Regulating Firms

Question 1

If a person has benefited from a contravention of a regulation, the FCA can ask the court for ‘redress’, an order requiring that person to forfeit to the FCA any profit made from the activity.

Answer 1

False

Question 2

Match the following functions within an authorised firm with the appropriate regulatory regime in the FCA Handbook. (Pick only two)

Answer 2

Senior Managers Regime : Compliance oversight function.

Certification Regime : Client dealing function

Question 3

Basel III requires banks to maintain a minimum solvency ratio of 5 per cent.

Answer 3

False

Question 4

Where an authorised firm takes disciplinary action against a senior manager for a breach of one or more of the FCA’s conduct rules, the firm must notify the FCA within three days.

Answer 4

False

Question 5

Match the required level of capital under CRD IV with the type of firm. (Pick only two)

Answer 5

125,000 euros : Investment firms who carry out customers’ orders and hold client money.

730,000 euros : Investment firms that deal on their own account.

Question 6

Varying a firm’s permissions may involve removing one or more of its regulated activities.

Answer 6

True

Question 7

If an authorised firm is judged to be guilty of misconduct, the FCA may issue a warning notice, publish a statement of misconduct or impose a financial penalty.

Answer 7

True

Question 8

The definition of a bank’s capital in the capital adequacy regulations excludes funds deposited by customers.

Answer 8

True

Question 9

A bank’s solvency ratio describes its capital as a percentage of the risk-adjusted value of its assets.

Answer 9

True

Question 10

Debt collecting is a regulated activity under the Regulated Activities Order.

Answer 10

True

Question 11

If a person has benefited from a contravention of a regulation, the FCA can ask the court for ‘redress’, an order requiring that person to forfeit to the FCA any profit made from the activity.

Answer 11

False

Question 12

The definition of a bank’s capital in the capital adequacy regulations excludes funds deposited by customers.

Answer 12

True

Question 13

Match each party to the trust to the role that they perform. (Pick only two)

Answer 13

Settlor : The person who creates the trust and who originally owned the assets placed under the trust.

Trustee : The person who has legal ownership of the trust and administers it in accordance with the trust deed.

Question 14

Where an authorised firm takes disciplinary action against a senior manager for a breach of one or more of the FCA’s conduct rules, the firm must notify the FCA within three days.

Answer 14

False

Question 15

Debt collecting is a regulated activity under the Regulated Activities Order.

Answer 15

True

Question 16

The Financial Conduct Authority requires firms to have in place procedures that will enable employees to report serious inappropriate circumstances or behaviour by other employees.

Answer 16

True

Question 17

It is permissible for an executor to also be a beneficiary under the deceased’s will.

Answer 17

True

Question 18

. A will written by a person who subsequently marries or re-marries is usually automatically revoked, unless specifically written in contemplation of the change in status.

Answer 18

True

Question 19

Match the regulator with their responsibility. (Pick only two)

Answer 19

The PRA : Responsible for prudential regulation of systemically important firms.

The FCA : Responsible for conduct regulation of all firms and prudential regulation of non-systemically important firms.

Question 20

Match the following statements with the appropriate form of joint ownership of property. (Pick only two)

Answer 20

Joint tenancy : On the death of one owner, the property is automatically transferred to the surviving owner.

Tenancy in common : On the death of one owner, their share passes to their own estate.

Question 21

The responsibility for the Financial Ombudsman Service (FOS) lies with the FCA.

Answer 21

True

Question 22

Suspicions of insider dealing will be investigated by the PRA.

Answer 22

False

Question 23

The minimum initial capital requirement for an investment firm that deals only with transactions on behalf of clients and holds client money is 250,000 euros.

Answer 23

False

Question 24

Match the term used to describe the legal personal representatives of the deceased in the two scenarios given. (Pick only two)

Answer 24

Executor : A valid will exists.

Administrator : No valid will exists.

Question 25

The FCA may take action in cases of market manipulation

Answer 25

True

Question 26

Varying a firm’s permissions may involve removing one or more of its regulated activities.

Answer 26

True

Question 27

A breach of contract occurs when a party fails to perform its side of the contract and does not have a legal justification for doing so.

Answer 27

True

Question 28

A limited liability partnership is subject to corporation tax in exactly the same way as a limited company.

Answer 28

False

Question 29

Basel III requires banks to maintain a minimum solvency ratio of 5 per cent.

Answer 29

False

Question 30

The FCA adopts a proportionate approach to its supervision of firms.

Answer 30

True

Question 31

The need to budget underpins all other forms of financial planning.

Answer 31

True

Question 32

The FCA has the specific objective of preventing all market failure.

Answer 32

False

Question 33

Instances of insider dealing are dealt with by the London Stock Exchange rather than the Financial Conduct Authority.

Answer 33

False