regulations Flashcards
WHICH OF THE NOTICES SPECIFIES A DATE FROM WHICH IT WILL BE EFFECTIVE?
FINAL NOTICE
WHICH OF THE FOLLOWING IS NOT A PRA SENIOR MANAGER FUNCTION FOR A UK BANK?
EXECUTIVE DIRECTOR FUNCTION
WHICH OF THE FOLLOWING IS NOT REGULATED UNDER FSMA 2000?
SHARE ADVICE IN A. NEWSPAPER COLUMN
WHICH OF THE FOLLOWING DOES FSMA 2000 MAKE RESPONSIBLE FOR ENSURING A FIRM COMPLIES WITH APPROPRIATE REGULATIONS?
THE FIRM ITSELF.
WHICH OF THE FOLLOWING IS NOT A PILLAR OF THE FCA SUPERVISION MODEL?
PROACTIVE INTERVENTION MODEL.
FSMA 2000 DOES NOT REQUIRE THE BUSINESS CARRYING OUT WHICH OF THE FOLLOWING TO BE AUTHORISED?
ADVISING ON CURRENCIES
FCA CAN IMPOSE FINES
THERE ARE NO MAXIMUM LIMITS ON FINES
WHICH OF THE FOLLOWING CONDUCT RULES APPLY TO ALL SMCR FUNCTIONS?
OBSERVE PROPER STANDARDS OF MARKET CONDUCT.
UNDER FCA SMCR WHICH OF THE FOLLOWING IS MOST LIKELY TO BE A SENIOR MANAGEMENT FUNCTION FOR A UK BANK?
MLRO
WHICH OF THE FOLLOWING IS NOT A SPECIFIED INVESTMENT?
NATIONAL SAVINGS CERTIFICATE
WHAT IMMEDIATELY FOLLOWS THE RECEIPT OF A WARNING NOTICE?
THE OPPORTUNITY TO MALE REPRESENTATIONS AND MEDIATE AN AGREEMENT WITH THE RDC DECISION COMMITTEE
WHICH OF THE FOLLOWING ARE CONSIDERED IN ASSESSING THE FITNESS AND PROPRIETY OF A FIRM?
- COMPETENCE AND EXPERIENCE OF THE BOARD
- THE ABILITY TO COMPLY WITH THE FINANCIAL RESOURCES REQUIREMENT REGULATIONS ON AN ON-GOING BASIS
- THE SPECIFIC ACTIVITIES TO BE PERFORMED.
WHICH OF THE FOLLOWING INVESTMENTS IS REGULATED BY FSMA 2000?
DEBENTURES
IF AN AUTHORISED FIRM IS UNHAPPY WITHT HE RESULTS OF AN FCA INVESTIGATION, THEY MAY GO TO THE TCCUT UNDER WHICH OF THE FOLLOWING NOTICES?
EITHER A SUPERVISORY OR A DECISION NOTICE
WHO AUTHORISES MARKET MAKERS IN THE WHOLESALE MONEY MARKETS IN THE UK?
FCA
WHICH OF THE FOLLOWING NOTICES CAN BE PUBLISHED IN ACCORDANCE WITH DISCIPLINARY PROCESSES AND MEASURES WITHOUT THE CONSENT OF THE RECEIVING PARTY?
- FINAL DECISION NOTICE
- FINAL SUPERVISORY NOTICE
WHEN DOES THE FCA ISSUE A FINAL NOTICE?
NO SOONER THAN 28 DAYS AFTER A DECISION NOTICE
WHICH OF THE FOLLOWING ARE NOT SPECIFIED INVESTMENTS AS DEFINED BY THE REGULATED ACTIVITIES ORDER?
PREMIUM BONDS AND CURRENCIES
WHICH OF THE FOLLOWING DOES NOT REQUIRE FCA/PRA AUTHORISATION?
WRITING A NEWSPAPER COLUMN ADVISING ON INVESTMENTS.
WHERE A FIRM SUBMITS A REQUEST FOR APPROVAL AND BECOMES AWARE OF ANY CHANGES TO THE PERSONAL DETAILS OF THE SENIOR MANAGER SEEKING FIT AND PROPER STATUS, THE FIRM MUST NOTIFY THE REGULATOR
IMMEDIATLY
ACCORDING TO THE GENERAL PROHIBITION (S19 FSMA 2000) WHICH OF THE FOLLOWING ACTIVITIES WOULD NOT REQUIRE A FIRM TO GAIN AUTHORISATION BY THE REGUALATOR?
ADVISING ON CURRENCIES
IF AN ADVISOR CARRIES ON REGULATED ACTIVITIES WITHOUT HAVING SOUGHT PART 4A PERMISSION FROM THE FCA, WHAT IS THE EFFCET ON ANY CONTRACT WITH A CLIENT?
IT IS VOIDABLE AT THE OPTION OF A CLIENT
IN THE SUPERVISION SOURCEBOOK THE FCA SETS OUT THE ROLES WITHIN A FIRM THAT REQUIRE APPROVED PERSON STATUS. WHICH OF THE FOLLOWING IS NOT INCLUDED AS A SENIOR MANAGER FUNCTION?
INVESTMENT ADVISER
WHICH OF THE FOLLOWING IS NOT A REGULATED ACTIVITY UNDER FSMA 2000?
DEALING IN US dollars
THE FCA ENFORCEMENT OFFICERS ARE INVESTIGATING A BREACH OF REGULATION BY AN AUTHORISED FIRM. THEY HAVE THE POWER TO DO ALL OF THE FOLLOWING EXCEPT:
REMOVE ORIGINAL DOCUMENTATION FOR FURTHER INSPECTION
CAN AN AUTHORISED FIRM APPEAL A DECISION NOTICE?
YES
WHICH OF THE FOLLOWING IS NOT ONE OF THE REGULATOR’S SUPERVISORY TOOLS?
DUE DILLIGENCE
S71 OF FSMA 2000 ALLOWS PRIVATE PERSONS TO CLIAM DAMAGES FOR LOSSES CAUSED BY WHICH OF THE FOLLOWING?
AN AUTHORISED FIRM
A FIRM WISHES TO PROVIDE SERVICES IN INVESTMENTS. ACCORDING TO THE REGULATED ACTIVITIES ORDER, WHIHC OF THE FOLLOWING INVESTMENTS WOULD NOT REQUIRE THE FIRM TO SEEK AUTHORISATION FROM THE FCA/PRA?
FOREIGN EXCHANGE
WHICH OF THE FOLLOWING IS TRUE OF DESIGNATED PROFESSIONAL BODIES?
EXEMPTION VIA A DPB IS ONLY ALLOWABLE WHERE THE REGULATED ACTIVITIES ARE INCIDENTAL TO THE MAIN BUSINESS OF THE PROFESSIONAL.
WHEN A FIRM IS FOUND IN BREACH OF THE REGULATIONS,
- INVESTIGATION
- PRELIMINARY FINDINGS LETTER
- RDC SENDS A DECISION NOTICE
- DISCIPLINARY ACTION
WHICH OF THE FOLLOWING IS NOT A SPECIFIED INVESTMENT UNDER FSMA 2000?
RESIDENTIAL PROPERTY
WHICH OF THE FOLLOWING COULD BE A REASON FOR THE FCA TO NOT PUBLISH A FINAL NOTICE?
IF PUBLISHING WOULD BE PREJUDICIAL TO THE INTERESTS OF CONSUMERS
WHICH OF THE FOLLOWING WOULD THE FCA NOT CONSIDER ACTS OF MISCONDUCT SUBJECT TO DISCIPLINARY PROCEEDINGS?
DEALING AHEAD OF THE FIRM’S RESEARCH PUBLICATIONS WHERE THE RESEARCH IS INTENDED FOR THE FIRM’S USE ONLY
WHICH OF THE FOLLOWING ARE SPECIFIED INVESTMENTS AS DEFINED BY THE REGULATED ACTIVITIES ORDER?
- OPTIONS ON THE FTSE 100 INDEX
- OPTIONS ON GOLD
WHICH OF THE FOLLOWING OCMES IMMEDIATELY AFTER THE ISSUE OF A WARNING?
RESPONSE AND RIGHT TO HEARING
PERSONAL RESPONSIBILITY FOR SENIOR MANAGER FUNCTIONS IS ENFORCED BY
A SET OF CONDUCT RULES BACKED BY A DUTY OF RESPONSIBILITY
THE FCA HAS THE RIGHT TO DEMANS THAT FIRMS MAINTAIN A HIGHER CAPITAL REQUIREMENT THAN THAT STATED IN GENPRU. IN TERMS OF THE TOOLS OF SUPERVISION THIS WOULD BE AN EXAMPLE OF WHAT TOOL?
PREVENTATIVE
When the Regulator receives an application for a senior manager to become an approved person and finds some problems, they will return the application:
To the firm and wait for clarification or amendments before considering their decision
Which of the following is not a conduct rule which must be followed by accountability regime persons?
Communicating in a clear, fair and non-misleading manner
If the FCA is asked to pursue ‘redress’ it will:
Consider the different methods of redress available to it
Which is not a specified investment?
An option on physically delivered gas oil
A Multilateral Trading Facility (MTF) is best described as:
A system that brings together multiple parties that are interested in buying and selling financial instruments and which allows them to do so
Which of the following is a regulated activity?
Establishing a stakeholder pension
Significant decisions on appropriate disciplinary measures are made by:
The RDC
How would you describe a firm which has gained Part 4A permission?
Authorised
S56 of the Financial Services and Markets Act 2000 allows the FCA to prohibit individuals from carrying out specified functions in relation to regulated activities, i.e. a ‘prohibition order’. What penalty can the FCA impose on an individual in breach of S56 FSMA 2000?
A fine
What is the maximum number of employees permitted to work in an authorised firm’s compliance department?
No maximum
Which of the following is true with regard to the Training and Competence Sourcebook?
FCA firm employees must have their competency reviewed regularly
All of the following are true with regards to FCA investigations except:
A certified person, once served with a notice of investigation, must cease all regulated activities immediately
Under the Individual Accountability Regime a firm must take reasonable care to ensure that individuals undertaking significant harm functions are:
Certified persons
Representatives of the FCA and PRA can do all of the following except:
Remove any documents from the firm’s business premises
Which of the following would not be considered acts of misconduct by a firm in the financial industry?
Not immediately producing adequate information for an FCA inspection
The Regulatory Decisions Committee is required to issue a statutory notice in respect of which of the following?
Imposition of a financial penalty on a regulated person
Which of the following is not a direct power available for the FCA to use where it considers appropriate?
Impose custodial sentences
When providing services to a professional client, for which of the following investments would a firm not need to gain Part 4A Permission?
Gold
Which of the following are not regulated investments, as defined by the Regulated Activities Order?
Premium bonds and currencies
The Financial Services and Markets Act 2000 states that a Recognised Investment Exchange (RIE) is exempt from the need for authorisation in respect of S19 - the General Prohibition. Which of the following bodies recognises these investment exchanges?
The Financial Conduct Authority
On receipt of a warning notice issued by the Regulatory Decisions Committee the recipient will be given the right to make representations in their defence within a reasonable period of not less than:
28 days
Which of the following may cause an individual not to be ‘fit and proper’?
Undischarged bankruptcy Conviction for tax evasion Refusal of entry into a trade association associated within financial services
Which of the following is true in relation to the Upper Tribunal (Tax and Chancery Chamber)?
A recipient of a decision notice may refer the matter to the Tribunal within 28 days
Under the product intervention rules for how long can products be banned by the FCA without consultation with the product provider
12 months
Which of the following is a specified investment under the Regulated Activities Order?
Shares in an unincorporated business
Which of the following is ALWAYS a certified function?
Financial planner
Which of the following is NOT a specified activity?
Acting as principal and end user when dealing in shares
What is the maximum penalty for those operating an unauthorised firm carrying out regulated activities in the UK as stated in the Financial Services Markets Act 2000?
Two years imprisonment and an unlimited fine
Which ONE of the following is CORRECT concerning a multi-lateral trading facility?
It is a system where a firm provides similar services to those offered by exchanges
Which of the following is responsible for hearing appeals from firms who are subject to FCA disciplinary action?
The Tax and Chancery Chamber of the Upper Tribunal
What is the territorial scope of the Tax and Chancery Chamber of the Upper Tribunal?
United Kingdom only
Which of the following is true regarding the Regulatory Decisions Committee?
It may issue a Final Notice
All of the following are true of recognised investment exchanges, except:
It guarantees a market place where investors can always deal at fair prices
Under the FCA’s Senior Managers regime which of the following is ALWAYS performing a senior management function?
Chairman of the Board of Directors
From which point in time must senior managers and certification functions comply with the Conduct Rules under the FCA’s Accountability Regime?
All relevant staff must comply with the Conduct Rules from appointment
Where a firm operates under the Senior Manager and Certification Regime, which ONE of the following roles within always requires approval from the Regulator? Somebody:
Acting as a non-executive director
Which of the following are true with respect to decision notices?
They may be issued to firms and individuals
Jo Wood has twice failed a key regulatory exam and the bailiffs have repossessed most of his belongings. He might not be considered fit and proper for which of the following reasons?
Financially unsound and incapable
When the UK regulator allows a firm to undertake regulated activities, it grants which of the following?
Part 4A Permission
Which of the following statements is not true of the Principles for Businesses?
They do not apply to UK firms complying with the
Who is the Tax and Chancery Chamber of the Upper Tribunal set up by?
The Ministry of Justice
Which of the following is NOT a disciplinary sanction of the Regulatory Decisions Committee?
Private warning
An authorised firm must ensure that only certificated persons perform certification functions. Which of the following is most likely to be an example of a certification function?
Retail customer adviser
Which of the following is not taken into account when the FCA assesses a firm’s fitness and propriety?
The market share the firm has within the financial services industry
Under the Financial Services and Markets Act 2000, a person will not be carrying on specified activities if (s)he does which of the following?
Advises on foreign currency
Which of the following is not categorised as a disciplinary measure of the FCA?
Private warning
For how long after the discovery of a problem can the FCA hold an individual eligible for disciplinary action?
Three years
According to Section 19 of the Financial Services and Markets Act 2000 (the ‘General Prohibition’), which of the following activities would require a firm to gain authorisation by the FCA/PRA?
Professional bodies providing advice in the normal course of business where the advice is separately remunerated
All of the following are specified by the FCA as SM&CR functions except:
Dealing with the assets of the firm
The MLRO must report to senior management at least:
Once every 12 months
The Markets in Financial Instruments Directive allows for the passporting of certain regulated activities. Which of the following instruments is NOT covered by this?
Sports spread bets
Before conducting designated investment business for a new customer, the money laundering regulation
To identify someone, an official document bearing a photograph should always be obtained, whether the new business is opened face-to-face or through the post.
Which of the following is NOT considered as ancillary services under MiFID?
Making a personal recommendation on a CAC 40 stock
An organisation is excluded from the scope of MiFID if it produces a commodity and:
Trades that commodity’s futures on its own account to hedge its exposure
At which stage of the money laundering process are the proceeds of crime separated from their source?
Layering
A UCITS collective investment scheme cannot invest in which of the following?
Gold
Which of the following is a principle of the Takeover Code?
The target company directors must advise shareholders on its view about the impact of the bid
Which one of the following is NOT a money laundering offence, as defined in the Proceeds of Crime Act?
Dealing on price sensitive information
Which of the following gives the FCA the power to prosecute insider dealing offences?
Financial Services and Markets Act 2000
Which of the following would be committing an offence under the Criminal Justice Act 1993 if they purchased shares in ABC plc?
An insider must knowingly have inside information (i.e. price sensitive and not public) from a known inside source. If there is no intent, then there is no offence. Being a market maker is an acceptable defence.
Which does the Capital Requirement Directive require? All firms:
Under the scope of MiFID should have more than the amount of regulatory specified capital
Which of the following is outside the scope of MiFID?
Oil
Market making is a specific defence against insider trading if the market maker:
Acts in good faith
Which two of the following are FALSE of the Money Laundering Regulations?
Not reporting when there are ‘reasonable grounds’ to suspect money laundering exists is not an offence
The regulations only apply to drugs laundering operations
Which of the following is untrue of the FCA rules and the legislation on money laundering?
A firm does not have to identify a client if the transaction is one off and for €30,000
Compliance with capital requirement rules for MiFID firms is imposed by:
The home state
Sue becomes suspicious of a ‘high number of sales’ by her client to an unknown party. Sue should report her fears to:
The MLRO
Which of the following is an ancillary service as defined under the Markets in Financial Instruments Directive?
Services relating to investment research
EMIR sets out requirements for reporting and risk management in the OTC derivative markets. Which firms are covered by this regulation?
All EEA-incorporated and established entities
Under the Money Laundering Regulations all of the following are considered high-risk factors EXCEPT:
Transactions within a pooled client account
To whom must the Money Laundering Reporting Officer report suspicious activities?
National Crime Agency
Which of the following is TRUE of the Money Laundering Regulations 2017?
All firms subject to the regulations must appoint a Money Laundering Reporting Officer
Which organisation would a Money Laundering Reporting Officer normally report suspicions of money laundering to?
National Crime Agency
Under the Money Laundering Regulations a firm must ensure that they have appropriate internal controls. One of these is the appointment of a money laundering reporting officer. Which of the following is not true of the MLRO?
They are a member of the National Crime Agency
Which of the following are TRUE regarding insider dealing?
Offences are committed by individuals, not corporations
Encouraging a third party to deal is an offence
UK equities and gilts and their derivatives are covered
Disclosure of inside information, other than in
In relation to money laundering, which of the following is FALSE?
Firms have to report money laundering suspicions to the Financial Action Task Force (FATF)
In relation to the insider dealing legislation, which of the following individuals would be considered to be an insider?
The audit partner who sells shares after reading the audit report prior to publication of the financial statements
Are promotions in respect of Undertaking for Collective Investments in Transferable Securities (UCITS) funds allowed on a general marketing basis in the UK?
Yes
Which of the following is least likely to supply information as an insider?
A small shareholder
Under the European Markets Infrastructure Regulation, which of the following is not a requirement on those that trade derivatives?
To ensure the orderly functioning of markets
Which of the following is not covered by the insider dealing legislation?
Building society deposits
Which ONE of the following is the best description of the purpose of the UCITS legislation?
To facilitate the marketing and sale of unit trusts and ICVCs in the EEA on the basis of authorisation in the home state
For the purposes of money laundering if a client is acting on behalf of a third party, whose identity needs to be established?
Both the client and the third party
Which institutions are included in MiFID?
An institution offering underwriting in tradable securities on a commitment An investment firm that offers services within its own group
Portfolio management firms
Corporate finance firms offering financial advice in EU
What kind of offence is insider dealing?
Criminal
Which of the following is neither considered an ancillary service nor a financial instrument as defined under MiFID?
A commodity producer managing risk through investment in commodity derivatives
The purpose of the Joint Money Laundering Steering Group (JMLSG) is:
To provide firms with guidance in respect of money laundering regulations
Which of the following are TRUE of money laundering?
There are three stages: placement, layering and integration
Assisting a money launderer, failure to report and tipping off are all offences
The firm must appoint an appropriate person to handle suspected cases
Records must be maintained for five years under the Money Laundering Regulations
A chairman has access to price sensitive information about his company’s shares. In which of the following circumstances could a director in the company trade?
The director would follow the PDMR rules
A firm of fund managers lets the market know that it is very keen to buy substantial quantities of shares in Benno plc, when actually it holds a smaller quantity of shares in Benno that it plans to sell. Which of the following criminal offences, under the Financial Services Act 2012 is the firm most likely to be guilty of?
Misleading impressions
The purpose of a transaction report is:
To allow the FCA to review transactions
Inside information could be which of the following?
Information which, if made public, could significantly affect the share price
Which of the following is NOT one of the specified types of market abuse?
Processing proceeds of crime
Which of the following are NOT permitted under UCITS, but is under MiFID?
Commodity derivatives
Which of the following would not be committing an offence under the Criminal Justice Act 1993 if they purchased shares in ABC plc?
A non-executive director of ABC who resigned seven months ago who expects profits to show an unexpected rise when published
According to the Money Laundering Regulations,
The firm must keep records for five years.
Which of the following is excluded from the Markets in Financial Instruments Directive regulations?
Insurance firms
A client requests an investment manager to carry out a trade in a listed security. Who is responsible for the transaction report?
Investment manager
Which TWO of the following would constitute insider dealing?
Dealing on unpublished, price-sensitive information
Encouraging another person to deal on unpublished, price-sensitive information
The rules concerning the capital resource requirements for MiFID firms are contained in:
The General Prudential Sourcebook
Which of the following prosecutes insider dealers?
Financial Conduct Authority
If a chairman wanted to deal shares in their company (s)he would inform:
Their company
Which of the following is NOT an offence under the insider dealing legislation?
A director dealing in shares two months before announcement of results
In relation to the insider dealing legislation which ONE of the following is a SPECIAL or specific defence against insider dealing?
The individual acted in accordance with the stabilisation rules
Who would receive notification of a director trading shares in their own company?
Their company
All of the following are covered by the UK insider dealing legislation except:
Forward foreign exchange contracts
Which of the following is NOT an objective of the Markets in Financial Instruments Directive?
To ensure the profitability of firms offering financial services across the EEA
In relation to data protection, to whom does a firm’s Data Input Officer report?
The firm’s Data Controller
The EU Transparency Directive sets 5% as the level of notifiable interest.
In the UK it is 3%.
Post-trade transparency, reporting and publication requirements require the publication of the price and volume of completed trades which are undertaken. These rules apply to which one of the following?
All deals by any investment firm
Which of the following is NOT true regarding the insider dealing legislation under the Criminal Justice Act?
Disclosure of information to a third party outside the company affected is not an offence
At which stages of the money laundering process are investment firms generally most vulnerable to being involved in money laundering activities?
Layering and integration
Which ONE of the following is a defence against S89-91 of Financial Services Act 2012 - making misleading statements or impressions?
Adherence to Stabilisation Rules
With regard to money laundering, all suspicions should be reported by employees to the MLRO, who in turn reports to?
NCA
Which are TRUE of money laundering?
The JMLSG Guidance Notes have received Treasury approval
It is a criminal offence not to report a suspicion
It is a criminal offence not to have procedures in place
Under the scope of MiFID, in which of the following situations would the French COBS apply in full if the client is France based?
Firm is located in the France
Firm is located in the EEA and the branch is in the France
To whom must the Money Laundering Reporting Officer report suspicious activities?
National Crime Agency
The rules on data protection require data not to be transferred out of which jurisdiction without ensuring there is an adequate level of protection?
EEA
Market abuse involving manipulating devices would cover:
Shares in an investment trust
Which of the following is an ancillary service under the Markets in Financial Instruments Directive?
Providing investment research into equities
Which of the following is NOT true of insider dealing?
It only applies to dealings via a regulated market
Which of the following is FALSE with regard to the money laundering regulations?
A Money Laundering Reporting Officer is only required for large, complex organisations
A director of a company has recently informed a friend about a pending takeover of the company, telling them that since this information is not public, they can make a quick profit by buying the company’s shares. The friend declines to trade on this information. Who has committed an offence under insider dealing legislation?
The director
Which of the following is a general defence to insider dealing?
Would have dealt anyway
Where can the law relating to insider dealing as a criminal offence be found?
The Criminal Justice Act 1993
Which of the following statements is TRUE regarding market abuse?
Intention does not need to be proved
According to the Markets in Financial Instruments Directive, which of the following is NOT a core investment service or activity?
Giving advice on capital structure
All of the following represent data protection principles under GDPR, except:
Processed in a manner which is clear, fair and not misleading
With whom must a processor of personal information register?
Information Commissioner
Under which of the following is insider dealing a criminal offence?
Criminal Justice Act 1993
Which EU Directive relates to passporting of financial services?
MiFID
Which European regulation relates to the transparency and risk management in the OTC derivative markets?
European markets infrastructure regulation
The individual acted in accordance with the stabilisation rules
Buying or selling securities and derivatives
The process where an EEA firm opens up a branch in another EEA country without obtaining local authorisation is known as:
Passporting
Which of the following would not be classed as an act of terrorism?
Chaining yourself to the railings outside 10 Downing Street
Which of the following is an inter-governmental body which sets international standards that aim to prevent money laundering and terrorist financing activities and the harm they cause to society?
Financial Action Task Force
What is the aim of the money laundering regulations?
To prevent the proceeds of crime from entering the financial system
Which of the following would not be considered a suspicious transaction under the Money Laundering Regulations?
The customer is unable to prove his identity through the usual means, but is willing to offer other forms of identification
The FCA Conduct of Business rules apply to all the following firms engaged in investment business, except which of the following?
Causing a dematerialised instruction to be sent from a foreign country to a UK exchange
Which of the following is NOT taken into account when reclassifying a retail client as a professional client?
Integrity and reputation
Limit orders not executed immediately must be made public to:
A regulated market
How do the FCA regulations apply to an appointed representative of a firm?
Indirectly
In which of the following situations would the firm need to apply the client money rules? If the money:
Is interest paid on any holdings of client money
Which of the following would be considered client money?
Cheque drawn up on client’s account that has not been cleared
Which of the following is NOT true of the order execution policy?
A firm must monitor the effectiveness of the policy on a transaction by transaction basis
Which ONE of the following is LEAST likely to cause a conflict of interest?
Customer instructs firm to buy shares when the firm holds a position
If a promotion is communicated solely by telephone, when must information be provided?
In good time before the consumer is bound by a distance offer or contract
When must a firm disclose charges to a retail client?
Before providing the service
If a firm performs an ancillary service for a client, how long should the firm hold on to the records of the client agreements?
Whichever is longest five years or the duration of the relationship with the client
According to the COBS, the financial promotion rules always apply to a firm in relation to the communication of a financial promotion:
From the UK to a person inside the UK
In relation to the conduct of business rules in respect of disclosure of conflicts of interest, which ONE of the following is FALSE of the disclosure?
It can be made verbally
An authorised firm wishes to increase its retail client base by launching a cold calling campaign. Which of the following would be permitted?
Discussion about listed shares
Which one of the following, if unsolicited, would not be regarded as a cold call under the financial promotion rules?
An email
Which of the following is a ‘personal recommendation’ under MiFID?
Suggesting the purchase of a particular investment instrument
When a firm communicates initially with a retail client, COBS requires it to provide ‘appropriate information’, which includes all of the following except:
Who to refer complaints to if they cannot be resolved by the firm
Graham has been accused of making a misleading impression in an attempt to encourage someone to deal. Which of the following would give him a defence?
Price stabilisation rules
Inside information could be which of the following?
Information which, if made public, could significantly affect the share price
Which of the following is an insider according to the Criminal Justice Act 1993?
An employee whose work involves inside information
All of the following are considered a core activity under MiFID except:
Safe custody
The Takeover Code covers all of the following elements of a takeover EXCEPT:
Ensuring the financial and commercial advantage of the takeover
Which of the following is the requirement concerning the holding of personal data under Principle 3 of the Data Protection Act 2018?
Adequate, relevant and not excessive
Which of the following pieces of legislation cover money laundering?
Proceeds of Crime Act 2002
Which of the following would NOT be covered by the insider dealing legislation?
Unit trust
To which of the following must a Money Laundering Reporting Officer report money laundering suspicions?
National Crime Agency
Which of the following is true regarding money laundering?
All suspicions should be reported by employees to the MLRO
Under Data Protection Principle 1, information must be processed:
Lawfully and fairly
In respect of Money Laundering Regulations which of the following is NOT true?
Once an employee has reported suspicions to their Money Laundering Reporting Officer they have a further duty of disclosure to the authorities
Which of the following requires immediate notification by the firm to the PRA?
When it has breached the financial resources requirement
IIWhen it believes that it may shortly breach the financial resources requirement
IVWhen a systems failure means that the firm is unable to produce accounting records which disclose the financial position of the company
If an employee notices a suspicious transaction, which of the following is the correct first course of action?
The employee reports to the MLRO
Under the UCITS Directive, in which of the following is it NOT permissible to invest?
Residential property
The MLRO is an officer of the firm with what characteristics?
The authority and sufficient independence within the firm to carry out the duty
Under the FCA client money rules (CASS 7), in which of the following situations is a firm deemed to have discharged fiduciary duty?
At the point where the payment clears from the client account
To whom should a firm produce a document about compensation claims when carrying on MiFID business?
All clients
When a professional client is initially classified, which of the following terms is used?
Per se
A firm provides services to retail clients in many products. In which of the following situations would it need to prepare a key information document (KID)?
The client wishes to receive advice on purchasing a structured product
For a UK firm operating in the UK the rules on personal account transaction are based on which of the following general approaches?
Home state basis
A firm may treat a client as an elective professional client for non-MiFID business if:
The qualitative test is passed and there is a statement that protection will be lost
Which of the following is NOT true of an eligible counterparty?
They can be individuals who have opted up from an elective professional client
The custody rules do not apply to delivery versus payment transactions if which of the following are met?
Delivery is due within one day of payment
The firm is holding money belonging to clients. When would it NOT need to comply with the client money rules? If the money is:
Coins held for the value of their metal
If a firm is aware that Bob is acting as an agent for Bill, then Bill will be the firm’s client if:
Bob and the firm have agreed in writing to treat Bill as the client
To whom do the client money rules apply?
All clients
If the firm aggregates a client’s order with a transaction for its own account, which of the following is true?
client’s allocation, if the order is partially allocated, must take priority
A firm that manages a client’s investments must ensure that which of the following occurs?
They specify any index against which performance will be compared
With reference to appointed representatives giving advice on packaged products, who is responsible for maintaining written records covering the agent’s scope of advice and range of products?
The appointing firm
What must be disclosed in all written communication with a retail client?
The name and business address of the firm
IIThe status of the individual sending the communication
IIIThe regulatory authority over the firm’s business
In which of the following legislation would you find details of whether a firm is subject to the Conduct of Business rules contained within the FCA Handbook?
Financial Services and Markets Act
In order to gain favourable terms for its clients, a firm aggregates several client orders with its own order. During execution, only part of the order is filled. How must the order be allocated?
- In line with the allocation policy
Which of the following are true with relation to a firm providing designated investment business to a retail client?
The firm must pay due regard to the information needs of clients when communicating with them
IIThe information should be sufficient to enable the client to understand the nature and risk of the service and investment
IIIThe information communicated must be fair, clear and not misleading
IVThe firm must provide appropriate information about itself to retail clients
Under the COBS, a professional client or an eligible counterparty can ask for a re-categorisation in which of the following cases?
It is permitted on a trade by trade basis
IIIt is permitted in general for all trades
IIIIt is permitted on individual instrument classes
A member of the compliance team is confirming the compliance of a financial promotion with FCA rules. Which of the following must be included in the promotion?
Capital at risk products are clearly referred to as such
According to COBS, which of the following is not considered an execution venue?
Retail broker
In the case of MiFID business, a firm must keep a copy of the periodic reports for:
A period of five years from the date of dispatch
It is always classified as a professional client
Simulated past performance is based on actual past performance of instruments that are the same as or underly the investment concerned
A firm is approached by an authorised collective investment scheme (CIS) in relation to designated investment business. Which of the following best represents the conditions under which the CIS will get classified as a professional client?
It is always classified as a professional client
Where a communication by a firm contains information about past performance, this must cover a minimum period of:
Five years
A firm provides personal recommendations to a retail client. After ensuring suitability, in which of the following situations would the firm need to provide the client with a suitability report?
When the firm recommends the investor to invest in an ISA wrapped investment trust
When the firm recommends the investor to invest in an ISA wrapped investment trust
Retail clients only
Which of the following statements is true with respect to cancellation rights on the sale to a retail client of a packaged product? Cancellation rights:
Should be offered
Under FCA rules on client categorisation, which of the following would ALWAYS be considered a per se professional client?
Special purpose vehicle
When entering into a distance marketing contract for a life policy, how much time must a retail client be given to cancel the contract if they wish to do so?
30 calendar days
Which of the following are not protected by the conduct of business rules sourcebook?
Property purchases by a retail client
If a person associated with the firm wishes to make a cold call, they must:
Give a contact point for the client during the call
The website of a firm shows two products; details on one are available only by post and of the other only online. Which of the two is a written financial promotion?
Both products are considered written financial promotions.
The requirement for the firm to deliver the best possible result when executing client orders is expected for:
All types of financial instruments
The following are true of investment advertisements sent to retail clients except that they must:
Not use any past performance data
Which of the following is NOT a requirement for an elective professional client status according to the Conduct of Business rules?
The client’s cash deposits are in excess of 20,000 euros. There is no explicit requirement on the size of the client’s cash deposits. The requirement is that the portfolio, including cash deposits must be greater than 500,000 euros.
In respect of the Conduct of Business Rules which of the following does NOT qualify as a ‘durable medium’?
Internet websites
In the description of an investment within a financial promotion, in light of the ‘fair, clear and not misleading’ rule, the firm should always include which of the following?
If fees cannot be specifically given, the basis on which these fees are assessed should be presented
A firm needs to assess the appropriateness of an investment or service for a retail client when the service is:
To arrange the purchase of a contingent liability instrument
A firm has just executed an order for a retail client. Within what period of time must the confirmation of trade be sent?
Within one business day
When can a retail client expect to receive information regarding their right to cancel an agreement to purchase units in an authorised unit trust?
Before or after entering into the agreement depending on the situation
Which of the following could be classified as communicating a financial promotion?
Internet website
IIMailshot
IIICall centre making calls
IVSales aid
When carrying out client orders the firm must ensure:
Comparable orders must be carried out sequentially except in specific conditions
When considering best execution criteria for a retail client, which of the following would NOT be considered when obtaining the best possible result?
The costs incurred by the client payable to the firm
A retail client would normally expect to get a periodic statement of their non-leveraged security based account at least:
Every three months
If an analyst invests in a UCITS collective investment scheme. How soon should they contact the compliance team to inform them of any increase in the number of units they hold?
There is no need if the analyst has no management relationship with the CIS
All are true in respect of churning and switching except:
The rules on churning and switching apply to retail clients only for advisory services and any client for discretionary services
In relation to MiFID business, how long must a firm retain records of trade confirmations sent to a client?
Five years from date of dispatch
A firm produces research with the sole intent of making this the focus of a recommendation to clients. When presenting such research recommendations, the firm must be considered as being bound by:
Financial Promotion Rules
A firm receives an order from a retail client, but there are problems in carrying out the instruction. When must a firm inform the client about this problem?
At once
A firm has searched through its client list, looking for those that have been inactive for some time. They plan to cold call these clients. If these clients are retail clients, which of the following products are permitted to be sold on the cold call?
A generally marketable low volatility packaged product
An authorised firm provides a service to a retail client. The FCA requires that the firm discloses its charges to that client. When should this disclosure occur?
Before doing business
In relation to MiFID business, which of the following is permissible for the presentation of past, simulated past or future performance of a UK investment?
The reference period and source of information are clearly stated
A website is a permissible method of communication with clients if which of the following criteria are met?
The provision of the information in that particular medium is appropriate to the investment, service and client
A firm discovers that an elective professional client’s portfolio has reduced in size to less than €150,000 and the number of trades has been reduced to an average of four per quarter over the last 12 months. What actions should the firm take?
Reclassify the individual as a retail client and notify the client of the action
An investor opens a non-exempt cash ISA with an authorised bank to benefit from the tax advantages offered. What is the minimum cancellation period the bank must offer?
14 calendar days
If a client is unwilling to provide sufficient information for a firm to assess suitability in respect of a personal recommendation, what should the firm do next?
Act for a professional client on a non-advised execution only basis as long as the client provides instruction for the trades
The requirements for record keeping according to MiFID are:
Five years
When providing which of the following activities must a retail client be assessed for appropriate levels of knowledge by the firm?
Executing a deal on an equity warrant
Executing a deal on an equity warrant
Misleading statements and impressions
According to the FCA Conduct of Business Rules Sourcebook, which of the following is the best definition of durable media?
Media that can be accessed by clients and allows unchanged reproduction of the information
Martin gives an instruction to a stockbroking firm to sell a holding of shares at a limit price much higher than the firm is willing to buy. Assuming that there have been no specific instructions beyond the order itself, which of the following best reflects what the firm should do next?
Place the order on a regulated market
In which of the following circumstances may a firm aggregate a client’s order with an own account order?
It is likely that the aggregation will not work to the disadvantage of each of the clients concerned
Which of the following will be included in a trade confirmation notice?
The date on which the trade took place
IIThe time at which the trade took place
IIIThe total consideration paid/received in the transaction
IVExecution venue
All of the following may be considered “proper fees” under the FCA inducements rules EXCEPT:
The cost of general office software
When communicating with retail clients, a firm producing information must ensure that:
The name of the firm is included
IIThe information does not emphasise any potential benefits of relevant business without risks being related
IIIIt is presented in a manner that is likely to be understood by the average member of the target group
IVIt does not obscure important items
If a financial analyst (a relevant person) is providing investment research for dissemination to its clients in particular financial investments, when would the analyst be permitted to deal on that information?
They would be permitted to deal on the information if granted approval by the firm’s compliance
What must the firm’s conflict of interest policy ensure?
All groups have sufficient guards on the information flow between each other
Which of the following sets of information is not required in a direct offer financial promotion to a retail client?
Execution venues where trading will occur
If an eligible counterparty requests to be dealt with for certain transactions as a professional client, what may the firm do?
Treat them as a professional client
Eligible counterparty status is not available to:
An expert individual client
When would an employee of an authorised firm MOST LIKELY be permitted to enter into a personal account transaction? If the transaction:
Is from an employee that is neither involved in the higher control functions nor the provision of designated investment business
For which of the following would the Financial Promotions regulations need to be applied?
Retail clients
From which of the following must a firm keep client money segregated?
Money belonging to the firm
From which of the following must a firm keep client money segregated?
Is compatible with the client’s level of experience and understanding of the risks involved
Which is FALSE in terms of the aggregation of orders?
Firms must aggregate firm and client orders together
If, during the reconciliation process, discrepancies are noticed, which of the following must the firm do?
Make up for the shortfall itself
Which clients need to have the most comprehensive risk explanation provided to them?
An execution only retail client buying options
Which of the following would not be automatically given retail client protection by an FCA member firm under client categorisation?
A listed company with funds of €2 million and assets of €25 million
During the provision of a service to a professional client, a firm discovers a conflict of interest that it is unable to manage. What should the firm disclose?
The sources of the conflicts before any transactions proceed on a durable medium
When is it allowable for an unauthorised person to communicate a financial promotion?
After reasonable care has been made to establish that an authorised firm has ensured that the promotion is in compliance with the relevant rules
What information must always be included in a firm’s order execution policy for retail clients?
The process the firm uses to specify relative importance of the execution factors
Which of the following is not defined as a packaged product according to COBS?
A government or public security
If the firm wishes to communicate electronically with clients, which of the following conditions must be met?
There is evidence that the client has means to communicate this way
IIThe client has consented to that form of communication
IIIThe website must be made known to the client
A firm wishes to execute a client order outside a regulated market or multilateral trading facility. When would this be permitted under the FCA conduct of business rules?
If there is prior consent from the client
All of the following could be considered a professional client. Which of them is MOST LIKELY to have reached that status through election?
Local authority
Which of the following is true of trail commissions for retail client advisers?
Trail commissions are not allowed
With respect to MiFID business, when a loan is made to a retail client how long should the records be kept?
Five years from the date the loan ended
Which of the following is not a requirement for recategorisation as a professional client according to conduct of business rules in relation to MiFID business?
The client has stated they are of sufficient experience, have sufficient understanding and pass the quantitative tests
If a client can be considered as a professional client, then the firm may assume that they have sufficient knowledge of which risks?
Risks of the designated investments for which they are classed as professional
To be treated as an elective eligible counterparty for MiFID business, a company must satisfy which conditions using the net turnover and/or funds criteria?
Net turnover of at least €40 million and company funds of at least €2 million
