of a national insurance payment record of 35 years d. John fell short of a national insurance payment record of 35 years

Answer 75

Jack must have paid NICS for less than the required 35 years to receive a lower single-tier state pension. The correct answer is: Jack fell short of a national insurance payment record of 35 years

Question 76

An Italian life office applies for UK authorisation and is refused. This means that… Select one: a. The life office can appeal to the court in Brussels b. The PRA and FCA can prevent them from trading in the UK c. They have 30 days to appeal to the Commission Nationale d. They can trade in the UK, but only advising on simple products

Answer 76

If an overseas firm is refused authorisation UK regulators, the PRA and FCA, can prohibit them from carry out regulated activities in the UK. The correct answer is: The PRA and FCA can prevent them from trading in the UK

Question 77

Which of the following types of FCA regulation involves the regulator trying to pre-empt future regulatory issues? Select one: a. Forward-looking b. Rules-based c. Regulation-based d. Systems & controls-based

Answer 77

Forward-looking, outcomes-based regulation is an example of the regulator trying to pre-empt future regulatory issues i.e. trying to positively affect ‘outcomes’. The correct answer is: Forward-looking

Question 78

Apex Ltd analyses its management information to evaluate ethics. Which of the following MI would be LEAST useful? Select one: a. Policy cancellations b. Case reviews c. Mix of business d. Employee turnover

Answer 78

Employee turnover is the least useful example of MI relevant to ethics within a firm. Though it could show deeper-rooted issues. The correct answer is: Employee turnover

Question 79

Which of the following statements is not one of the FCA 6 Fair Treatment of Customers outcomes? Select one: a. Consumers do not face unreasonable post sale barriers b. Products/services are designed to meet most consumer needs c. Advice is given taking account of consumer circumstances d. Consumers are provided with products that perform as they have been led to expect

Answer 79

Products/services must be designed to meet ALL (not most) customer needs. The correct answer is: Products/services are designed to meet most consumer needs

Question 80

How is the MaPS funded? Select one: a. Via taxation of UK individuals and companies b. Through government borrowings via Gilts and NS&I products c. Via a levy on financial services firms and pension schemes d. Through additional indirect and direct taxation

Answer 80

The MaPS (Money and Pension Service) / MoneyHelper is funded by levies collected by the FCA and paid for by financial services firms and pensions schemes. The correct answer is: Via a levy on financial services firms and pension schemes

Question 81

Under current FCA rules when must an approved individual be fit and proper for their function? Select one: a. At the job application stage b. On acceptance of the approved position c. During their service with the authorised firm d. When accepted and during service with an authorised firm

Answer 81

The fit and proper rules state that an individual must be and remain fit and proper. This means this requirement applies both when first joining an authorised firm, or market but also during the period of service in its entirety. The correct answer is: When accepted and during service with an authorised firm

Question 82

John is reviewing some policies dated 1 April it is now 17 April, which ones can he still cancel? 1) OEIC investment 2) Term assurance 3) Whole of life assurance 4) Personal pension

Answer 82

Life products and all other types of pension have 30-day cancellation rights. Simpler business types such as investments and general insurance have 14 days. Of the options given 2, 3 and 4 will have a 30 days’ cancellation period. The correct answer is: 2,3,4

Question 83

If a firm becomes aware of a material breach of the Principles for Business by an adviser, who should report it to the FCA? Select one: a. The MLRO b. The Compliance Officer c. The adviser’s supervisor d. The firm’s CEO

Answer 83

The compliance officer must be informed if there is a material breach of the Principles for Business. They will then immediately report this breach to the FCA. The correct answer is: The Compliance Officer

Question 84

Better Finance has marketed its new investment bond through written financial promotions. These adverts contain small print and a non FCA font size. This advertisement is therefore… Select one: a. Compliant and ethical b. Non-compliant and ethical c. Compliant and non-ethical d. Non-ethical and non-compliant

Answer 84

This written financial promotion is both non-compliant and non-ethical. The use of small print is an ethical issue and the use of a non FCA approved font size is non-compliant. The correct answer is: Non-ethical and non-compliant

Question 85

Which of the following plays a major part in setting and reinforcing ethics within an authorised firm? Select one: a. Training & competence standards at all levels of the company b. The company’s ‘tone at the top’ by the board/senior management c. Ensuring a minimum number of controlled functions d. Regular reviews in conjunction with the FCA

Answer 85

The example set by senior management plays a major part in the ethical standards and behaviours within an authorised firm. The correct answer is: The company’s ‘tone at the top’ by the board/senior management

Question 86

Mark is a financial adviser in a firm of estate agents. His work-colleague, and ‘best mate’ George has been going through a divorce and has acquired a serious drinking habit, which is affecting his work. Mark has decided to do nothing for the time being – this will sort itself out eventually. Mark’s actions are… Select one: a. Ethical and compliant b. Non-ethical and compliant c. Ethical but non-compliant d. Non-ethical and non-compliant

Answer 86

Mark’s behaviour is unethical as he should not be turning a blind eye, even though this involves his friend. It is also non-compliant. The correct answer is: Non-ethical and non-compliant

Question 87

Which of the following types of product recommendation will require the adviser to present the customer with a full client agreement at the start of the advice process? Select one or more: a. Stakeholder pension b. Renewable term assurance c. With-profit investment bond d. Open ended investment company (OEIC) e. A written financial promotion

Answer 87

Client agreements are required with regulated products. Stakeholder pensions follow a simplified process where a full client agreement is not required. A written financial promotion is an advert where no advice is given therefore this is also not a requirement. The correct answers are: Renewable term assurance, With-profit investment bond, Open ended investment company (OEIC)

Question 88

You are handling a complaint against your firm. You have not been able to resolve this within the required 8-week period. What must you do? Select one or more: a. There is no requirement to do anything as the 8 weeks is only a guideline b. Write to the complainant explaining the company’s position so far c. Pass the complaint to the Financial Services Compensation Scheme d. Advise the complainant of their right to go to the Financial Ombudsman Service e. The complaint is automatically regarded as being upheld against the firm

Answer 88

When the 8-week period is reached, with no final firm response, several actions must be taken by the firm. These include sending a further holding response at 8 weeks, plus advising the client of their right at this point to take their case to the Financial Ombudsman Service. The correct answers are: Write to the complainant explaining the company’s position so far, Advise the complainant of their right to go to the Financial Ombudsman Service

Question 89

You advise your client to visit the Money and Pensions Advice (MaPS) / MoneyHelper website. What are its primary aims? Select one or more: a. To explain financial jargon b. Provide information on how to borrow wisely c. Provide access to discounted products d. Give basic financial advice e. Provide information on retirement planning

Answer 89

The Money and Pensions Service (MaPS) branded as MoneyHelper gives financial information simply and clearly. It does not give advice, it gives information. The correct answers are: To explain financial jargon, Provide information on how to borrow wisely, Provide information on retirement planning

Question 90

Which of the following customers could be classed as an eligible counterparty or professional client? Select one or more: a. An individual with £100,000 on deposit b. An insurance company based in Berlin c. A manufacturing company in Munich d. A central bank based in Brussels e. A UK based local authority

Answer 90

An individual is usually categorised as a retail client, regardless of how much money they have. The manufacturing company is likely to have little or no knowledge about the FS industry. All the others could fall into the eligible counterparty or professional client categories. The correct answers are: An insurance company based in Berlin, A central bank based in Brussels, A UK based local authority

Question 91

You have recently met a new client who has inherited a legacy of £125,000 and requires investment advice. You advise that part of the money should go into a single premium onshore life assurance bond investing in a with-profits fund. Prior to completing the application form, what documentation must the client receive? Select one or more: a. Information required by the Consolidated Life Directive b. A Consumer-Friendly Principles and Practices of Financial Management (CFPPFM) c. A key features document d. A cancellation notice e. A suitability report

Answer 91

This client should receive a CFPPFM booklet as they are investing into a with-profits fund. They also require a key features document. The cancellation notice and suitability report would follow post application completion. A is irrelevant. The correct answers are: A Consumer-Friendly Principles and Practices of Financial Management (CFPPFM), A key features document

Question 92

Which of the following products can be provided under the basic advice regime for stakeholder products? Select one or more: a. A low-cost regular contribution personal pension plan b. An offshore collective investment plan c. An easy access deposit account d. A collective investment fund held under a stocks and shares ISA e. A medium-term note providing a structured return over a set period

Answer 92

Stakeholder products include short term deposit based, medium term savings or endowment like products and long-term pensions. Offshore products and medium-term notes are not available as stakeholder is aimed at simple, low-earning clients. The correct answers are: A low-cost regular contribution personal pension plan, A collective investment fund held under a stocks and shares ISA

Question 93

John is interested in marketing his services online. To historically comply with the E-Commerce Directive which of the following was required? Select one or more: a. Clear information on the services provided b. A prompt acknowledgement that an order has been placed c. Easy identification and rectification procedure for customer mistakes d. Clear information on who regulates the firm e. All orders must be accepted within 5 business days

Answer 93

In relation to business completed online the provider must include information on the services provided, acknowledge orders placed, provide info on who regulates the firm and provide a simple process to rectify customer mistakes. Acknowledging orders does not mean all orders will be accepted. The correct answers are: Clear information on the services provided, A prompt acknowledgement that an order has been placed, Easy identification and rectification procedure for customer mistakes, Clear information on who regulates the firm

Question 94

To comply with the Data Protection Act 2018, which of the following rules must be satisfied? Select one or more: a. All data must be held securely b. The maximum length of time it can be held is 6 years c. The data can be transferred out of the UK if required d. The data must be accurate e. The data subject has a right to prevent processing for direct marketing purposes

Answer 94

A person’s data cannot be freely used for marketing purposes. It must remain within the UK and be held securely. Data requests can come with a charge as long as this is deemed ‘reasonable’. The ICO expects charging to be rare in practice. The correct answers are: All data must be held securely, The data must be accurate, The data subject has a right to prevent processing for direct marketing purposes

Question 95

You are meeting a new client, Rachel, following a referral from a local accountant. Under the status disclosure rules, you must provide the client with… Select one or more: a. Details of how the firm is paid b. The complaints procedure c. Details of the services that can be provided d. Details of the Financial Services Compensation Scheme e. Details of shareholders of the firm

Answer 95

A client through status disclosure must be provided with certain key information which includes the services offered, how a firm is paid, the complaints procedure plus details of the FSCS. The correct answers are: Details of how the firm is paid, The complaints procedure, Details of the services that can be provided, Details of the Financial Services Compensation Scheme

Question 96

Which of the following statements is true regarding execution-only business? Select one or more: a. The adviser must confirm the recommendation is affordable b. Money laundering checks may still have to be completed c. The adviser must check the product is appropriate d. The client has no right of complaint about the suitability of the product e. The suitability report is replaced by a recommendation summary

Answer 96

If a transaction is execution-only no advice is requested or given. So, this would not include affordability confirmation, how appropriate a product is, or the provision of a suitability report. The correct answers are: Money laundering checks may still have to be completed, The client has no right of complaint about the suitability of the product

Question 97

Ajay is reviewing his finances and discovers he has a motor insurance plan, home contents insurance and mortgage plan in force. In the event of a claim under the FSCS which of the following statements is correct? Select one or more: a. His motor insurance will be covered for 90% of the claim b. His motor insurance will be covered for 100% of the claim c. His contents insurance will be covered for 100% of the claim d. His contents insurance will be covered for 90% of the claim e. His mortgage plan will be covered for 90% of the claim capped at £85,000 f. His mortgage plan will be covered for 100% of the claim capped at £85,000

Answer 97

Motor insurance is compulsory, so 100% of the claim without limit is covered by the FSCS. Contents insurance is not compulsory, therefore compensation is capped at 90%. Mortgage plans are 100% protected, capped at £85,000. The correct answers are: His motor insurance will be covered for 100% of the claim , His contents insurance will be covered for 90% of the claim , His mortgage plan will be covered for 100% of the claim capped at £85,000

Question 98

Sunny is an experienced IFA with 25 years’ service and no complaints against him. This means that… Select one or more: a. He does not need to meet the Level 4 requirements and instead can be grand-fathered across. b. He can only charge fees for his services c. He must be VAT registered d. He must give the option of seeing another IFA e. He must consider the financial strength of a provider when recommending them to a client

Answer 98

All life, pensions and investments advisers now need to meet level 4 requirements in terms of appropriate qualifications, VAT registration depends on an adviser’s gross turnover. Sunny does not have to recommend another adviser. The correct answers are: He can only charge fees for his services, He must consider the financial strength of a provider when recommending them to a client

Question 99

Dave and Anna are 57 and 42 respectively. They have 3 children Paul 19, Eve 16 and Sam 14. With regard to adult ISAs which statements are true? Select one or more: a. They all can contribute to ISAs this tax year b. Anna and Eve can contribute to stocks and shares ISA c. Dave and Paul can contribute to a cash ISA d. As a family, they can contribute £80,000 e. Dave and Eve can contribute no more than £20,000 between them in total into ISAs

Answer 99

Regarding the adult ISA, the minimum age is 16, so only 4 of this family of 5 can contribute. Eve can contribute to a cash but not a stocks and shares ISA as she is under 18. The maximum ISA contributions, either to cash or stocks and shares for the current tax year is currently £20,000 per person The correct answers are: Dave and Paul can contribute to a cash ISA, As a family, they can contribute £80,000

Question 100

You are considering whether you fully understand the rules around Fair Treatment of Clients (FTC), as you know that this will be discussed at a training session for financial advisers tomorrow. Which of the following is correct? Select one or more: a. FTC emanates from Principle 6 of the FCA Principles for Businesses b. FTC only applies to IFAs and Whole of Market Advisers c. The FCA set a deadline for firms to clearly demonstrate how they are meeting the 6 outcomes of December 2008 d. FTC is in line with the FCAs principles-based regulation e. FTC should flow from “tone at the top” practice on behalf of leaders within a firm

Answer 100

FTC applies to all 3 adviser types therefore option B is the only incorrect statement here. FTC emanates from Principle 1: Integrity so is therefore principles based. The Fair Treatment of Customers had a deadline, December 2008. Senior managers are expected to lead by example, so ‘tone at the top’. The correct answers are: FTC emanates from Principle 6 of the FCA Principles for Businesses, The FCA set a deadline for firms to clearly demonstrate how they are meeting the 6 outcomes of December 2008, FTC is in line with the FCAs principles-based regulation, FTC should flow from “tone at the top” practice on behalf of leaders within a firm