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CeMAP 1 > MOCK EXAM 6 > Flashcards

MOCK EXAM 6 Flashcards

1
Q

Under the ‘know your customer’ rules, why does an adviser need to establish a risk profile?

A. In order to match appropriate insurance solutions

B. In order to match appropriate investment solutions

C. To identify affordability

D. To establish premium sustainability levels

A

B. In order to match appropriate investment solutions

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2
Q

If a member of an Occupational Pension Scheme has an unresolved complaint after exhausting both the trustee and TPAS procedures, what period of time do they usually have to refer the matter to the Pensions Ombudsman?

A. Three months
B. six months
C. Three years
D. one year

A

C. Three years

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3
Q

Before an employee carries out duties that fall under the FCAs regulatory responsibility he should:

A. have successfully completed his probation period.

B. have completed the required number of hours continuing professional development.

C. be assessed as competent to undertake the role without supervision.

D. be assessed on technical knowledge and its application.

A

C. be assessed as competent to undertake the role without supervision.

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4
Q

Employees should receive regular training about what is expected of them under money laundering rules so that they:

A. are aware of the consequences to themselves if they fail to comply.

B. can complete the Money Laundering Report.

C. can assess their firm’s compliance with the sourcebook.

D. can caution as appropriate any suspect individuals.

A

A. are aware of the consequences to themselves if they fail to comply.

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5
Q

The Shire Building Society employs Joe. He has complained about treatment he has received as a member of the society’s Occupational Pension Scheme. He is dissatisfied with the response he has received from the scheme’s trustees. Who should he now contact?

A. The Pensions Advisory Service
B. The Pensions Ombudsman
C. The Financial Services Authority
D. The Financial Services Ombudsman

A

A. The Pensions Advisory Service

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6
Q

Ben suffers a loss of £32,000 due to the insolvency of an authorised investment firm. What is the maximum amount that may be claimed from the Financial Services Compensation Scheme?

A. £28,800
B. £29,000
C. £32,000
D. £30,000

A

C. £32,000

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7
Q

The Financial Conduct Authority insists that customer records must be kept for a specific period. For how long do customer records in relation to a mortgage contract have to be kept for?

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

A

B. 3 years

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8
Q

Under what circumstances if any is a firm of IFAs permitted to select products from a panel of product providers?

A. Never

B. For any type of product provided that it is sufficiently broad and is reviewed regularly

C. for investment based products only

D. provided that the same panel is used for all their customers

A

B. For any type of product provided that it is sufficiently broad and is reviewed regularly

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9
Q

Jack has a complaint about a motor insurance policy he has bought recently. The company has not resolved his complaint to his satisfaction. Who should he now turn to for help?

A. The ABI
B. General Insurance Standards Council
C. Financial Ombudsman Service
D. The Office of Fair Trading

A

C. Financial Ombudsman Service

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10
Q

Which regulatory body now supervises the rules and regulations in relation to consumer credit?

A. Financial Conduct Authority
B. Competition and Markets Authority
C. Department for Work & Pensions
D. Bank of England

A

A. Financial Conduct Authority

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11
Q

Training and competence records for all individuals must be retained for a specified period after they have left the firm. This period is:

A. 3 years
B. 5 years
C. 7 years
D. 10 years

A

A. 3 years

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12
Q

The rules on operational risk require financial institutions to use a multiple of their averaged gross income. This multiple is:

A. 1.0
B. 0.50
C. 0.15
D. 0.25

A

C. 0.15

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13
Q

The supervisor ceases to be fully accountable for advice given by the adviser when the adviser:

A. is qualified to CeFA 3 level
B. has started seeing clients unaccompanied
C. is deemed competent
D. has achieved supervisory status

A

C. is deemed competent

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14
Q

Which of the following group of company employees would NOT be subject to detailed rules of training and competence under the FCA’s Conduct of Business rules?

A. Directors
B. Back office supervisors
C. Investment managers
D. Sellers of stakeholder pensions

A

A. Directors

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15
Q

The 2nd key Principle of Business as defined by the FCA is that firms must act with skill care and:

A. control
B. integrity
C. diligence
D. honesty

A

C. diligence

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16
Q

In a newspaper advert for a personal loan a financial service provider must satisfy certain rules which are set by which regulatory body?

A. The Citizens Advice Bureau

B. Consumer Credit Service

C. The Lending Code Standards

D. Board British Bankers Association

A

C. The Lending Code Standards

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17
Q

The FCA’s supervision model is based on three pillars which are:

A. ARROW visits, skilled persons reports, risk assessments

B. proactive issues, reactive issues, issues and products

C. firm systematic framework, event driven work, ARROW

D. skilled persons reports, supervisor visits, risk assessments

A

B. proactive issues, reactive issues, issues and products

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18
Q

Tina supervises trainee advisers but is not in a position of significant influence. Which principle SPECIFICALLY applies to her role?

A. She must ensure that the business of her firm is organised effectively

B. She must exercise diligence in managing the business

C. She must observe proper standards of market conduct

D. She must take steps to ensure the business complies with the regulatory system

A

C. She must observe proper standards of market conduct

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19
Q

Which one of the following BEST describes the reason why the Financial Services and Markets Act 2000 was introduced?

A. The existing regulatory structure was too fragmented

B. It was necessary to make the Treasury the main authorising body

C. The existing regulatory structure was too bureaucratic

D. It was necessary to make the Home Office the main authorising body

A

A. The existing regulatory structure was too fragmented

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20
Q

Supervision of which sector of financial services was taken over by the Financial Services Authority in January 2005 and now falls under FCA regulation?

A. Mortgage lending
B. General Insurance
C. Life Assurance
D. Banking

A

B. General Insurance

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21
Q

The Financial Conduct Authority intends to secure an appropriate level of investor protection for consumers. Selecting an ‘appropriate level’ would NOT depend on the different:

A. experience of consumers
B. levels of risk relating to different investments
C. expertise of consumers
D. levels of customer loyalty to investment companies

A

D. levels of customer loyalty to investment companies

22
Q

Which one of the following statements in relation to the Financial Conduct Authority (FCA), is CORRECT?

A. The FCA is owned by the Government

B. The Chancellor of the Exchequer is the chairman of the FCA

C. The FCA oversees and regulates the industry on behalf of the Government

D. The FCA is responsible to the Department of Trade and Industry

A

C. The FCA oversees and regulates the industry on behalf of the Government

23
Q

Individuals who are allowed to carry out ‘controlled functions’ in relation to a firm’s regulated activities are known as:

A. authorised persons
B. approved persons
C. appointed persons
D. appropriate persons

A

B. approved persons

24
Q

Which one of the following FCA Sourcebooks provides the standards for the sale of mortgage products?

A. Market Conduct Sourcebook
B. Specialist Sourcebook
C. Interim Prudential Sourcebook
D. Mortgage Conduct of Business

A

D. Mortgage Conduct of Business

25
Q

In judging the FCAs performance, as part of its operational objectives, it must be seen to be:

A. facilitating competition
B. reducing innovation
C. maintaining costs
D. increasing regulation

A

A. facilitating competition

26
Q

Which one of the following job applicants is LEAST likely to meet the FCA ‘fit and proper’ requirements?

A. Gail, who has recently been made redundant from a firm of IFAs

B. Alison, who had a default notice issued in respect of a personal loan

C. Josie, whose father’s house was repossessed three years ago

D. Irene, who currently has an authorised overdraft limit of £2,000

A

B. Alison, who had a default notice issued in respect of a personal loan

27
Q

A firm of solicitors who sell investments on behalf of trustees and receive commission from the product provider, will be regulated by:

A. themselves
B. their Designated Professional Bodies
C. the Treasury
D. the Financial Conduct Authority

A

D. the Financial Conduct Authority

28
Q

One function of the terms of the client agreement is to explain:

A. the individual contracts that the adviser is licensed to sell

B. the area from where a potential client can obtain advice

C. the Financial Services & Markets Act

D. how the adviser is to be remunerated.

A

D. how the adviser is to be remunerated.

29
Q

Freda is reviewing a mortgage illustration before making a purchase. The illustration will have to:

A. indicate how the product charges compare to other providers

B. indicate the need for life cover

C. disclose all the fees associated with the mortgage

D. explain the impact of the charges on the mortgage rate

A

C. disclose all the fees associated with the mortgage

30
Q

Under the new rules, what is the term for those investment advisers giving advice on the products and services of the full range of product providers?

A. Appointed agents
B. Company representatives
C. Independent advisers
D. Tied agents

A

C. Independent advisers

31
Q

Which one of the following documents must be given to a client before giving advice on packaged products?

A. The Key Facts Document

B. The Menu

C. The FCA services and costs disclosure document or the firm’s own disclosure documentation that they have decided to use

D. The Initial Disclosure Document is the only option

A

C. The FCA services and costs disclosure document or the firm’s own disclosure documentation that they have decided to use

32
Q

When recommending a product to a client, the suitability of advice rules require the independent adviser to always abide by the fundamental principle of:

A. observing the client’s best interests

B. observing that the client knows best

C. offering the most cost effective product

D. offering the top performing product

A

A. observing the client’s best interests

33
Q

Giles has advised Malcolm regarding setting up his free standing AVC plan. Under the ‘know your customer’ rules, for how long minimum must he keep Malcolm’s fact find details?

A. Six years
B. Indefinitely
C. Ten years
D. Three years

A

B. Indefinitely

34
Q

Janice has cancelled an investment plan within the cancellation period but unfortunately has received back less than she invested. Why is this?

A. A withdrawal charge has been applied to her plan

B. She invested a lump sum into a unit-linked plan

C. A surrender charge has been applied to her plan

D. She invested a regular premium into a unit-linked plan

A

B. She invested a lump sum into a unit-linked plan

35
Q

Which of the following is an independent financial adviser NOT obliged to offer?

A. disclosure of fees
B. products from every provider
C. Disclosure of status
D. disclosure of the name of the regulator

A

B. products from every provider

36
Q

If a client intends purchasing an investment product from an intermediary on an execution only basis, then:

A. no recommendation will be required
B. no commission will be payable
C. know your customer rules will still apply
D. best execution rules will not apply

A

A. no recommendation will be required

37
Q

Which of these mortgage advisers is required to issue an initial disclosure document on a mandatory basis?

A. Whole of market adviser

B. Multi tied adviser

C. There is no requirement to use an initial disclosure document, it is up to the firm to decide how to implement their disclosure requirements

D. Tied adviser

A

C. There is no requirement to use an initial disclosure document, it is up to the firm to decide how to implement their disclosure requirements

38
Q

A customer who does not agree with the adviser’s definition of priorities should:

A. terminate the call
B. re-appoint to a second meeting
C. ask to see a supervisor
D. propose their own priorities

A

D. propose their own priorities

39
Q

John, a mortgage adviser, has NOT yet issued a suitability letter and the mortgage is about to complete. This is permitted because:

A. suitability letters need to be issued for commercial mortgages only

B. there is no FCA requirement for the issuing of mortgage suitability letters

C. suitability letters need only be issued on buy-to-let mortgages

D. it is only necessary for a mortgage suitability letter to be issued after completion

A

B. there is no FCA requirement for the issuing of mortgage suitability letters

40
Q

The key benefit of having a client agreement in place for an adviser is?

A. All types of transaction are permitted

B. The right for the customer to make a complaint is waived

C. The adviser may have the ability to make decisions about investments

D. The provider’s duty of care is reduced

A

C. The adviser may have the ability to make decisions about investments

41
Q

Paula is employed by the Fenwick Building Society. She wants to make a complaint about the treatment she has received as a member of the society’s final salary pension scheme. To whom should she first refer her complaint if she is unable to gain satisfaction from the scheme’s trustees?

A. The FSA
B. The Pensions Ombudsman
C. The Pensions Regulator
D. The Pensions Advisory Service

A

D. The Pensions Advisory Service

42
Q

The sale of which product would NOT be covered by MCOB rules?

A. Buy to let mortgages as a commercial enterprise
B. A further advance for home improvements
C. A lifetime mortgage
D. A first time buyer mortgage on a first charge

A

A. Buy to let mortgages as a commercial enterprise

43
Q

Cold calling to a prospective customer would not be allowed for which one of the following products?

A. Stakeholder pension
B. An offset mortgage product
C. With-profit endowment
D. Term assurance

A

B. An offset mortgage product

44
Q

Which one of the following is NOT typically included in a services and costs disclosure document (SCDD) issued by an adviser?

A. A statement that the firm is authorized and the name of the regulator

B. Details of the qualifications held by each of the firm’s advisers

C. Details of whether the adviser offers independent or restricted advice

D. Details of the charging structure

A

B. Details of the qualifications held by each of the firm’s advisers

45
Q

For mortgage sales, which of the following pieces of information is not required as part of the initial disclosures?

A. Fees associated with the service
B. Arrears arrangements
C. Complaints and compensation issues
D. The providers of mortgages under discussion

A

B. Arrears arrangements

46
Q

Which one of the following statements is FALSE in relation to regulatory risk assessment?

A. The risk assessment will be made public

B. The size of the firm will have no impact on the risk assessment

C. A firm’s compliance culture will impact on its assessment

D. Firms with higher risk ratings will receive more frequent visits

A

A. The risk assessment will be made public

47
Q

What, if any, is the defined MINIMUM number of Continuing Professional Development hours required for a retail investment adviser?

A. 35
B. 30
C. 40
D. 50

A

A. 35

48
Q

Which one of the following is least likely to be a FCA regulated mortgage?

A. Further Advance
B. Home Income Plan
C. Semi Commercial Loan
D. A mortgage taken by a limited company

A

D. A mortgage taken by a limited company

49
Q

In the event of insolvency, what is the MAXIMUM claim normally allowable from the Financial Services Compensation Scheme for loss of deposited funds from a single bank?

A. 100% of the first £85,000

B. 100% of the first £24,000 + 90% of the next £24,000

C. 100% of the first £48,000

D. 100% of the first £50,000

A

A. 100% of the first £85,000

50
Q

Under what circumstances if any are a firm of IFAs permitted to select products from a panel of product providers?

A. None
B. for any type of product
C. for investment-based products only
D. for risk benefit products only

A

B. for any type of product

CeMAP 1 (25 decks)

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