R01 Chapter 1

Question 1

Asset or liability? Loans & Deposits

Answer 1

Loans: asset
Deposits: liability

Question 2

The control of taxation, borrowing and government spending are collectively known as?

Answer 2

Fiscal policy and actions involving interest rates and money supply are known as monetary policy.

Question 3

Who’s responsibility is it to define the level of government expenditure and borrowing?

Answer 3

Chancellor of the Exchequer

Question 4

Who controls the interest rates?

Answer 4

Monetary policy committee (MPC)

Question 5

What is quantities easing ? (A form of monetary policy)

Answer 5

Quantities easing creates new bank reserves (Gov buy back gilt’s & corporate bonds) increasing liquidity and encouraging lending and investment

Question 6

Which Government department is responsible for formulating and putting into effect the UK Government’s financial and economic policy?

Answer 6

HM treasury

Question 7

A new UK bank would need to be authorised by the:

Answer 7

PRA

Question 8

Which body has the power to ensure banks increase their capital during periods of growth and profitability, so that they are sufficiently protected during periods of declining business and market instability?

Answer 8

The Financial Policy Committee.

Question 9

If the FCA was to substantially increase the number of rules in its Handbook, this might be seen as being contrary to which FCA regulatory principle?

Answer 9

Efficiency and economy.

Question 10

Which regulator is responsible for monitoring the activities of the London Stock Exchange?

Answer 10

The FCA.

Question 11

DepositOn is an online bank offering a range of current and savings accounts, including ISAs. It also offers a financial planning service through its subsidiary InvestOn. Its Part 4A permission will be provided by the:

Answer 11

PRA

Question 12

In what way did the Banking Act 2009 increase the responsibilities of the Bank of England in respect of the long term stability of the UK financial system?

Answer 12

It provided a framework for dealing with failing banks, and formalised the Bank’s oversight of payment systems.

Question 13

Able & Co is an authorised firm that is subject to the rules based on the Capital Requirements Directive. It should be aware that:

Answer 13

it should constantly know how much capital it has.

Question 14

Under the terms of the Mortgage Credit Directive

Answer 14

mortgage offer is binding on the lender, who must allow the borrower a minimum seven-day reflection period.

Question 15

The Consumer Credit Act 2006 expanded the definition of an ‘individual’ entitled to protection, so as to include:

Answer 15

sole traders, partnerships of three or fewer partners and unincorporated associations.

Question 16

Under the Senior Managers and Certification Regime, a firm can be classified as:

Answer 16

Core

Question 17

Under what circumstances, if any, can an appointed representative hold client money?

Answer 17

It is not permitted to hold client money under any circumstances.

Question 18

In its bi-annual report to the FCA about complaints received, a firm must include the number of complaints closed:

Answer 18

within three days, within eight weeks and after eight weeks of receipt.