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CeMAP 1 > MOCK EXAM 5 > Flashcards

MOCK EXAM 5 Flashcards

1
Q

The Financial Action Task Force (FATF) specifically transfers law enforcement activities to:

A. money laundering officials
B. The Financial Conduct Authority
C. The Crown Prosecution Service
D. The National Crime Agency

A

D. The National Crime Agency

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2
Q

For at least how long MUST customer records concerning stakeholder pension scheme members be retained by a life office?

A. 3 years
B. 5 years
C. 10 years
D. Indefinitely

A

B. 5 years

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3
Q

A customer ended his relationship with a lender 2 years and 6 months ago. For a minimum of how many more months should the evidence of identification be retained by the lender?

A. 6 months
B. 30 months
C. 18 months
D. 42 months

A

B. 30 months

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4
Q

Jeremy and Sandra have an interest only mortgage and have received written advice to check the performance of their repayment vehicle. Under the MCOB rules, this has most likely to have been issued by:

A. the FCA
B. the lender
C. the adviser
D. the investment product provider

A

B. the lender

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5
Q

In terms of ‘knowing your customer’, what is a professional customer?

A. Where a firm acts on behalf of a private customer with some knowledge of the industry

B. A private customer

C. Where a customer is in the financial services business

D. A corporate customer

A

A. Where a firm acts on behalf of a private customer with some knowledge of the industry

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6
Q

Hayley works for Complete Investments plc, where she offers investment advice for a MiFID firm. When is the earliest date that Complete Insurance is permitted to destroy fact find information?

A. After 5 years
B. must be kept indefinitely
C. 3 years
D. 6 years

A

A. After 5 years

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7
Q

Tom is applying to be the new Chief Executive Officer in an authorised firm that is solely FCA regulated. Which of these statements is true?

A. There are no formal rules in relation to this issue

B. He must be individually vetted by the Bank of England

C. The firm are able to declare Tom to be a fit and proper person

D. He must be individually vetted by the FCA

A

D. He must be individually vetted by the FCA

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8
Q

Which of the following is most likely to be in evidence, for insider dealing to take place?

A. Transmission of information
B. A significant degree of trading
C. A person being in a position of trust
D. A person having access to restricted information

A

D. A person having access to restricted information

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9
Q

When MUST the client agreement be provided by an investment adviser?

A. Before introducing the fact find
B. As soon as regulated business is transacted
C. Within 14 days of the first meeting
D. As soon as the client requests it

A

A. Before introducing the fact find

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10
Q

Which document is sent to a client advising them of their right to change their mind?

A. Acceptance letter
B. Surrender Notice
C. Terms of Business Letter
D. Cancellation Notice

A

D. Cancellation Notice

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11
Q

Since April 2014, who is responsible for considering any complaint brought about because of potential breaches of the rules in relation to consumer credit contracts ?

A. The Bank of England
B. Prudential Regulatory Authority
C. Financial Conduct Authority
D. Financial Services Compensation Scheme

A

C. Financial Conduct Authority

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12
Q

Mortgage Advice Ltd have found that their primary method of obtaining new business is not permitted under FCA rules. This means that they must have been using which of the following methods?

A. Mortgage Introducers
B. TV advertising
C. Cold calling
D. Radio advertisers

A

C. Cold calling

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13
Q

The purpose of the fact find is to:

A. enable the client to avoid disclosing personal information

B. allow the adviser to formulate a binding agreement with the client

C. give a complete picture of the client’s personal and financial circumstances

D. ensure that an adviser sells a product to the client

A

C. give a complete picture of the client’s personal and financial circumstances

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14
Q

What is the latest date, if any, that a mortgage suitability letter can be sent to a customer?

A. Five days after the initial interview
B. Five days after the final interview
C. Five days after the end of the cooling-off period
D. There is no requirement for suitability letters for mortgages

A

D. There is no requirement for suitability letters for mortgages

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15
Q

Which one of the following is an example of a type of real time financial promotion?

A. A personal visit
B. A radio appearance
C. An email
D. A website

A

A. A personal visit

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16
Q

Which one of the following accurately relates to the advice that MUST be given by independent intermediaries?

A. The cheapest product from the host employer

B. The cheapest product from any provider

C. A suitable product from an appropriate provider

D. A suitable product from the host employer

A

C. A suitable product from an appropriate provider

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17
Q

Which one of the following is NOT a tool open to the FCA in setting and enforcing standards for organisations and individuals?

A. Discipline
B. Compensation
C. Injunctions and prosecutions
D. Supervision and investigation of firms

A

B. Compensation

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18
Q

When setting up a buildings insurance policy, the adviser is operating to rules issued by the:

A. OFT
B. FCA
C. GISC
D. ABI

A

B. FCA

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19
Q

In order to satisfy the Capital Requirements Directive, an investment firm that does not deal on its own account but is allowed to hold client money, must have minimum capital of:

A. £ 125,000
B. € 125,000
C. € 730,000
D. £ 730,000

A

B. € 125,000

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20
Q

Jack has just received a final response letter from his insurance provider. What significance does it have?

A. Jack will now have to take legal action to obtain redress

B. Jack can now take the complaint to the Financial Ombudsman Service

C. The Financial Ombudsman Service has found Jack’s complaint frivolous

D. Jack will have to pay to progress the complaint further

A

B. Jack can now take the complaint to the Financial Ombudsman Service

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21
Q

The Financial Conduct Authority has identified three operational objectives as part of its role as the new regulator. Which of these is not an operational objective?

A. Protect Customers

B. Enhance the integrity of UK financial system

C. Reduce financial crime

D. Maintain effective competition to benefit consumers

A

C. Reduce financial crime

22
Q

For how many years after an employee has left a firm, minimum, must training and competence records be kept?

A. 3
B. 4
C. 5
D. 6

A

A. 3

23
Q

During 2019, an individual sustained a loss of £38,000 following the insolvency of an authorised investment firm. What is his MAXIMUM claim under the Financial Services Compensation Scheme?

A. £33,170.00
B. £38,000.00
C. £30,000.00
D. £34,500.00

A

B. £38,000.00

24
Q

Which one of following is true in respect of a firm’s responsibilities under the money laundering regulations? A firm must:

A. report suspicious circumstances

B. maintain client confidentiality at all times

C. appoint its Money Laundering Reporting Officer at director or partner level

D. deny access to appropriate services to anybody unable to provide detailed evidence of identity

A

A. report suspicious circumstances

25
Q

Which of the following is not a senior management function requiring FCA approval?

A. Complaints manager
B. Money Laundering Reporting Officer
C. Head of Compliance
D. Chief Executive Officer

A

A. Complaints manager

26
Q

What is the minimum period for which records in respect of pension transfers must be kept?

A. 3 years
B. 6 years
C. 10 years
D. Indefinitely

A

D. Indefinitely

27
Q

A mortgage lender has to write to a borrower who is in arrears within how many days of becoming aware of the missed payment?

A. 15 working days
B. 7 working days
C. 10 working days
D. 21 working days

A

A. 15 working days

28
Q

Investment business is being transacted by an independent financial adviser with a client. In these circumstances who is responsible for presenting a key features document to the client?

A. Adviser
B. Product provider
C. The FCA
D. Adviser’s manager

A

A. Adviser

29
Q

The Financial Conduct Authority exists to:

A. govern organisations that manage investments on behalf of other people

B. set and monitor adherence to rules for the regulation of banking and investment business

C. regulate the marketing and sale of all life assurance products

D. oversee the administration of all types of investment business

A

B. set and monitor adherence to rules for the regulation of banking and investment business

30
Q

The FCA Handbook contains a section called the Specialist Sourcebook. Which one of the following would need to refer to this section?

A. A building society
B. A firm of solicitors
C. A stockbroker
D. An authorised insurance seller

A

B. A firm of solicitors

31
Q

Regulations require that advice given to a customer by a financial adviser MUST be in the best interests of the customer, based on the customer’s particular circumstances. Since December 2001, this has been commonly referred to as:

A. A suitable advice
B. execution only
C. best advice
D. fit and proper advice

A

A. A suitable advice

32
Q

An independent financial adviser must select both a suitable product and its provider. Which one of the following matters does NOT need to be considered in selecting the provider?

A. The adviser’s fee
B. The standard of service offered to clients
C. The cost of the product
D. The product’s performance to date

A

A. The adviser’s fee

33
Q

A customer cancels a £120,000 unit linked single premium investment bond within the cooling-off period. However, during this period, the stock market fell sharply. Consequently, so did the value of the bond. What is the customer likely to receive?

A. £120,000 less a market adjustment, if specified in the terms and conditions

B. £120,000 less a market adjustment, whether or not specified in the contract

C. 95% of the surrender value of the investment bond

D. The paid up value of the investment bond

A

A. £120,000 less a market adjustment, if specified in the terms and conditions

34
Q

What does an ‘execution only’ transaction require an adviser to do?

A. To provide advice that will inform the customer’s choice

B. To make a range of recommendations for the customer

C. To carry out the instructions given by the client

D. To effect the transaction on behalf of a market counterparty

A

C. To carry out the instructions given by the client

35
Q

Why might money laundering regulations create ‘financial exclusion’?

A. Because not everyone can provide the necessary identification

B. Because certain non-residents cannot be offered banking facilities

C. Because financial organisations are wary of opening bank accounts with cash deposits

D. Because customers want to know why they have been declined a financial product

A

A. Because not everyone can provide the necessary identification

36
Q

Mortgage advisers are permitted to operate in one of three categories. Which one of the following is the exception?

A. Whole of market advisers
B. Tied advisers
C. Multi tied advisers
D. Multi market advisers

A

D. Multi market advisers

37
Q

Regulations established under the Financial Services and Markets Act 2000 require firms to make a commitment to try to resolve complaints within:

A. 3 working days
B. one month
C. 8 weeks
D. 3 months

A

C. 8 weeks

38
Q

During 2019, a customer’s £5,000 deposit account was lost when a bank collapsed. How much could he claim from the Financial Services Compensation Scheme?

A. £4,700.00
B. £5,000.00
C. £4,500.00
D. £3,800.00

A

B. £5,000.00

39
Q

If a customer decides that they want to cancel their general insurance contract within the cooling off period, they must do so within:

A. 7 days
B. 14 days
C. 28 days
D. 30 days

A

B. 14 days

40
Q

The frequency of compliance visits by the FCA to a firm depends on a number of factors. Which of these would least likely be taken into account?

A. The size of the firm, measured by the number of customers

B. The regulator’s risk assessment of the firm

C. The firms risk classification as determined by the regulator

D. The types of product offered

A

D. The types of product offered

41
Q

In relation to the General Data Protection Regulations (GDPR), which one of the following is INCORRECT?

A. It requires anyone holding computerised data on individuals to be registered

B. It gives individuals the right of access to data relating to them

C. It applies only to records held on computer

D. The Information Commissioner has the power to prosecute Data Controllers

A

C. It applies only to records held on computer

42
Q

Pension deductions from employees must be paid to the pension scheme by which date in the month following deduction?

A. 1st
B. 6th
C. 19th
D. 25th

A

C. 19th

43
Q

Which regulator regulates the financial stability of deposit taking and related activities?

A. The Bank of England
B. The Office of Fair Trading
C. Prudential Regulatory Authority
D. The Financial Services Authority

A

C. Prudential Regulatory Authority

44
Q

Ivor deliberately leaked an incorrect story that his bank were sustaining significant losses due to credit problems and then made a profit through dealing. This is an example of:

A. professional malpractice
B. money laundering
C. insider dealing
D. market manipulation

A

D. market manipulation

45
Q

Which one of the following organisations’ responsibilities were taken over by the regulator with effect from 31st October 2004?

A. The Council of Mortgage Lenders
B. The Insurance Directorate of the Treasury
C. The Mortgage Code Compliance Board
D. The Friendly Societies Commission

A

C. The Mortgage Code Compliance Board

46
Q

What do financial services firms need before they can carry out regulated activities?

A. Authorisation
B. Approval
C. Permission
D. Sanction

A

C. Permission

47
Q

Which one of the following is NOT covered by the Financial Conduct Authority’s Principles for Business?

A. A firm’s relations with its regulators
B. The protection of customers’ assets
C. Guidelines on training
D. Maintenance of adequate financial resources

A

C. Guidelines on training

48
Q

Which one of the following contained within the FCA Handbook is binding on authorised firms?

A. Rules
B. Guidance
C. Standards
D. Procedures

A

A. Rules

49
Q

Under the ‘know your customer requirements’, advisers should:

A. assume that a private customer fully understands the risks involved.

B. explain the reasons for the recommendation to an execution-only client.

C. provide the highest level of advice and duty of care to clients categorised as retail customers.

D. offer exactly the same duty of care and advice to all customers.

A

C. provide the highest level of advice and duty of care to clients categorised as retail customers.

50
Q

Under the new rules, independent financial advisers:

A. can only sell products from one company
B. must be licensed by the company whose products they sell
C. can advise on products across the entire market
D. can only refer business to tied agents

A

C. can advise on products across the entire market

CeMAP 1 (25 decks)

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