Mock Exams Flashcards
Compliance officer concern if have loads defaulted
principle of financial soundness
House in joint tenants
house goes to spouse
condition of being a trustee
individual must be sane
controls enduring power of attorney
court of protection
Record keeping
record of pension transfer indef and records of pension opt-outs indef
Most important secondary legislation
RAO
Companies that do not meet listings req for london stock exchange
the alternative investment market
Money Laundering req evidence of identity
transfer of pension and sale of stakeholder pension plan both with premiums
Emergency funds
Between 3-6 months salary
Ltd gone into administration support from Financial compensation scheme
executors of deceased receive compensation and info req before compensation approved
PIPSI
Protection, Income Protection, Pensions, Savings, Investments
Levels FA can provide
possible to transact business on insistent customer and execution only not covered by FOS
Regulates sale of lifetime mortgages
FCA
Investment Bond
Single premium non-qualifying plan
Min standards firm satisfy order to retain authorisation
threshold conditions
investors buy previously issued equities from other investors
the secondary market
Invest money for 3 years, most reliably achieve return for him
deposits
breach FCA
enforcement division
following block 9 guide relevant to all firms
FC
FA with misappropriate client funds
sack and report matter to FCA
SL req
anything other than top ups
FCA and key cultural drivers
believes these drivers have an influence on behaviours of management and staff and so impact customer outcomes
Pension regular max fine
£5,000
Pension plan without establishing suitability of product
violate know your customer
Finanial stability board
International
Primary economic tool in UK
Interest rates
mental capacity act 2005 became effective
October 1 2007
period of reflection cooling off period begins
when terms and conditions are received
referred complaint to FOS
case handling fee levied by FOS charged to the respondent, compensation award binding
FCA authorisation
anyone that is not appointed and then advising
FOS Awards
award on costs on top of any max compensation amount and can take to court
Purpose of with profit funds
provide smoothed investment return for investors
qualify for endowment policy
at least 75% of premiums payable over the term
objects decision of FCA can appeal to
upper tribunal tax and chancery chamber
financial difficulty
debt management plan
FCA regulations on money laundering found
senior management arrangements systems and controls sourcebook
bankrupt end
after 1 year
six outcomes of treating customers fairly TCF
evidence from MI and press, adequate training
miffed firm keep approvals for mortgages
5 years
lasting power of attorney can cover financial and welfare
need two separate copies
is a living will legally binding in england
No
dividend yield usually lead to a share being described as an income share
4%
contract terms must be
in plain and intelligible language
FCA high level of standards PRIN
Principled for business
ensure suitability of advice falls under FCA Principle
customers relationship of trust
debt management plans licensed under
Consumer credit act
can trustee be beneficiary under trust
yes
Advantage of renewable rate critical illness
premiums likely to start lower
Portfolio of gilts, holds until maturity
her gain with be tax free
specialist qualification over and above standard level 4
pension transfer specialist
benchmark for mortgage payment protection insurance
no more than 60 days
data protection - sensitive data
any personal info
successful application for trading as IFA
Successful receive scope of permission notice and fit and proper
child benefit
tax pay on the element applicable to the first child by 20% on the balance
ethics
tell me and show me to prove to me
application form completion
the client
deliberately misleading or attempting too falls under conduct rule
integrity
main benefit of management information firm
allow issues to be identified and rectified
assessing client needs - steps
IDQP
identification discussion quantification prioritisation
full compliance of FCA principles for business
is evidence of but not enough to prove threshold condition 5 is met
context of regulation what does general prohibition mean
no-one may carry on regulated activity wtihout being authorised or exempt
whom a lasting power of attorney registered
the public guardian
ethics principles
11
dividend allowance £2000 - basic tax payers pay 7.5% on dividends and higher rate taxpayer 32.5%
7.5% on extra dividends
life insurance policy in contract law the application form represents
offer
controls interest rates
bank of england
online business
FCA E Commerce directives
a rule to cover every potential situation is
neither desirable nor achievable
medium term investments
5-15 years
FCA receive funding from
the financial services industry
which not a uk government method of influencing the economy
interest rates
consumer credit act of 1974 covers credit to
£25K
low cost endowment
aim to but does not guarantee to repay the mortgage at the end of the term
max FOS award
350,000
example of good implementation of customer fair treatment
taking legal action against a former member of staff who has tampered with records
product categories in the ICOBS handbook
3
exempt from consumer credit act 1974
building societies
min percentage a property must be used for residential purposes for mortgage to fit the MCOB definition
40%
leasehold who owns property land building stands
The landlord
ethical approach to taking over clients
work through them starting from those that would benefit from a review
financial intermediary firm can hold money
in a separate client bank account
commonhold who owns the land
the commonhold association
conflict between FCA rule and principles
the principles will always take precedence
who get most protection under FCA COBS rules
retail clients
off the page gov approved financial services
a multi distribution organisation
order to act as an attorney under lasting power of attorney an individual must be
overr 18 and solvent
operating as a mortgage adviser
whole market, multi tied or single tied
How many directors must a plc have as a min
2
protecting from loss arising from financial transaction
use derivatives
pay fees in installments
this is possible
home reversion plan scheme
regulated ny FCA
Provision of wills and executorship by banks is regarded as
core service
max period reflection cooling off period for stakeholder pension
30 days
ultimate responsibility of ensuring liquidity as the lender of last resort
the bank of england
life office free asset ratio
surplus assets over liabilities
not pay on critical illness
loss of a limb
cancellation notice when SL issued
no later than the cancellation notice
deal with the estate of a deceased person left no will
their administrators
regulated home finance advise regulated rules
MCOB
Tracker fund
the investor is lie to benefit from dividends
identify FCA as regulator
authorised and regulated by the financial conduct authority
consumer credit is regulated by
FCA
Investor buy previously issued equities from other investors
the secondary market
ultimate standard of demonstrating ethical practice
show me
enduring power of attorney can brother make decisions on health care provision
no
employment and support allowance eta split into
2 phases
definition FCA use to define honesty integrity and reputation
no formal definition
body responsible for co-ord interest rates EU
european central bank
EU member state compelled to introduce an element of european law via parliament
a directive
lifetime mortgage
a generic term for equity release products
pension provider keep copy fo approvals
5 years
ensure suitability of its advice falls under FCA Principle
customers relationship of trust
dying without a will
intestate
mortgage where monthly repayment fall everytime pound rises
a foreign currency mortgage
controlled function
must be individually approved
cancellation notice SL issused
no later than the cancellation notice
deferred period in relation to income protection insurance
the period at start of an illness before the benefit becomes payable
highest interest rates
90 day deposit account
communication by telephone not one of the regulators requirements
the produce that will be recommended must be described
under financial compensation scheme max limit on compensation for non compulsory insurance
90% of vaild claims with no max
timing of interest had impact on the return the standardised measure is
AER
Firm have systems and controls
appropriate to its business
FA investigated by FCA
should be notified in all but limited circumstances
not be a trustee
16 year old
EU brought in new legislation that now applies immediate
Regulation
fund holds fixed interest securities with rating lower than BBB
Junk
Job tackling global money laudering
financial action task force
body to confiscate assets fo criminals
NCA
Process of capitalising debt
constitutes an increase in mortgage debt and requires disclosure
covered in terms for consumer credit act 2006
an unincorporated association
lasting power of attorney includes decisions about welfare
and to consent to or refuse medical treatment
dividend
share in the profit of a company
rules around data protection
any relevant filing system subject to protections and anyone obtain of data
bankruptcy order made
the official receiver takes control of the debtors property
ethical problem in firm can be solved by
dilemma resolution
purpose of critical illness
provide lump sum when insured suffers serious illness
rules arounds liquidity in IFPRU7 require firm to
be self sufficient and maintain adequate liquid resource
qualifying endowment policy level of life cover
at least 75% of the premiums payable over term
Endowment life cover
Broadly speaking, in order to be a qualifying policy, an endowment must provide a minimum life insurance benefit of 75% of the premiums payable over the term. This can be reduced for individuals over 55 years of age. In exchange for following these rules, qualifying policies receive beneficial tax treatment.
savings are protected and channelled into
capital management
trading floor
on-exchange financial market
discretionary portfolio
does not have the time or expertise
equity release is for borrowers
already own property and wish to release money for variety of reasons by way of mortgage or remortgage
Ijara scheme
will not own any portion of the property until end of agreement
IHT comes in at 325,000 own-life whole of life policy increasing cover written in trust
for daughter and typically 6-10 times amount to protect
Limited liability partnership
cannot pursue individual for partnerships debts except where personal guarantee
contract insurance issue letter of acceptance
known as counter offer
joint tenancy ownership
survivor gets property
bankruptcy order
prove inability to pay
leave investments to grandchildren
discretionary trust
income in possession trust
wife enjoyed income from trust and then pass onto two children
FCA enforcement powers to meet objectives
eight regulatory principles
pillar 1 requirements of capital req directives
insufficient capital to meet current credit market and operational risks
bank activity regulated by
prudential regulation authority PRA
Regulating activities of london stock exchange
FCA financial conduct authority
Part 4a permission provided by
PRA
Advantage of share price performance
manipulating transactions
routine supervision FCA
named individual supervisor
FCA considers financial resources and
systems and controls, governance arrangements and risk management capability
disclose regulatory status
on email footer and declare same on business cards
re-authorising firm have to pay application fee
50% or new applicant
Subject to an investigation and hasn’t been notified
carrying on regulated activity without authorisation
Upper tribunal tax and chancery chamber appeals
permissions approval withdrawal but not against capital adequacy
Loan cooling off period
7 days
Max term of imprisonment
2 years
delaying FCA authorisation of a firm
incomplete application
senior managers and certification regime
classified as core
records relating to advice
SL retained for 5 years and lit 6 years
breached data protection principle
relied on pre-ticked boxes to verify consent
rapid resolution complaint dealt with
3 business days
Gov org responsible for national strat on financial capability debt and financial education
money and pension service
ending a relationship means that investments can be destroyed
3 years post the date relationship ended
Advice on company pensions cannot
provide specific choices on recommendations to the choice he should make
notice of cancellation period deemed to serve
on the date it is posted to the appointed representative
IHT planning least relevant
income tax status
main reason for collecting details on outstanding debts
to ensure liability could be met if they were to die or earning cease due to illness
action adviser take if client chooses not to address need identified
should record as part of advice process
SL failed most likely due to
cost of implementation of products recommended
Outcomes based regulation best described as
regulation based on what might happen in the future
Conduct risk
how investments are explained to clients and how quality controlled
failed fit and proper test
entered into an independent voluntary arrangement with her creditors
key aims of senior managers and certification regime
provide clarity of responsibility / give FCA wider powers to take enforcement action / make firm responsible for authorising those who undertake significant harm
FCA clients eligible complainants
those that are associated with financial products
Financial services compensation scheme
all of investment bonds and half of savings if jointly owned
Pension ombudsman consider complaints
admin related and decisions of pension protection fund
firms describing as indépendant must
allow off panel recommendations and ensure model portfolios cater for clients individual circumstances
adviser charges might be paid by
hourly rate, fund related fee deducted for investment, fund related fee deducted from product charges no commission related fees
basic advice permitted to advise on
cash ISA and gov products such as stakeholder pensions
SL for personal pension plan
must show why at least as suitable as stakeholder and show any disadvantages
petitioning the court for bankruptcy order
prove inability to pay by showing not complied within 3 weeks order has been made
Trust = leave investment to grandchildren on basis agreed by children
discretionary trust
Trust = investment left to wife to have an income and then upon death capital split between children
interest in possession trust
put into effect uk gov financial and economic policy
HM Treasury
Failed pillar 1 req of capital req directive by PRA
insufficient capital to meet current credit, market and operational risks investment
bank amortised to provide advise - regulated by
PRA
Financial policy committee
power ensure banks increase capital during growth so sufficiently protected during decline
Part 4a Permission
provided by PRA investment
FCA risk based approach to supervising firms based on 3 pillars
proactive firm / group supervision / event driven reactive supervision / issues and products supervision
subject to capital requirements directive = required
to undertake stress testing of financial resources
upper tribunal tax and chancery camber can hear appeals against FCA except relating to
firms capital adequacy
reports of complaints must include
4 weeks / 8 week / after 8 weeks
gov responsbile for strat on financial capability debt and education
money and pensions service
earliest date client agreement relating to initial investment could be destroyed
on the date the relationship ended
where no rules to cover a situation which takes precedence
FCA principles for business
aims of senior managers and certification regime are to
inc give FCA wider powers to take enforcement action
describing advice as independent must
allow off panel recommendations and ensure model portfolio cater for client individual circumstances
adviser charges might be paid
in related fee deductions
longer cancellations policies
pension transfers and life policies
function of financial services by means which savers ready assess reconciled with borrowers req for long term funds
liquidity
payment settlement clearing trading systems examples of
infrastructure
reponsible for macro prudential regulation of financial service
financial policy committee
distinguish friendly societies from ordinary life assurance companies
many products qualify for preferential tax treatment
core service
mortgage and loans
lower interest rates result in
rise in share prices
main objective if monetary policy committee MPC
meet government inflation target
IHT nil rate band 325k 650k for couples then charged at 40% if no children involved and 20% if there are
664k - 650k = 14k - 20% = 2.8K
When would sole trader pay national insurance
if business employs someone other that the proprietor
person dies intestate no children but married how much estate pass to child
half the residual amount after the first 270K of the estate has passed to peter
who can witness a will
the person that is not a beneficiary
insurance company consideration to the policyholder in formation of life assurance
paying or promising to pay the premium
warren employés services of IFA on suitable lie assurance product - correct legal position
IFA owes duty of care under law of agency
set up trust for children, who is the legal owner of the money
the appointed trustees
main advantage of a flexible power of appointment trust used by most life offices
gives trustees power to vary beneficiaries according to family circumstances
type of trust that arises when trust fails
resulting trust
set up trust for nephew for university fee
bare trust
event of valid claim on the life policy held under trust, provide documents except
grant of probate
3 certainties present to create a trust
intention to create, specified matter and specified beneficiaries
interest a remainderman have in a trust property
reversionary interest
single strategic objective of ensuring markets work well
FCA
Unregulated investment product
Premium bonds
fundamental principles of EU bulk of economic law
Treaties
EU directive aim to improve functioning of financial market
markets in financial instruments directive 11
regulatory body that investigates and addresses issues of concern regarding mergers and cartel
the competition and markets authority
CMA competition and markets authority aims to deter wrongdoing
delivering effective enforcement
FCA objective to enable customers to make informed choice
Promoting competition
FCA risk based approach to supervision flexible portfolio subject to
pillars 2 and 3 only
statement regarding mystery shopping false
big part of FCA and undertaken freq
Under FCA model pillar 1 relates to
proactive supervision
purpose of threshold conditions COND in FCA handbook
min standards a firm must satisfy to become and remain authorised
main purpose of the FCA general prudential sourcebook GENPRU
sets out rules and guidance on adequacy of financial resources for regulated firms
in what section of FCA handbook would you fund rules on guidance and how key responsibility for managing business should be allocated
SYSC
Firm arranges general insurance policies
ICOBS
In what circumstance can person aggrieved by decision of upper tribunal appeal to court of appeal
only on a point of law
which rule applies an IFA under the authority client assets sourcebook CASS
if authorised to hold money must hold separately from own money in client bank account
under anti money laundering - following not acceptable means of verifying ID
recent bank statement
how long personal data processed for a particular purpose held?
no longer than necessary
under FCA rules when must authorised firm refer to a customer to the internal complaints
at or immediately after point of sale
how is Financial Services Compensation Scheme funded FSCS
By general levy on authorised firms
Which protected product must the FSCS make arrangement to secure continuity by transferring business to another provider
long-term insurance
which client gets least protection under the FCA business source book rules COBS
Eligible counterparts
following may a firm be permitted to classify a retail client as elective professional client
only if the firm has evidence that client has sufficient expertise experience and knowledge
to provide independant advice firms must
assess sufficient range of products that are sufficiently diverse in terms of type and issuer to ensue clients investment can be suitably met
what is duty of representative of marketing group who give investment advice on groups products
select appropriate product for client from range of products offered by the product provider they represent
example of best execution
an investment from sells shares on behalf of client on best available terms
retail clients on stakeholder products
a firm must explain why chose the stakeholder product
stakeholder range statement
pension providers can charge min annual management charge of 1.5% of value of pension reducing 1% after ten years
EU directive stated intention of aligning customer protection for insurance based invest products by mifid 11
the insurance distribution directive IDD
Which sales situation req client agreement
IFA selling collective investment scheme to client
which statement about completion of term assurance application form fo you think is true
the financial adviser may complete the application form but he customer must sign it
statement about columnar right to cancel regulated contract incorrect
pension open market there is a cancellation substitute notice procedure giving 14 days period refection before annuity is processed
fact find establishes that cannot afford to meet financial needs at once
FA should help establish order of priorities
liabilities section of fact find places emphasis on
Mortgages
under which FCA senior management function would firm MLR officer sit
required functinos
main purpose of FCA Code of conduct COCON
rules are intended to drive up standards of individual behaviour in FS
in relation to the statement of prince for approved persons APER which applies to approved persons who perform higher functions
ensure the business is organised so can be controlled effectively
primary responsibility for managing conflict of interest within authorised investment firm
senior management
relation to managing conflict of interest which statement false
internal audit function essential to management of conflict of interest
each of following is one of six consumer outcomes relating to fair treatment of customers with exception of which one?
consumers are obliged to take advice regarding which insurance products will best meet their needs
regulator guidance on management information relating to fair treatment of customers is it should be accurate timely and relevant and
consistent
component of ethical framework can be described as policies procedures tool kits for employees to use
operational
which suggests organisation has values led commitment to ethics
focus on preventing rather than correcting unethical behaviour
PIPSI
Protection Income protection pensions savings and investments
whose interests should a trustee represent
the beneficiaries
first communication by telephone which following is not one of the regulators req
the products that will be recommended must be described
example of treating customers fairly
take into circumstances and central to corporate culture
statutory maternity pay
a min of 6 months
tied representative from a bank when giving advice
recommend appropriate contract for client from company range
qualify for income support
16 years attained
under principles based approach to regulation, connects risk to compliance and ethical issues
GRC
Market value reduction applies to his with profits bond what is market value reduction
method by which the remaining investors in the fund are protected when someone withdraws cash
following banking crisis the FCA introduced new approach
intensive supervision
certified or an approved person role under
financial soundness
order of bankrupcy
secured creditors, costs of bankruptcy, preferential debts, ordinary debts
Employment and support allowance ESA split into
2 Phases
max period of reflection cooling off period for stakeholder pension
30 days
FCA and PRA statutory duty
contribute to protecting and enhancing the stability of the financial systems
the financial stability board is
international
reduce interest rates across eurozone
the european central bank
dual authorisation from PRA & FCA
major deposit taker offering full range of investment products and services
stimulate economy increase capital expenses
capital expenditure can be spent at home to stimulate employment tax cuts spent on imports
decision on interest rates from chancellor to bank
to remove political influence
defined contribution pension scheme - amount primarily receive based on
investment peformance
long are capital growth
shares
liability for trade debts
unlimited
trust - transfer claim of monies to the beneficiary
absolute
reduce risk protect and enhance
the financial policy committee
european economic area
EU plus iceland leichtinstien and norway
overal responsibility for senior management functions
chief executive
12 renumination policies effective form based on
standard salaries
exempt mifid capital resource requirement
20K
protection insurance cancellation period
30 days
insurance company mange and reduce financial risks to business by
maintaining adequate levels of solvency and reinsurance arrangements
FCA notified of terminatinos
14 days
products subject to rules on persistency
singel premium life and pension contracts
client agreement relating to investment be destroyed
5 years
ethnical perferances
pension planning
leadership tackle misconduct
by establishing an ethical vision and means to achieve it
ethnical dilemmas from a client
ask a trusted colleague
quantitive easing
not way of raising money to fund grwoth
sale rent back agreement differ from home reversion scheme
home reversion scheme are for people to release equity from their property
member of defined contribution occupational pension scheme can have their share identified
earmarked
disclosure and representations act 2012
take resonable care not to make a misrepresentation
if not will and no children
receive entire estate
HMRC directly reponsible for occupational pension scheme
the scheme trustees
truteees standard of care
utmost diligence
body had overall aim of raising rate of sustainable growth of economy and achievement of rising prosperity
HM treasury
objective of competition and markets authority can be described as
competition between companies in the uk remains fair for the benefit of business consumes and the economy as a whole
macro-prudential regulation for identifying systemic risks within financial services sectir
financial policy committee
firms make it clear who is repsonsible for which area
senior management responsibility
FCA liquidity tests for high risks firms
every 24 months
firm insure against actions from FCA
in respect of its own costs in defending FCA enforcement action and any costs it may required to pay to the FCA
FCA periodic fees
soley on the firms share of FCA budget for the current tax year
regulated advice as a result received initial disclosure document and demands and needs statement
advice on private medical insurance
agreement involvement credit up to 25K regulated the 2006 act removed the upper limit for
high net worth debitors
insurance company
PRA will determine whether meets threshold conditons
possession of assets and money
assets for a max of 28 days and not permitted for money under any circumstances
max FOS award
355K
european standardised info sheet and key info document
buy a property with a mortgage and money to invest
invested assets section least likely to reveal
ability to fund further investment
degree to which advisers are explaining life assurance contracts adequately most revealing
persistency ratios
Must have a principles and practices of financial management document for these types of business
with profit whole of life
low cost with profits whole of life
dual regualted firm
the firm is regulated and supervised by two different regulators one on prudential and one on conduct
help to buy
not allowed to sub let
micro prudential decisions
prudential regulation committee
macro prudential regulation and systemic risks
financial policy commitee
freq FCA conduct periodic capital and liquidity tests for high risk
every 2 years
client agreement not req
where investor recieved advice from direct offer financial promotion and where life office advises on life and pension policies as a principal
Quantitive easing
liquidity increased resulting in lower interest rates
Trading floor
on-exchange financial market
joint tenancy
goes to the other if die
limited liability partnership
cannot be pursued for partnership debts except where provided personal guarantee
wife has income from trust and then capital split between children
interest in possession trust
PRA informed building society that failed to meet pillar 1 req of capital req directive
means it has insufficient capital to meet current credit market and operational risks
FCA when making rules and carrying out investigations may also pay due regards to
eight regulatory priniciples
FCA three operational objectives
consumer protection integrity of the uk financial system and competition
organisation tasked with identifying monitoring and taking action to remove reduce systemic risks with view of protecting and enhancing resiliance
the financial policy committee
bank based in the UK uthorised to provide on investments - regulated
PRA
Named individual supervisor
a fixed portfolio firm will have over a flexible portfolio firm
regulator reponsible for monitoring london stock exchange
FCA
which body in PRA responsible for important micro prudential decisions
Prudential regulation committee
FCA panel meet on monthly basis to discuss
current and future issues of relevance to FCA regulated firms
investments and subsidiary financial planning - part 4a permission provided by
the PRA
subject to FCA investigation and not notified
insider dealing
time for agreement tot be sent loan
7 days
consumer credit act expanded definition of individual entitled protection
sole traders partnerships of 3 or fewer partners and unincorporated associations
cancellation home insurance
14 days
miffed exempt capital resource
20K
mortgage introducers do not req FCA authorisation
do not provide advice to clients
exempt from capital req directives - most likely to be
small intermediary business
appointed rep hold client money
not permitted to hold under any circumstances
insurance comp applied to both PRA and FCA for authorisation
PRA determine meet threshold conditions
pension ombudsman can receive complaints relating to
the decision of pension protection fraud and the administration of occupational schemes
personal pensino SL and literature
records relating to advice min of 5 years and literature 6 years
key aims of senior management
make firm responsible for authorising those who undertake sig harm functions, give FCA wider powers, provide clarity of responsibility
likely reason to appeal to upper tribunal tax and chancery chamber
because FCA refused application for authorisation
max term of imprisonment
2 years
contract terminated
need to tell FCA 14 days laters
solvency 11 directive
family income benefit, term assurance, income protection insurance
fair clear not misleading
stocks and shares and skateholder pension
independant firm
allow off panel recommendations and ensure model portfolio caters for clients individual circumstances
agreemnet not req
where the investor receives advice from a direct offer financial promotion and were a life office advises on life and pension policies as a principals
multi-tied
range of products but restricted ot one provider
earliest date investments destroyed
on the date the client relationship ended
principles and practices of financial management document
with-profits whole of life and low cost with profits whole of life
lighter touch advice
questions about debt levels and investment objectives and questions about toloreance of risks and pension rights
latest date an SL can be produced
2 weeks
SL non compliant
cost of implementation of products recommended
Risk management category
identifying the risk profile of the business
monitoring persistency and decline
investigate why there is no improvement in performance
