regulations Flashcards
1
Q
WHICH OF THE NOTICES SPECIFIES A DATE FROM WHICH IT WILL BE EFFECTIVE?
A
FINAL NOTICE
2
Q
WHICH OF THE FOLLOWING IS NOT A PRA SENIOR MANAGER FUNCTION FOR A UK BANK?
A
EXECUTIVE DIRECTOR FUNCTION
3
Q
WHICH OF THE FOLLOWING IS NOT REGULATED UNDER FSMA 2000?
A
SHARE ADVICE IN A. NEWSPAPER COLUMN
4
Q
WHICH OF THE FOLLOWING DOES FSMA 2000 MAKE RESPONSIBLE FOR ENSURING A FIRM COMPLIES WITH APPROPRIATE REGULATIONS?
A
THE FIRM ITSELF.
5
Q
WHICH OF THE FOLLOWING IS NOT A PILLAR OF THE FCA SUPERVISION MODEL?
A
PROACTIVE INTERVENTION MODEL.
6
Q
FSMA 2000 DOES NOT REQUIRE THE BUSINESS CARRYING OUT WHICH OF THE FOLLOWING TO BE AUTHORISED?
A
ADVISING ON CURRENCIES
7
Q
FCA CAN IMPOSE FINES
A
THERE ARE NO MAXIMUM LIMITS ON FINES
8
Q
WHICH OF THE FOLLOWING CONDUCT RULES APPLY TO ALL SMCR FUNCTIONS?
A
OBSERVE PROPER STANDARDS OF MARKET CONDUCT.
9
Q
UNDER FCA SMCR WHICH OF THE FOLLOWING IS MOST LIKELY TO BE A SENIOR MANAGEMENT FUNCTION FOR A UK BANK?
A
MLRO
10
Q
WHICH OF THE FOLLOWING IS NOT A SPECIFIED INVESTMENT?
A
NATIONAL SAVINGS CERTIFICATE
11
Q
WHAT IMMEDIATELY FOLLOWS THE RECEIPT OF A WARNING NOTICE?
A
THE OPPORTUNITY TO MALE REPRESENTATIONS AND MEDIATE AN AGREEMENT WITH THE RDC DECISION COMMITTEE
12
Q
WHICH OF THE FOLLOWING ARE CONSIDERED IN ASSESSING THE FITNESS AND PROPRIETY OF A FIRM?
A
- 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.
13
Q
WHICH OF THE FOLLOWING INVESTMENTS IS REGULATED BY FSMA 2000?
A
DEBENTURES
14
Q
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?
A
EITHER A SUPERVISORY OR A DECISION NOTICE
15
Q
WHO AUTHORISES MARKET MAKERS IN THE WHOLESALE MONEY MARKETS IN THE UK?
A
FCA
16
Q
WHICH OF THE FOLLOWING NOTICES CAN BE PUBLISHED IN ACCORDANCE WITH DISCIPLINARY PROCESSES AND MEASURES WITHOUT THE CONSENT OF THE RECEIVING PARTY?
A
- FINAL DECISION NOTICE
- FINAL SUPERVISORY NOTICE
17
Q
WHEN DOES THE FCA ISSUE A FINAL NOTICE?
A
NO SOONER THAN 28 DAYS AFTER A DECISION NOTICE
18
Q
WHICH OF THE FOLLOWING ARE NOT SPECIFIED INVESTMENTS AS DEFINED BY THE REGULATED ACTIVITIES ORDER?
A
PREMIUM BONDS AND CURRENCIES
19
Q
WHICH OF THE FOLLOWING DOES NOT REQUIRE FCA/PRA AUTHORISATION?
A
WRITING A NEWSPAPER COLUMN ADVISING ON INVESTMENTS.
20
Q
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
A
IMMEDIATLY
21
Q
ACCORDING TO THE GENERAL PROHIBITION (S19 FSMA 2000) WHICH OF THE FOLLOWING ACTIVITIES WOULD NOT REQUIRE A FIRM TO GAIN AUTHORISATION BY THE REGUALATOR?
A
ADVISING ON CURRENCIES
22
Q
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?
A
IT IS VOIDABLE AT THE OPTION OF A CLIENT
23
Q
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?
A
INVESTMENT ADVISER
24
Q
WHICH OF THE FOLLOWING IS NOT A REGULATED ACTIVITY UNDER FSMA 2000?
A
DEALING IN US dollars
25
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
26
CAN AN AUTHORISED FIRM APPEAL A DECISION NOTICE?
YES
27
WHICH OF THE FOLLOWING IS NOT ONE OF THE REGULATOR'S SUPERVISORY TOOLS?
DUE DILLIGENCE
28
S71 OF FSMA 2000 ALLOWS PRIVATE PERSONS TO CLIAM DAMAGES FOR LOSSES CAUSED BY WHICH OF THE FOLLOWING?
AN AUTHORISED FIRM
29
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
30
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.
31
WHEN A FIRM IS FOUND IN BREACH OF THE REGULATIONS,
- INVESTIGATION
- PRELIMINARY FINDINGS LETTER
- RDC SENDS A DECISION NOTICE
- DISCIPLINARY ACTION
32
WHICH OF THE FOLLOWING IS NOT A SPECIFIED INVESTMENT UNDER FSMA 2000?
RESIDENTIAL PROPERTY
33
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
34
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
35
WHICH OF THE FOLLOWING ARE SPECIFIED INVESTMENTS AS DEFINED BY THE REGULATED ACTIVITIES ORDER?
- OPTIONS ON THE FTSE 100 INDEX
| - OPTIONS ON GOLD
36
WHICH OF THE FOLLOWING OCMES IMMEDIATELY AFTER THE ISSUE OF A WARNING?
RESPONSE AND RIGHT TO HEARING
37
PERSONAL RESPONSIBILITY FOR SENIOR MANAGER FUNCTIONS IS ENFORCED BY
A SET OF CONDUCT RULES BACKED BY A DUTY OF RESPONSIBILITY
38
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
39
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
40
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
41
If the FCA is asked to pursue 'redress' it will:
Consider the different methods of redress available to it
42
Which is not a specified investment?
An option on physically delivered gas oil
43
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
44
Which of the following is a regulated activity?
Establishing a stakeholder pension
45
Significant decisions on appropriate disciplinary measures are made by:
The RDC
46
How would you describe a firm which has gained Part 4A permission?
Authorised
47
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
48
What is the maximum number of employees permitted to work in an authorised firm's compliance department?
No maximum
49
Which of the following is true with regard to the Training and Competence Sourcebook?
FCA firm employees must have their competency reviewed regularly
50
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
51
Under the Individual Accountability Regime a firm must take reasonable care to ensure that individuals undertaking significant harm functions are:
Certified persons
52
Representatives of the FCA and PRA can do all of the following except:
Remove any documents from the firm's business premises
53
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
54
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
55
Which of the following is not a direct power available for the FCA to use where it considers appropriate?
Impose custodial sentences
56
When providing services to a professional client, for which of the following investments would a firm not need to gain Part 4A Permission?
Gold
57
Which of the following are not regulated investments, as defined by the Regulated Activities Order?
Premium bonds and currencies
58
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
59
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
60
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
61
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
62
Under the product intervention rules for how long can products be banned by the FCA without consultation with the product provider
12 months
63
Which of the following is a specified investment under the Regulated Activities Order?
Shares in an unincorporated business
64
Which of the following is ALWAYS a certified function?
Financial planner
65
Which of the following is NOT a specified activity?
Acting as principal and end user when dealing in shares
66
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
67
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
68
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
69
What is the territorial scope of the Tax and Chancery Chamber of the Upper Tribunal?
United Kingdom only
70
Which of the following is true regarding the Regulatory Decisions Committee?
It may issue a Final Notice
71
All of the following are true of recognised investment exchanges, except:
It guarantees a market place where investors can always deal at fair prices
72
Under the FCA's Senior Managers regime which of the following is ALWAYS performing a senior management function?
Chairman of the Board of Directors
73
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
74
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
75
Which of the following are true with respect to decision notices?
They may be issued to firms and individuals
76
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
77
When the UK regulator allows a firm to undertake regulated activities, it grants which of the following?
Part 4A Permission
78
Which of the following statements is not true of the Principles for Businesses?
They do not apply to UK firms complying with the
79
Who is the Tax and Chancery Chamber of the Upper Tribunal set up by?
The Ministry of Justice
80
Which of the following is NOT a disciplinary sanction of the Regulatory Decisions Committee?
Private warning
81
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
82
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
83
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
84
Which of the following is not categorised as a disciplinary measure of the FCA?
Private warning
85
For how long after the discovery of a problem can the FCA hold an individual eligible for disciplinary action?
Three years
86
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
87
All of the following are specified by the FCA as SM&CR functions except:
Dealing with the assets of the firm
88
The MLRO must report to senior management at least:
Once every 12 months
89
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
90
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.
91
Which of the following is NOT considered as ancillary services under MiFID?
Making a personal recommendation on a CAC 40 stock
92
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
93
At which stage of the money laundering process are the proceeds of crime separated from their source?
Layering
94
A UCITS collective investment scheme cannot invest in which of the following?
Gold
95
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
96
Which one of the following is NOT a money laundering offence, as defined in the Proceeds of Crime Act?
Dealing on price sensitive information
97
Which of the following gives the FCA the power to prosecute insider dealing offences?
Financial Services and Markets Act 2000
98
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.
99
Which does the Capital Requirement Directive require? All firms:
Under the scope of MiFID should have more than the amount of regulatory specified capital
100
Which of the following is outside the scope of MiFID?
Oil
101
Market making is a specific defence against insider trading if the market maker:
Acts in good faith
102
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
103
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
104
Compliance with capital requirement rules for MiFID firms is imposed by:
The home state
105
Sue becomes suspicious of a 'high number of sales' by her client to an unknown party. Sue should report her fears to:
The MLRO
106
Which of the following is an ancillary service as defined under the Markets in Financial Instruments Directive?
Services relating to investment research
107
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
108
Under the Money Laundering Regulations all of the following are considered high-risk factors EXCEPT:
Transactions within a pooled client account
109
To whom must the Money Laundering Reporting Officer report suspicious activities?
National Crime Agency
110
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
111
Which organisation would a Money Laundering Reporting Officer normally report suspicions of money laundering to?
National Crime Agency
112
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
113
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
114
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)
115
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
116
Are promotions in respect of Undertaking for Collective Investments in Transferable Securities (UCITS) funds allowed on a general marketing basis in the UK?
Yes
117
Which of the following is least likely to supply information as an insider?
A small shareholder
118
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
119
Which of the following is not covered by the insider dealing legislation?
Building society deposits
120
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
121
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
122
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
123
What kind of offence is insider dealing?
Criminal
124
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
125
The purpose of the Joint Money Laundering Steering Group (JMLSG) is:
To provide firms with guidance in respect of money laundering regulations
126
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
127
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
128
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
129
The purpose of a transaction report is:
To allow the FCA to review transactions
130
Inside information could be which of the following?
Information which, if made public, could significantly affect the share price
131
Which of the following is NOT one of the specified types of market abuse?
Processing proceeds of crime
132
Which of the following are NOT permitted under UCITS, but is under MiFID?
Commodity derivatives
133
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
134
According to the Money Laundering Regulations,
The firm must keep records for five years.
135
Which of the following is excluded from the Markets in Financial Instruments Directive regulations?
Insurance firms
136
A client requests an investment manager to carry out a trade in a listed security. Who is responsible for the transaction report?
Investment manager
137
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
138
The rules concerning the capital resource requirements for MiFID firms are contained in:
The General Prudential Sourcebook
139
Which of the following prosecutes insider dealers?
Financial Conduct Authority
140
If a chairman wanted to deal shares in their company (s)he would inform:
Their company
141
Which of the following is NOT an offence under the insider dealing legislation?
A director dealing in shares two months before announcement of results
142
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
143
Who would receive notification of a director trading shares in their own company?
Their company
144
All of the following are covered by the UK insider dealing legislation except:
Forward foreign exchange contracts
145
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
146
In relation to data protection, to whom does a firm's Data Input Officer report?
The firm's Data Controller
147
The EU Transparency Directive sets 5% as the level of notifiable interest.
In the UK it is 3%.
148
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
149
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
150
At which stages of the money laundering process are investment firms generally most vulnerable to being involved in money laundering activities?
Layering and integration
151
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
152
With regard to money laundering, all suspicions should be reported by employees to the MLRO, who in turn reports to?
NCA
153
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
154
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
155
To whom must the Money Laundering Reporting Officer report suspicious activities?
National Crime Agency
156
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
157
Market abuse involving manipulating devices would cover:
Shares in an investment trust
158
Which of the following is an ancillary service under the Markets in Financial Instruments Directive?
Providing investment research into equities
159
Which of the following is NOT true of insider dealing?
It only applies to dealings via a regulated market
160
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
161
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
162
Which of the following is a general defence to insider dealing?
Would have dealt anyway
163
Where can the law relating to insider dealing as a criminal offence be found?
The Criminal Justice Act 1993
164
Which of the following statements is TRUE regarding market abuse?
Intention does not need to be proved
165
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
166
All of the following represent data protection principles under GDPR, except:
Processed in a manner which is clear, fair and not misleading
167
With whom must a processor of personal information register?
Information Commissioner
168
Under which of the following is insider dealing a criminal offence?
Criminal Justice Act 1993
169
Which EU Directive relates to passporting of financial services?
MiFID
170
Which European regulation relates to the transparency and risk management in the OTC derivative markets?
European markets infrastructure regulation
171
The individual acted in accordance with the stabilisation rules
Buying or selling securities and derivatives
172
The process where an EEA firm opens up a branch in another EEA country without obtaining local authorisation is known as:
Passporting
173
Which of the following would not be classed as an act of terrorism?
Chaining yourself to the railings outside 10 Downing Street
174
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
175
What is the aim of the money laundering regulations?
To prevent the proceeds of crime from entering the financial system
176
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
177
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
178
Which of the following is NOT taken into account when reclassifying a retail client as a professional client?
Integrity and reputation
179
Limit orders not executed immediately must be made public to:
A regulated market
180
How do the FCA regulations apply to an appointed representative of a firm?
Indirectly
181
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
182
Which of the following would be considered client money?
Cheque drawn up on client's account that has not been cleared
183
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
184
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
185
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
186
When must a firm disclose charges to a retail client?
Before providing the service
187
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
188
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
189
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
190
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
191
Which one of the following, if unsolicited, would not be regarded as a cold call under the financial promotion rules?
An email
192
Which of the following is a 'personal recommendation' under MiFID?
Suggesting the purchase of a particular investment instrument
193
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
194
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
195
Inside information could be which of the following?
Information which, if made public, could significantly affect the share price
196
Which of the following is an insider according to the Criminal Justice Act 1993?
An employee whose work involves inside information
197
All of the following are considered a core activity under MiFID except:
Safe custody
198
The Takeover Code covers all of the following elements of a takeover EXCEPT:
Ensuring the financial and commercial advantage of the takeover
199
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
200
Which of the following pieces of legislation cover money laundering?
Proceeds of Crime Act 2002
201
Which of the following would NOT be covered by the insider dealing legislation?
Unit trust
202
To which of the following must a Money Laundering Reporting Officer report money laundering suspicions?
National Crime Agency
203
Which of the following is true regarding money laundering?
All suspicions should be reported by employees to the MLRO
204
Under Data Protection Principle 1, information must be processed:
Lawfully and fairly
205
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
206
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
207
If an employee notices a suspicious transaction, which of the following is the correct first course of action?
The employee reports to the MLRO
208
Under the UCITS Directive, in which of the following is it NOT permissible to invest?
Residential property
209
The MLRO is an officer of the firm with what characteristics?
The authority and sufficient independence within the firm to carry out the duty
210
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
211
To whom should a firm produce a document about compensation claims when carrying on MiFID business?
All clients
212
When a professional client is initially classified, which of the following terms is used?
Per se
213
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
214
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
215
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
216
Which of the following is NOT true of an eligible counterparty?
They can be individuals who have opted up from an elective professional client
217
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
218
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
219
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
220
To whom do the client money rules apply?
All clients
221
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
222
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
223
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
224
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
225
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
226
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
227
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
228
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
229
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
230
According to COBS, which of the following is not considered an execution venue?
Retail broker
231
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
232
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
233
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
234
Where a communication by a firm contains information about past performance, this must cover a minimum period of:
Five years
235
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
236
When the firm recommends the investor to invest in an ISA wrapped investment trust
Retail clients only
237
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
238
Under FCA rules on client categorisation, which of the following would ALWAYS be considered a per se professional client?
Special purpose vehicle
239
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
240
Which of the following are not protected by the conduct of business rules sourcebook?
Property purchases by a retail client
241
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
242
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.
243
The requirement for the firm to deliver the best possible result when executing client orders is expected for:
All types of financial instruments
244
The following are true of investment advertisements sent to retail clients except that they must:
Not use any past performance data
245
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.
246
In respect of the Conduct of Business Rules which of the following does NOT qualify as a 'durable medium'?
Internet websites
247
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
248
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
249
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
250
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
251
Which of the following could be classified as communicating a financial promotion?
Internet website
IIMailshot
IIICall centre making calls
IVSales aid
252
When carrying out client orders the firm must ensure:
Comparable orders must be carried out sequentially except in specific conditions
253
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
254
A retail client would normally expect to get a periodic statement of their non-leveraged security based account at least:
Every three months
255
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
256
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
257
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
258
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
259
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
260
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
261
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
262
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
263
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
264
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
265
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
266
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
267
The requirements for record keeping according to MiFID are:
Five years
268
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
269
Executing a deal on an equity warrant
Misleading statements and impressions
270
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
271
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
272
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
273
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
274
All of the following may be considered "proper fees" under the FCA inducements rules EXCEPT:
The cost of general office software
275
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
276
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
277
What must the firm's conflict of interest policy ensure?
All groups have sufficient guards on the information flow between each other
278
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
279
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
280
Eligible counterparty status is not available to:
An expert individual client
281
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
282
For which of the following would the Financial Promotions regulations need to be applied?
Retail clients
283
From which of the following must a firm keep client money segregated?
Money belonging to the firm
284
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
285
Which is FALSE in terms of the aggregation of orders?
Firms must aggregate firm and client orders together
286
If, during the reconciliation process, discrepancies are noticed, which of the following must the firm do?
Make up for the shortfall itself
287
Which clients need to have the most comprehensive risk explanation provided to them?
An execution only retail client buying options
288
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
289
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
290
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
291
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
292
Which of the following is not defined as a packaged product according to COBS?
A government or public security
293
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
294
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
295
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
296
Which of the following is true of trail commissions for retail client advisers?
Trail commissions are not allowed
297
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
298
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
299
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
300
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
301
When can a UK firm communicate an unsolicited real time financial promotion to an client in another EEA country?
When it complies with the UK COBS
302
Which of the following communications would not have to follow the COBS promotions rules?
An advert in a national newspaper communicating the logo of the firm, a contact point and the regulated activities provided
303
Financial advisers acting for retail clients must not accept commission for their services, but a fee instead. Which piece of regulation stipulates this rule?
The Retail Distribution Review
304
When is the FCA's Conduct of Business Rule relating to suitability required? When the firm is performing:
Discretionary MiFID services on behalf of retail and professional clients
305
According to client asset rules (CASS), a firm may deposit client money in which of the following?
A central bank
306
Which ONE of the following is a responsibility of the HOST state regulator under the MiFID directive when a firm is conducting business from a branch in that state?
Conduct of business rules
307
The rules on front-running of investment research require a firm to wait for how long before conducting own account trades following the publication of research to its clients?
Until the client has had a reasonable time to react to the research
308
Which one of the following conduct rules applies to all persons captured by the SM&CR regime? You must:
Observe proper standards of market conduct
309
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
310
Which of the following statements complies with the inducements rules?
An acceptable commission is one that has been paid to a client
311
When a firm provides designated investment business to a retail client, the training and competency requirements do not apply for which of the following?
Arranging
312
All of the following concerning general guidance notes issued by the FCA are true, except that they:
Are binding on the firm
313
Market abuse is different from the offence of insider dealing in all of the following ways except:
It should be easier for the FCA to impose a custodial sentence
314
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
315
To whom is the PRA directly accountable?
Bank of England
316
If an independent financial adviser (IFA) passes on the business of a client to a life assurance company, which of the following would be true? The life assurance company:
Can rely on the information about the client provided by the IFA
317
In respect of the Conduct of Business Rules which of the following does NOT qualify as a 'durable medium'?
Internet websites
318
If a company prepares financial reports how long is the close period under the 'Persons Discharging Managerial Responsibility' (PDMR) regime of directors' dealings?
30 days
319
Which of the following is TRUE of an offence of 'receiving a bribe' under the United Kingdom's Bribery Act 2010?
Requesting a bribe is an offence, regardless of whether or not the bribe is actually received
320
Which of the following is not a sanction available to the FCA in relation to a breach of the conduct of business rules?
Disqualification of directors
321
Under the Proceeds of Crime Act if you made an illegal disclosure in respect of an investigation into money laundering, you would be guilty of which of the following offences?
Tipping-off
322
The Takeover Code covers all of the following elements of a takeover EXCEPT:
Ensuring the financial and commercial advantage of the takeover
323
What is the primary reason for a collective investment scheme to seek regulated status? So that:
It may advertise itself to the general public
324
How often should an authorised firm report to the FCA in respect of customer complaints?
Twice a year
325
A financial adviser makes a personal recommendation on a retail investment product to a retail client. For which of the following reasons would the adviser NOT need to send out a suitability report? The recommendation relates to:
A small life policy from a friendly society
326
Under the COBS rules, which one of the following rules would apply to eligible counterparties?
Client categorisation
327
The FCA rules on financial promotions expand which Principle for Businesses?
Customers' Interests
328
The FCA guidance on electronic communication with a client states that a firm should do all of the following, except:
Be able to demonstrate that it made it clear to the client that instructions communicated in this manner may not be acted upon immediately
329
Which of the following functions captured under the SM&CR regime is not classified as a senior manager function?
Investment adviser
330
How long after a transaction must a confirmation be sent to the client?
By the next business day
331
What is the minimum period of reflection required by the FCA following the sale of a life or pension product, irrespective of whether the firm offers advice?
30 days
332
Which of the following best describes the purpose of the 'Persons Discharging Managerial Responsibility' (PDMR) regime?
It is designed to protect directors from the appearance of insider dealing
333
Which one of these is not a per se eligible counterparty?
Local authority
334
If a chairman wanted to deal shares in their company (s)he would inform:
Their company
335
Which of the following best represents the FCA view on industry guidance?
The FCA will not monitor or enforce compliance
336
Firm XYZ is an authorised person in the UK and communicates a promotion from Firm JKL, an authorised overseas person. Which of the following is TRUE?
The extent to which the compensation will or will not be available must be stated
337
A financial promotion to which of these groups does not require approval prior to communication?
Eligible counterparty
338
The Criminal Justice Act regarding insider dealing contains a special defence providing the person was acting in good faith. This defence applies to:
Market makers
339
A client approaches your firm wishing to engage you to provide a discretionary service on his account. In order to trigger the requirement to provide a client agreement before providing services the client must be:
Either a retail client or professional client, as both are protected by this rule
340
If the FCA requires inspection of documents during an investigation, what is the time limit for a regulated firm to produce them?
A reasonable time period
341
In the process of action taken by the FCA under the Decision Procedure and Penalties Manual, which of the following should follow immediately after the firm receives a warning notice?
The firm has the right to make representation, which may lead to the FCA amending the notice or even cease action
342
Which ONE of the following is ALWAYS required to be an approved person under the Accountability Regime rules?
Non-executive director
343
A firm is able to execute a client order on venue A or venue B. If the spread associated with venue A is better, the firm must execute on:
Either venue A or venue B provided the cost difference only reflects actual execution cost differences
344
Once a warning notice has been issued, what would be issued next to inform the firm that the investigation is no longer proceeding?
Notice of discontinuance
345
Which of the following would not be considered market abuse?
An employee of a firm trades on price-sensitive information that has been disclosed through an RIS
346
According to the JMLSG's guidance notes, for what length of time should client verification records be kept?
Five years from the date the account was closed
347
Which of the following is true of exempt persons under the Financial Services and Markets Act 2000?
They cannot be both authorised and exempt regardless of activities
348
Which of the following best describes the objective of conduct risk regulation?
Rules do matter, but outcomes for consumers and markets are the principal focus of regulatory concern
349
Under the regime created by the retail distribution review, which of the following is TRUE?
The charge can be ongoing and based on a percentage of the funds invested
350
To which one of the following activities do the conduct of business rules apply?
Long-term insurance business in relation to life policies
351
The Tax and Chancery Chamber of the Upper Tribunal is operated by:
A government department
352
If an authorised firm is conducting unauthorised regulated activities, this will be considered to be which ONE of the following?
A criminal matter
353
Assuming abusive effect was identified, which of the following is not considered market abuse?
Following the conduct of business rules
354
The Collective Investment Scheme Sourcebook does not apply to which of the following?
Director of an investment trust
355
Which of the following best describes the right to appeal to the Tax and Chancery Chamber of the Upper Tribunal following the issue of a decision notice?
There is a right to appeal in all circumstances
356
Who has overall responsibility for the UK's financial system, including the institutional structure and the legislation that governs it?
HM Treasury
357
Which one of the following is ALWAYS a specified activity under the Financial Services and Markets Act 2000?
Operating a stakeholder pension scheme
358
Which of the following is client money?
Money held in excess to a client's obligations
359
A broker is aware that his firm is involved in takeover proceedings involving company GHI plc. The broker receives a client order to sell all their stock 'At best'. According to the Market Abuse Regulation what should the dealer do?
Take the order and execute it
360
In the course of MiFID business, in which one of these situations does the rule of appropriateness apply to a firm?
Arranging a swap transaction for a client without giving any advice
361
In relation to the Client Asset Sourcebook rules, client money is money held separately from the:
Firm's money
362
Graham accepts regular deposits from the director of a small overseas company. Which of the stages of money laundering could Graham find himself under suspicion of under the Money Laundering Regulations?
Placement
363
A firm is required to organise and control their affairs responsibly and effectively, and the FCA sets down high-level competence requirements for them to achieve this.
Which of the following sourcebooks contained within the FCA Handbook outline these requirements for ALL firms?
Senior Management Arrangements, Systems and Controls
364
How much notice does the FCA need to give before entering a firm's premises during an investigation?
A reasonable period
365
"An employee has noticed that one of his clients has started settling transactions in Australian dollars. There is nothing in the 'Know Your Customer' information that would suggest this is to be expected.
Which is the following is the best description of the action that the employee should take?"
Report the client to their Money Laundering Reporting Officer
366
Report the client to their Money Laundering Reporting Officer
Act in accordance with the order execution policy
367
Where an agent is acting on behalf of a number of underlying clients (who are all, by written agreement, to be treated as clients of the firm), the firm is permitted to send a single communication to the agent, expressed to cover each underlying client in respect of which one of the following?
Terms of agreement
368
What must a firm do if it considers, on the basis of information received, that a particular product is not appropriate for a client?
Warn the client that, in its view, the product is not appropriate
369
Thomas works at a small bank. Over the last few months he has been accepting deposits from an individual who visits the UK regularly. This is most likely to be which stage in the process of money laundering?
Placement
370
Which of the following is a breach of the principle of integrity?
Misleading a client about a transaction
371
The sourcebook 'Senior Management Arrangements, Systems and Controls' requires records to be retained by the firm regarding the apportionment of senior management responsibilities. For how long must these records be retained?
Six years from any change in senior management responsibilities
372
Which of the following is NOT an objective of the FCA Handbook, Senior Management Arrangements Systems and Control Sourcebook?
To ensure that directors and senior management spend more time trying to detect money laundering
373
When considering the rule on product information to be disclosed before providing services, to whom would the firm need to make these disclosures?
Retail clients only
374
Which of the following is an eligible complainant under the FCA regulations?
A private individual who has never worked in the financial sector
375
Churning is the name given to:
Overtrading in securities
376
A firm has received several execution only client orders for purchases in Company A. The firm also has an order to purchase shares in that company. Which ONE of the following statements is FALSE in respect of the execution of these orders?
The firm can only rely on aggregation if the orders cannot be executed sequentially
377
Churning relates to:
The overtrading of investments only
378
Which of the following are in the scope of the market abuse regime:
Shares traded on NEX
IICopper futures traded on the LME
IIIShares on the Official List of the LSE
IVGas oil futures traded on ICE Futures
379
Which of the following is not a threshold condition for a firm seeking Part 4A permission under the Financial Services and Markets Act 2000?
Market conduct
380
According to COBS, a firm must take reasonable steps to manage any conflicts of interest with respect to independent research in which of the following cases?
The firm is making a recommendation to a client
381
Which of the following does not have any rights under the Financial Services Compensation Scheme?
An authorised firm with respect to general insurance
382
Steve is a director within a broking firm. Under the general requirements in the Senior Manager Arrangements, Systems and Controls Sourcebook, the FCA would expect Steve to have which of the following characteristics?
He must be of good repute and sufficiently experienced
383
According to the Money Laundering Regulations, which of the following is FALSE?
A firm must keep records for a minimum of three years
Explanation
The firm must keep records for five years.
384
Under UKLA disclosure and transparency rules, concert parties must disclose shareholdings to a company where they acquire:
3%
385
In which of the following circumstances may an unauthorised firm make a financial promotion? It:
Is permitted to make a financial promotion only if the content and inducement have been approved by an authorised person
386
Which of the following are covered under MiFID investments?
Corporate bonds
387
Which of the following is false in relation to the sale of cash deposit ISAs sold via a distance contract and without advice?
The maximum period of reflection is 30 days
388
Which one of the following would be required to seek authorisation under S19 of the Financial Services and Markets Act 2000?
Advising on stakeholder pensions
389
Can a third party appeal to the Tribunal on behalf of an authorised firm against a decision notice?
Yes, if the appeal is made within 28 days of the notice being issued
390
With regard to the approval of a non-real time financial promotion, which of the following is true? A firm:
Can use any authorised third party and the promotion becomes the responsibility of the third party
391
Can use any authorised third party and the promotion becomes the responsibility of the third party
Five years from the date it receives the complaint
392
The Tax and Chancery Chamber of the Upper Tribunal's responsibilities include:
Hear appeals from authorised firms facing disciplinary action from the FCA
393
A UK authorised firm has acquired a passport from the FCA to conduct business from a branch office in Spain. When conducting business from that branch office with its Spanish clients, which of the following rules would be governed by the host state regulator?
The rules that govern how the firm conducts business with its Spanish clients
394
Which ONE of the following is LEAST LIKELY to be a professional client?
Unauthorised firm
395
With regards to a MiFID business, which of the following do not require Part 4A authorisation?
French company with clients in the UK
396
In respect of the Criminal Justice Act 1993, which of the following is most likely to be an insider?
An employee who received price sensitive information in the normal course of business
397
Which of the following is least likely to give rise to a conflict of interest?
Encouraging a client to buy when a firm has gone short
398
Under Senior Management Arrangements, Systems and Controls (SYSC), when a firm apportions its responsibilities amongst its directors and senior management it must ensure all of the following, except:
That records of responsibilities are publicly available and sent to all clients before conducting designated business
399
Which of the following are eligible to claim financial loss from the Financial Ombudsman Service?
A charity with income of £250,000
400
For what time period would a firm keep records on confirmation of trades for MiFID business?
Five years from dispatch
401
Which of the following best reflects the reactive supervision work of the FCA?
It is remedial work to deal with problems that are emerging or have happened
402
Any firm providing execution services for a client must produce an order execution policy. Which of the follow is not true with regard to a firm's order execution policy? It must:
Be assessed by a third party firm before being shown to clients
403
With which of the following conduct rules are all approved persons required to comply?
Observe proper standards of market conduct
404
Which of the following applies to a UK firm dealing in shares with an eligible counterparty?
It is an eligible counterparty business and therefore has limited exposure to the conduct of business rules
405
Which of the following is not true regarding the types of notices that can be issued by the Regulatory Decisions Committee (RDC)?
On the issuance of a decision notice the recipient has the right to appeal to the Upper Tribunal within 36 days
406
Who implements and administers the Freedom of Information Act 2000?
The Information Commissioner's Office
407
What is MOST likely to be covered by the FCA rules on financial promotions?
Promotion aimed at private investors
408
For which one of these financial instruments is a firm required to assess appropriateness when performing execution only services?
Securitised debt embedding a derivative
409
Which one of the following is NOT regarded by the FCA as a reasonable inducement to be paid by a product provider to a firm in relation to the sale of packaged products?
Office rent
410
Which of the following bodies is responsible for promoting stable and prudent operation of the financial system through the effective regulation of deposit taking institutions, insurers and investment banks?
Prudential Regulation Authority
411
Which of the following is TRUE in respect of the conflicts of interest policy?
Where a firm is part of a group, the policy should take account any potential conflicts arising from that group
412
Which of the following BEST describes the protections offered to 'whistle-blowers' as applied under the Public Interests Disclosure Act (PIDA)?
It protects persons from retaliation where they inform the regulatory authorities of concerns that might come to their attention at their place of work
413
Which of the following penalties are NOT available to the FCA for cases of market abuse?
A prison sentence
414
Which ONE of the following investments is NOT permitted under the Markets in Financial Instruments Directive?
Mortgages
415
Who must a data controller be registered with under the Data Protection Act?
Information commissioner
416
Where a firm becomes aware of a conflict of interest that may damage a particular client's interests, which of the following procedures must the firm follow?
Manage the conflict and continue to deal
417
Which of the following is not true regarding the Financial Services Compensation Scheme?
Eligible counterparties may never make a claim on the scheme
418
Which of the following is a provision of the Money Laundering Regulations?
Training must be given to employees in relation to money laundering prevention
419
Which of the following best describes the cancellation period offered to a client of the firm?
Compulsory for certain products
420
Which of the following is a general defence for insider dealing?
An individual who would have dealt anyway
421
Which of these is true in relation to COBS for a MiFID firm?
They must follow COBS
422
Under which of the following circumstances do the conduct of business rules not require a firm to enter into a client agreement?
The client enters into an insurance contract with the firm as principal
423
Which European regulation relates to the transparency and risk management in the OTC derivative markets?
European markets infrastructure regulation
424
To be marketed in an EEA country a UK unit trust must:
Conform with UCITS directive and member state's regulations
425
Which of the following is true of trail commissions?
Trail commissions of any sort are not allowed
426
Where money is held in connection with a delivery vs. payment transaction, the client money rules will not apply for:
Up to three business days
427
Which activity is the subject of the defence in relation to distorting market prices of 'acting in accordance with the rules of'?
Price stabilisation
428
When a decision notice is referred to the Tax and Chancery Chamber of the Upper Tribunal, a full re-hearing is given to the matter that gave rise to the referral. What evidence may be considered at the re-hearing?
Any evidence relating to the decision whether or not it was available to the FCA at the time of the decision
429
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
430
What best describes the guidance notes from the Money Laundering Steering Group?
They provide an indication of how firms should interpret the laws on money laundering
431
To whom is the FCA directly accountable?
HM Treasury
432
When comparing conduct risk regulation with compliance with rules, which of the following is true?
Compliance with rules is retrospective, the conduct risk approach is forward looking
433
If a retail client wishes to ensure that they do not lose any money in a deposit, which of the following is the most suitable deposit?
Up to £85,000 in a UK bank account
434
Which one of the following is not defined as the client of a firm?
A person acting through an agent
435
Money laundering relates to:
Cash and assets from a criminal source
436
Which ONE of the following supervisory tools are designed to limit or reduce identified risks and prevent them crystallising or increasing?
Preventative
437
Which regulatory body safeguards the members of defined benefit pension schemes?
The Pensions Regulator
438
When the holdings of a married couple are automatically aggregated as a result of deciding if one of the sizable holdings rules have been broken, this is known as working as:
Connected parties
439
When the holdings of a married couple are automatically aggregated as a result of deciding if one of the sizable holdings rules have been broken, this is known as working as:
Up to £85,000 in a UK bank account
440
A defence against a charge of carrying out a regulated activity without authorisation could be:
Managing own portfolio
441
If a firm is providing investment research for dissemination to its clients in particular financial investments, when would the firm be permitted to deal on that information?
If a firm is providing investment research for dissemination to its clients in particular financial investments, when would the firm be permitted to deal on that information?
442
If a firm is providing investment research for dissemination to its clients in particular financial investments, when would the firm be permitted to deal on that information?
All clients
443
If a retail client has not advised the firm differently, how often must firms send periodic statements?
Quarterly
444
Under the Financial Services Act 2012 who is responsible for the soundness of 'significant investment firms'?
PRA
445
Are promotions in respect of Undertaking for Collective Investments in Transferable Securities (UCITS) funds allowed on a general marketing basis in the UK?
Yes
446
In respect of the Conduct of Business rules which of the following does NOT qualify as a 'durable medium'?
Website
447
Once the FCA has issued a warning notice under the powers granted under s387 of the Financial Services and Markets Act 2000, in which of the following circumstances can the FCA decide to discontinue any further action?
At any time by issuing a written notice of discontinuance
448
Which of the following does NOT require a key information document?
Cash deposit individual savings account
449
In respect of the responsibilities of an authorised firm which of the following is TRUE?
A firm must take reasonable care to establish and maintain systems and controls that are appropriate to the business
450
According to the Financial Services Act 2012, which one of the following is a statutory objective of the FCA?
Protecting and enhancing the integrity of the UK financial system
451
Under the individual accountability regime, which of the following is a conduct rule applying to certified persons?
Act with due skill, care and diligence
452
The rules on market abuse apply to:
Regulated individuals and members of the public
453
A firm must assess the expertise of elective professional clients. This is known as:
- Qualitative test
454
You have gained a new client who wishes to take advantage of your online facilities. Through which of the following methods must you inform your client of the firm's website address?
Through an e-mail sent to the client's email address
455
The purpose of the Public Interest Disclosure Act 1998 in terms of whistleblowing is:
To invalidate clauses in employment contracts that preclude protected disclosures
456
Under the SMCR, which of the following would definitely require certification from the employee's firm?
Advising clients
457
Durable media are those which according to COBS:
Can be accessed by a person and which allows unchanged reproduction of the information stored on it
458
EMIR sets out requirements for reporting and risk management in the OTC derivative markets. Which firms are covered by this regulation?
EEA-incorporated and established entities
459
Which of the following would NOT be seen by the FCA as meeting the requirement in terms of use of charges for research?
The research payment account cannot be funded by research charges made to clients
460
If a company prepares semi-annual financial reports how long is the close period under the 'Persons Discharging Managerial Responsibility' (PDMR) regime of directors' dealings?
One month
461
In which of the following circumstances would identification be required on establishing new business?
A potential new client resident in the UK
462
What is the maximum claim on the Financial Services Compensation Scheme in the event of an insolvency of a firm where the investor has lost money through protected investment business?
£85,000
463
If a collective investment scheme wishes to attain compliance with the Undertakings for Collective Investments in Transferable Securities Directive in order to market itself throughout the EEA, which of the following would the manager not be permitted to include in his portfolio?
Options on gold
464
Which one of the following is NOT true about the information that must be disclosed by a firm to a client before providing services?
The information must be in a format that is specific to each client
465
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
466
According to the inducement provisions stated by the FCA, which of the following is not an appropriate payment by the firm?
A third party providing general office equipment used for word processing and accountancy in the normal running of the firm's activities
467
With regards to money laundering, the FCA will check whether a firm is in breach of the rules on systems and controls with reference to the firm's adherence to:
JMLSG guidance
468
Who is allowed to make a mass detriment reference?
FOS and Authorised firms
469
Under the retail distribution review (RDR), financial advisers must complete CPD. What does the abbreviation CPD refer to?
Continuous professional development
470
In the event of a firm being unable to execute a client limit order immediately, the firm must make that order public in all but which of the following situations?
The client has informed the firm that they do not wish the trade to be made public
471
In relation to financial promotions, the guidance for a firm wishing to communicate or approve a financial promotion aims to amplify which Principles for Businesses?
'Customers' interests' and 'Communication with clients'
472
For the purpose of the best execution rule, which one of the following is not an acceptable execution venue?
Any over the counter arrangement
473
Which of the following would be a breach of the Conduct Rule 'Integrity'?
Misleading a client by providing false information
474
In relation to MiFID business, what minimum value must be exceeded by the portfolio of an elective professional client?
500,000 euros
475
Which of the following best reflects the 'issues and products' work of the FCA?
It is intensive campaigns on sectors of the market or products posing risk to consumers
476
Which execution only client is MOST LIKELY to need to have the most comprehensive risk explanation provided to them?
A retail client buying options
477
Which of the following is true of trail commissions?
Trail commissions are no longer allowed
478
Which of the following would be considered a general defence against the accusation of insider dealing as defined under the Criminal Justice Act?
Did not expect to gain a profit
479
When an FCA firm undertakes a promotion to a retail client, which is TRUE?
There must be a warning that any performance data is not a reliable indicator of future performance
480
Which of the following would ALWAYS be contained within the key information document?
A description of the terms and features of a product
481
Who performs the regulatory check of a mail-shot sent by an appointed representative?
The compliance department of the appointing firm
482
Which of the following is not true in relation to the prospectus regulation?
It requires a prospectus to be approved by each member states
483
An authorised firm, acting on behalf of a client, has received an order to buy 5,000 shares in XYZ plc just before the market opens. The firm believes that the market will open with a sharp fall due to significant losses on the S&P 500 overnight. When should the firm execute the transaction?
The firm may delay execution if it believes it is in the best interests of the client
484
Which of the following statements is TRUE regarding market abuse?
Intention does not need to be proved for a conviction
485
When a firm is carrying out which type of business is the FCA's Conduct of Business Rule relating to suitability required?
Advisory MiFID services on behalf of retail and professional clients
486
Dealing on which of the following would be classified as an offence under the insider dealing legislation?
Inside information when the person knows that it is inside information and knows that it is from an inside source
487
The FCA intend to take action against a firm for a breach of a rule. Which of the following will inform the firm of the action proposed?
Warning notice
488
Which of the following is a statutory objective of the FCA?
To ensure that the relevant markets function well
489
In relation to MiFID business, eligible counterparty status exists in relation to:
Eligible counterparty business only
490
John works in a Spanish branch of company XYZ. Barry is one of the directors in the UK office who has found out that John has been involved in a criminal activity. Should Barry blow the whistle?
Yes; regardless of where the offence has been committed
491
The main objective of the 'Persons Discharging Managerial Responsibility' (PDMR) regime is:
To ensure the LSE is perceived to be a fair and orderly market
492
A firm providing services in which of the following investments would not qualify for MiFID status?
Instruments of payment
493
If a complaint has NOT been resolved by a firm who should the complainant turn to next?
FOS
494
In relation to data protection, to whom does a firm's Data Input Officer report?
The firm's Data Controller
495
A retail client who is habitually resident overseas does not wish to be sent a basic agreement letter for insurance business. The firm should:
Not send them a client agreement
496
A firm must retain records relating to an assessment of appropriateness for a minimum of:
Five years
497
Which of the following is the best description of an outcomes-focused approach to regulation?
More reliance on high level objectives and less attention to detailed rules
498
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
499
Which of the following is TRUE in respect of the principles of membership of the Chartered Institute for Securities and Investment's Code of Conduct?
Members must comply with the principles
500
What do insider dealing and market abuse have in common?
They can both involve the use of non public information
501
How long must records of non-MiFID custody assets be kept under the client asset rules?
Three years after they were made
502
Which of the following is not a feature of the FCA's principles-based approach to money laundering in their Senior Management Arrangements, Systems and Controls (SYSC) Sourcebook? Firms should:
Establish and maintain effective systems and controls for compliance with JMLSG
503
Which of the following roles should be performed by an approved person?
Non-executive directorship
504
What is the scope of the United Kingdom's Bribery Act 2010?
Worldwide
505
The process where an EEA firm opens up a branch in another EEA country without obtaining local authorisation is known as:
Passporting
506
Which of the following instruments is NOT within the scope of the Criminal Justice Act 1993 (Insider Dealing)?
Building Society share account
507
Which of the following is not an appropriate action for avoidance of a conflict of interest?
Implementing Chinese walls in place of a personal account notice
508
If the FCA requires information from an authorised firm for the purpose of an investigation, which is NOT a method through which the firm is usually informed?
A
An e-mail giving 24 hours' notice
509
Under anti-money laundering provisions, which ONE of the following is TRUE in respect of suspicious transactions? Employees should:
Ensure a report is made to their firm's MLRO
510
How soon must the firm correct a discrepancy after completing a client money reconciliation?
As soon as possible
511
Which of the following best describes Chinese walls? An arrangement that requires:
Information held by a person in the course of carrying on one part of its business to be withheld from, or not to be used by, persons with or for whom it acts in the course of carrying on another part of its business
512
According to the Conduct of Business Rules, when an appointed representative communicates a financial promotion, who ultimately bears responsibility for that communication?
The authorised firm that approves the promotion
513
The MLRO must report to senior management at least every:
12 months
514
Which of the following would not be able to take advantage of the FSCS?
An authorised collective investment scheme investing in designated investments
Explanation
515
Which of the following is true of the training and competence rules?
Authorised firms are required to ensure their employees are competent for their role in the firm under Principle for Businesses 3, Management and Control
516
Which one of these is not an acceptable reason for a firm to fail to execute otherwise comparable orders sequentially?
A retail client's order was given priority over other clients
517
Which of the following best describes the relationship between the FCA, the PRA and the board of the Financial Services Compensation Scheme (FSCS)?
The Chairman of the board of the FSCS is appointed by the FCA and the PRA jointly
518
Which ONE of these per se professional clients is not permitted to become an eligible counterparty?
An institutional investor that is not an authorised or regulated person
519
Which of the following statements is false with regards to whistleblowing?
The rules allow an employee to breach rules on client confidentiality at all times
520
Under the liquidity framework, the PRA requires a firm to perform all of the following, except:
Call on the resources of other companies of the same group
521
In the context of market abuse which of the following circumstances would not be considered an offence?
Short selling
522
Which of the following functions in an authorised firm is LEAST likely to require approval under the individual accountability regime?
Customer advisor on investments
523
A client asks for a copy of a trade confirmation for a trade that was carried out six years ago. Which would be a valid response to the client?
- Records are only kept for five years from the date of dispatch
524
If the criteria for a concert party are established under the Disclosure and Transparency Rules, an obligation to notify the company occurs at a collective holding of:
3%
525
Which of the following is the best description of criminal property?
Any benefit (money or otherwise) that has arisen from criminal conduct
526
Which of the following is the correct interaction between the FCA regulations on money laundering and the JMLSG guidelines?
Firms cannot usually be disciplined for not following the regulations if they follow the JMLSG guidelines
527
All key features documents must include information:
Explaining relevant cancellation procedures
528
What must the firm do when a specific instruction from a client would prevent a firm from following its order execution policy when carrying out the transaction?
Carry out the order as instructed
529
Which one of the following statements is correct?
Both the FCA and PRA are funded by fees paid by regulated firms
530
In relation to MiFID business, how many transactions per quarter (over the previous four quarters) must a client have carried out in order to be treated as an elective professional client?
10
531
When the Regulations Decision Committee issues a final notice to a firm at the end of the investigation procedure, which of the following is not included on a final notice?
The disciplinary action taken by the firm
532
Under the Joint Money Laundering Steering Group Guidance Notes, which of the following would identify why enhanced due diligence is required for a politically exposed person?
Due to their position, they are more vulnerable to corruption
533
A retail client wishes to opt up to a professional client. Which of the following is a requirement under the quantitative test?
Portfolio of investment assets above €500K
534
When a firm uses a website to promote a product and gives the facility for an online application this would be considered to be?
Direct non real-time offer
535
Which of the following is TRUE of the statutory notices issued by the RDC?
A decision notice may suggest actions that differ from the warning notices
536
Which of the following is true with regard to the Training and Competence Sourcebook?
FCA firm employees must have their competence regularly reviewed
537
Where a dual-regulated firm applies for Part 4A permission, which of the following threshold conditions is the sole responsibility of the Financial Conduct Authority?
Appropriate non-financial resources
538
The COBS relating to financial promotions require an individual with appropriate expertise to check that the promotion is fair, clear and not misleading. For which of the following types of financial promotion is such a confirmation exercise required before issue?
Non real-time financial promotions
539
Which of these is an eligible complainant under the FOS?
A business with a turnover of €1.3m
540
The purpose of the Capital Requirements Directive is to ensure that firms maintain adequate resources in excess of their:
Capital resource requirements
541
What must a firm do when a client has placed a limit order in respect of shares traded on a regulated market and the order is not immediately executed by the firm under prevailing market conditions?
Make the order public with a view to having it executed as soon as possible
542
A retail client approaches a financial advisor (FA) to gain advice on a pension product. Which of the following must be disclosed regarding the scope and range of the advice by the FA before doing business?
Scope and range of advice in a durable medium
543
Assuming that the activity is to be performed in the UK, which of the following would require authorisation under s19 of the Financial Services and Markets Act 2000, the 'General Prohibition'?
Arranging currency options
544
Which of the following are not protected by the conduct of business rules sourcebook?
Property purchases by a retail client
545
To assess suitability for a retail client which one of the following, regarding the client, is the first thing that a firm should obtain from the client?
Knowledge and experience
546
Which one of these is not an excluded communication under the financial promotion rules?
An unapproved financial promotion by an unauthorised firm
547
Following an FCA investigation, the Regulatory Decisions Committee can issue a range of statutory notices. What is the best description of a warning notice?
Sent when the FCA believes that there is sufficient evidence to suggest wrongdoing has taken place and it intends to discipline
548
In relation to rules governing regulated and unregulated activities, Part 9A of the Financial Services and Markets Act 2000 empowers the FCA to do which one of the following?
Create rules that are legally binding on authorised firms concerning regulated activity and also activity that is not regulated
549
Under the client asset rules contained within the FCA Handbook, all of the following are classified as client money except:
Monies due to the firm
550
Which of the following is NOT true of insider dealing?
It only applies to dealings via a regulated market
551
Which of the following bodies oversees a firm's behaviour towards their clients and the markets on which they participate?
Financial Conduct Authority
552
Which of these is an eligible claimant under the FSCS?
A shareholder who owns < 5% of an organisation
553
To whom would a firm report suspicions of money laundering?
National Crime Agency
554
A firm discovers that it can execute a trade more favourably than the specific client instruction it has received. According to the specific client instructions rules, how should the firm proceed?
Execute according to the client's instructions
555
A broker is unable to execute a client order due to a trading halt on the exchange. This has led to the client order being postponed. In which of the following situations would the broker have to notify the client? If the order:
Came from a retail client
556
Which of the following would not be an acceptable method of managing a conflict of interest?
Ensuring that client trades are executed first when a conflict arises
557
Section 168 of the Financial Services and Markets Act 2000 permits the FCA to appoint competent persons to carry out investigations on its behalf if:
An offence has been committed
558
In relation to providing investments, the rule on inducements in the Conduct of Business rules, which ONE of the following is TRUE?
The rules allow the firm to pay an inducement to the client
559
If providing execution only services in a non-complex product, the only information a firm requires is the client's:
Name and address
560
Although a client provides a firm with specific instructions, the firm executes the trade in accordance with their own trade execution policy. What must the firm do?
Report itself to the FCA, as it is potentially in breach of regulations
561
Which of the following is true of internal reconciliations of clients' assets?
If a firm cannot comply with the requirements on reconciliation it must notify the FCA
562
Which of these would be exempt from the need for authorisation under the Financial Services and Markets Act 2000?
A French firm conducting an FX trade with a UK counterparty
563
Which of the following would be considered a retail investment product, but not a packaged product?
Shares in an investment trust
564
According to guidance in the FCA handbook which of the following would BEST indicate that an investment manager of a client portfolio was engaged in churning?
Excessive activity in a client's portfolio containing shares
565
If the FCA is leading an investigation into insider dealing, who can use the special defence of 'acting in good faith'?
Market-maker
566
Which of the following are penalties available to the FCA for cases of market abuse?
Restitution order
IIUnlimited financial penalty
IIIWithdrawal of approval
IVIssue a public statement
567
An authorised firm wishes to conduct business over the internet with its clients. Which of the following is NOT an obligation on the firm when considering this form of business?
Explain that orders received electronically may not be acted on immediately
568
Which of the following would not be a valid exception to the rule prohibiting the front running of investment research?
The research is for eligible counterparties only
569
In relation to an authorised firm placing reliance on others for information, which of the following is not a qualifying criteria?
The information provider must be based in the UK
570
Which of the following statements is TRUE regarding market abuse?
Intention does not need to be proved
571
What disclosure obligations does a shareholder have if they own 18% of the shares of Widget plc, a listed company and sell 1% of their holdings?
Disclose the sale to the company concerned within two business days
572
The financial promotion rules do not apply to marketing communications in respect of which one of the following?
A predator company posting details of a takeover to shareholders
573
The Appropriateness rule, in the FCA Conduct of Business rules, applies to:
A professional client purchasing a capital at risk structured product with no advice
574
Which ONE of the following needs to be included in a firm's order execution policy?
Execution venues
575
A firm has received a sell limit order from a professional client. The order is the tenth order received from that client over a period of three months. The order cannot be executed immediately through the firm.
Which of the following reasons would justify the firm not making the order public on the LSE?
The client has instructed otherwise
576
Which of the following could be categorised as an elective professional client?
The head of research at a fund management firm with a portfolio worth €700,000
577
Under the Market Abuse Regulation the FCA has the power to do which one of the following with respect to market abuse?
Civil enforcement
578
All of the following statements regarding Chinese walls are true except:
The FCA specify that Chinese walls must be implemented in all asset management firms
579
In the event that a firm breaches the general prohibition under S19 of the Financial Services and Markets Act 2000, which of the following is TRUE?
Any agreements with the firm are unenforceable against the client
580
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
581
Which of the following gives the FCA the power to prosecute insider dealing offences?
Financial Services and Markets Act 2000
582
In relation to the provision of research under the Conduct of Business Sourcebook, a broker must do which of the following?
Receive payment from the recipients of the research
583
A firm engaging in a transaction triggered the COBS requirement to display proof of appropriateness for the transaction because the client:
Engaged in execution only trades
584
The FCA is pursuing an investigation into insider dealing. Which of the following would provide the accused with a special defence under the Criminal Justice Act against an accusation?
Market maker acting in ordinary course of business
585
All of the following must always be complied with in relation to customer complaints, except:
Always paying compensation
586
As part of the requirements set out in SYSC, which of the following is TRUE?
All firms must maintain clear apportionment of significant responsibilities among directors
587
How soon on meeting a new client must a firm obtain appropriate identification in accordance with the money laundering regulations?
As soon as reasonably practicable
588
In respect of the personal accounting dealing rules, the firm does not need to do which of the following?
Ensure that the employee only uses the firm for its personal account dealing transactions
589
Fatima's role involves dealing with customers, specified as a significant harm function by the regulator. Under the certification regime, which of the following is true?
Fatima needs to be certified by her firm before performing the role and annually thereafter
590
Which of the following represents an acceptable inducement under COBS?
Management fees
591
All of the following are specified by the FCA as a certification function except:
Information providers
592
When considering whether to make a public disclosure and impose a financial penalty on an approved person, the RDC will take into account all of the following, except the fact that:
Whether the firm continues to employ the individual
593
Money that is proceeds of crime is placed on deposit in the UK. It is then transferred overseas in an offshore bank account. Which stage of money laundering does this transfer represent?
Layering
594
Which one of the following notices would give the recipient no further right of recourse against the FCA?
Final
595
Insider trading legislation does not cover which ONE of the following?
Forward foreign exchange contracts
596
In relation to the following communication which ONE could an authorised firm approve on behalf of a firm which is NOT authorised?
Magazine advert
597
In the absence of agreement to the contrary, what must the firm do if a per se eligible counterparty asks to be subject to conduct of business protections?
Re-categorise it as an elective professional client
598
Once a prospectus prepared under the Prospectus Regulation by a UK issuer has been approved:
The issuer can market their securities throughout the EU
599
Which of the following can a collective investment scheme invest in under UCITS III?
Derivatives
600
When ensuring compliance with anti-money laundering procedures and the combating of financing of terrorism, which (if any) should financial services firms prioritise?
Both are equally important
601
Assuming that the client has approached the firm to request recategorisation, which one of the following could not be considered an elective eligible counterparty?
An individual trading for their own account with 10 years of professional experience
602
Under FCA regulations, which of the following is true of a written financial promotion?
A firm can arrange for a third party to carry out the confirmation exercise and the responsibility for the promotion remains with the firm
603
Which of the following is a statutory objective of the FCA?
Protecting the integrity of the financial system
604
What is the MAIN purpose of the appropriateness requirement by the FCA?
To perform a duty of care for retail clients when providing execution only services
605
An unsolicited real-time communication is simply an elaborate regulatory description of a cold call, but what can be promoted via such a communication?
A personal pension
606
Which ONE of the following is LEAST LIKELY to be a professional client?
Unauthorised firm
607
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
608
A firm has given a personal recommendation to a client. For which of the following would a suitability report NOT be required?
Transactions in a regulated collective scheme for a professional client
609
On which of the following trading platforms is an exchange trade reported automatically and published immediately?
SETS
610
An existing client approaches their firm and requests that they give him a lower level of protection. Which of the following would be appropriate action for the firm to take? The firm must:
First assess the client and then, if necessary, warn them of the additional risks
611
Which one of the following does a firm NOT need to obtain information about in order to assess suitability?
The identity of the client's existing investments
612
Money laundering covers:
All benefits of criminal activity
613
When a firm holds client money with a third party, it must inform:
A retail client
614
Which of the following best describes the FCA's attitude with regard to the enforcement of the Principles for Business?
FCA firms can be disciplined because of a principle violation
615
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
616
Which of the following firms would be required to comply with the UK Conduct of Business rules?
A UK subsidiary of a foreign firm writing insurance business for UK clients
617
The UCITS directive allows which of these to market themselves to UK clients?
EU firms
618
Which of the following would be considered a retail investment product, but not a packaged product?
Shares in an investment trust
619
If a firm is holding money belonging to clients, which of the following is a reason for the firm to be exempt from the CASS 7 client money rules?
The money is coins held for the value of their metal
620
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
621
Under the capital adequacy requirements, what is the purpose of stress tests?
To assess how well the capital resources stand up against a range of adverse scenarios over specified time periods
622
The Financial Conduct Authority's Principles for Businesses do NOT include which of the following statements? A firm must:
Operate an appropriate and effective complaints procedure
623
As part of the requirements set out in SYSC, which of the following is TRUE?
All firms must maintain clear apportionment of significant responsibilities among directors
624
The PRA replaced which one of the following?
FSA
625
According to the Regulated Activities Order 2001, which of the following are specified investments?
Units in a collective investment scheme
626
Which one of these statements is false in relation to a firm which holds itself out as giving independent advice on packaged products?
It must require the client to pay for its advice with an up-front fee
627
In the event that a firm breaches the general prohibition, which of the following is TRUE?
Any agreements with the firm are unenforceable against the client
628
According to the Terrorism Act 2000, by when must any suspicions of terrorist financing be reported?
As soon as reasonably practicable
629
If an applicant for approved person status has a criminal history covered by the Rehabilitation of Offenders Act 1974 which of the following describes the right of the FCA to take this into account?
It might be taken into account if relevant
630
When confirming whether a financial promotion complies with the financial promotions regulations, which of the following is TRUE?
Confirmation of compliance must be made by a person with appropriate expertise
631
The maximum amount that a firm is bound to pay under FOS (plus costs) is:
£355,000
632
When a firm trades with an eligible counterparty, which one of the following rules does not apply?
Selling and advising
633
Which legislation establishes a framework of rights and duties to safeguard personal data?
DPA 2018
634
Under the Criminal Justice Act, which of the following constitutes a special defence against an insider dealing prosecution?
Market information
635
When a person is communicating a non-written financial promotion on behalf of an authorised firm which of the following must they always do?
Identify himself and the firm he represents
636
Which of the following is an ancillary service under the Markets in Financial Instruments Directive?
Providing investment research into equities
637
The FCA will consult which of the following sources of information in relation to money laundering offences?
The Joint Money Laundering Steering Group
638
Which of the following would not be exempt from requiring authorisation?
Lloyd's of London
639
Which one of the following is overseen jointly by both the FCA and PRA?
FSCS
640
According to the conduct of business rules and in relation to MiFID business, a firm must have in place a client agreement when it carries on:
Designated investment business for a retail client and MiFID business for a professional client
641
In relation to the best execution rules in the conduct of business sourcebook, is it acceptable for a firm to charge different amounts for conducting the same trade on TWO different execution venues?
Yes - provided the difference between the charges represents differences in trading costs on the execution venues
642
A firm is considering putting its own buy order on the same ticket as one of its client's buy orders. Which of the following is true before the firm does this?
The firm has disclosed to the client that aggregation may operate to the disadvantage of clients
643
The FCA has investigated an authorised firm and discovered that an employee has grossly misled the market through his actions and statements. As a response to this the FCA wish to prohibit the individual under the powers granted to them in the Financial Services and Markets Act 2000. When will the FCA publish details of the prohibition order?
After the issuance of a final notice
644
Which one of the following would automatically be treated as a per-se professional client for MiFID business?
An authorised firm with a balance sheet of €18m and own funds of €32m
645
When must confirmation of a transaction be dispatched to a retail client?
No later than the end of the next business day
646
The Senior Management and Arrangements, Systems and Control (SYSC) regulations encourage directors and senior managers of authorised firms to do all of the following, EXCEPT:
Take more time to identify transactions involving money laundering
647
Which of the following best describes the role of the Joint Money Laundering Steering Group in the financial sector?
An independent body that provides guidance for financial institutions on fulfilling their duties in relation to money laundering
648
Chinese walls have been breached and one particular employee has received sensitive information with regards to a firm takeover. What should the firm do?
Restrict the employee from advising clients if related to the target company
649
Which one of the following is NOT a statutory objective of the FCA under the Financial Services Act 2012?
Promoting the safety and soundness of authorised persons
650
Under the SM&CR set out by the FCA, which one of the following is least likely to be a senior manager function?
Customer advisor supervisor
651
The FSCS deposit compensation limit is:
£85,000
652
Under the professional standards of the retail distribution review (RDR), which of the following actions by an adviser would NOT require the firm to notify the FCA?
She has maintained her level of competence
653
What is the minimum amount of net turnover that a trust must have to be classified as professional client for MiFID business?
€40 million
654
At what time of day may a cold call be made?
An appropriate time
655
When the FCA grants an exchange with recognised status, it:
Requires that the exchange must be fit and proper
656
An employee of an authorised firm suspects that deposits being made by a client are suspicious. Which of the following would allow the employee to identify funds being deposited for terrorist activities rather than funds being deposited for money laundering?
Knowledge of the legitimacy of the source of funds
657
Knowledge of the legitimacy of the source of funds
The information disclosure complied with accepted market practices
658
In which of the following circumstances would it be permissible to not give a client a client agreement?
Retail clients paying for advice only with no resultant deals
659
What sort of financial promotion may a firm not approve on behalf of an unauthorised firm?
Telephone calls
660
How is the Pension Protection Fund (PPF) funded?
They take on assets from schemes tranferred to the PPF
661
Which of the following actions is not defined as an act of terrorism under the Terrorism Act 2000?
Advance social causes
662
Which ONE of the following is TRUE regarding the conflicts of interest rules in the Conduct of Business sourcebook?
The policy must specify procedures for managing the conflicts
663
A fund manager sends out a mailshot blindly to several clients. The email contains information regarding the manager's products and his website. Which of the following is covered under the Distance Marketing Directive?
The email and the website
664
According to the Conduct of Business Rules, in which of the following situations would an authorised firm need to assess whether an investment or service is appropriate for a client?
Arranging a deal in a warrant for a retail client who has responded to a direct offer
665
According to the Capital Requirements Directive, what should a firm do if its financial resources fall below the financial resources requirement set by the PRA?
Inform the PRA immediately
666
For which personal account purchase would it be necessary for a relevant employee to obtain prior permission to deal, according to the personal account dealing rules?
Shares purchased by the employee on behalf of her spouse
667
Which of the following are NOT permitted under UCITS, but is under MiFID?
Commodity derivatives
668
Under the FCA Financial Promotions Rules a firm is permitted to disclose its opinion of the future performance of an investment. Which of the following is not permitted when taking advantage of this?
Projecting future performance from simulated past performance
669
The directors of a UK financial institution use an overseas agent who, it has been proved, has accepted and used bribes in their activities. Which of the following would be a valid defence against any of the four offences of the Bribery Act 2010?
The directors could prove that adequate procedures are in place to prevent bribery
670
Why does a firm have a written money laundering policy?
To ensure that there is a framework with which to deal with money laundering
671
In order for an authorised firm to assess the suitability of a transaction
Financial situation
672
In relation to the insider dealing legislation which ONE of the following is a SPECIAL defence against insider dealing?
The individual acted in accordance with the stabilisation rules
673
Where would a firm seeking authorisation to perform certain regulated activities find the statutory procedures for seeking permission to perform regulated activities?
The Financial Services and Markets Act
674
When an appointed representative is communicating a promotion to retail clients, and making appointments, which of the following is not required?
The detailed risks of the investment
675
If a German firm has obtained a licence to sell securities in Germany, it will have to:
Notify the German authorities if it intends to provide services in the France
676
Which one of the following can NOT be a per se eligible counterparty?
A local authority
677
Under the passporting regulations, which one of the following is not the responsibility of the home state?
Conduct of business
678
After the initial investigation by the FCA officers, the information is typically handed over to the Regulatory Decisions Committee who would decide what action is necessary. Any proposed action would be stated in a warning or supervisory notice. Which of the following could be issued by the RDC instead of these notices?
Notice of discontinuance
679
If client A is advised by firm B on his investments, and then client A asks firm C to execute a trade for him, then firm C should keep a recording of the conversation between whom?
Between A and C covering the instruction to execute the trade
680
Which of the following is not a sanction that the PRA can impose on a firm breaching PRA rules?
Maximum fine of £250,000
681
A per se professional client asks an authorised firm for it to be categorised as a retail client for extra protection for MiFID business. Which is TRUE about the firm's response?
The firm would enter into a written agreement regarding re-categorisation
682
A fund manager is providing a discretionary management service to their clients. Halfway through their normal reporting period, the manager makes a large investment for the fund. When do they have to notify the client of the details of this purchase?
In the periodic statement
683
A person buys an unusually large number of a particular share near the end of the day. Which of the following is most likely true in relation to market abuse?
The trade could lead to investors making the wrong decision
684
With which of the below principles for business would you associate the outcomes of fair treatment of customers?
Principle 6
685
If the Chairman of a UK listed company is aware of price sensitive information, but this is not known by anyone else, under what circumstances are other directors permitted to trade in their own-company shares?
The directors follow the rules of the PDMR regime
686
What is the maximum that can be claimed from the FSCS by eligible claimants in respect of sterling deposit losses in a single institution?
£85,000 per individual
687
The Panel on Takeovers and Mergers is:
An independent body that issues and administers the City Code
688
Which of the following is not one of the four types of market manipulation set out in the Market Abuse Regulation?
Manipulating impressions
689
An authorised firm communicates a financial promotion on a specific product containing past performance figures. Which of the following is true?
A warning about the effects of currency fluctuations if the figures are in a currency other than the client's domestic currency
690
What is the role of the Tax and Chancery Chamber of the Upper Tribunal?
If a firm is unhappy with the decisions of the FCA they may refer it to the Upper Tribunal
691
When may a senior manager, having applied for approval from the FCA, perform a senior manager function?
As soon as the FCA grants approved status the manager may perform the function
692
Which of the following would best describe criminal property?
Property which is, or represents, a person's benefit from criminal conduct, where the alleged offender knows or suspects that it is such
693
Which of the following would be considered a retail investment product, but not a packaged product?
Shares in an investment trust
694
In which of the following situations would a firm need to perform appropriateness checks?
For non-advised services in complex products provided to both retail and professional clients
695
Which one of the following is not a senior manager function?
Significant harm function
696
Who does the Regulatory Decisions Committee report to?
The Financial Conduct Authority
697
Which of the following is true of the Financial Action Task Force?
It continuously adapts its standards to address new risks
698
In which of the following situations would a firm need to perform appropriateness checks?
Elias buys illiquid shares in an unquoted company brokered by an authorised firm
699
The FCA has decided to discipline a firm or employee for a breach of a regulation. Which of the following notices are used to inform them?
Decision notice
700
Which of these would be exempt from the financial promotions rules?
Communications by a government
701
Which of these is described as exempt from the need for authorisation under FSMA Exemption Order 2001, but only for accepting deposits?
Local Authority
702
If a financial analyst is providing investment research for dissemination to its clients in particular financial investments, when would they be permitted to deal on that information?
The financial analyst, as a relevant person, would be permitted to deal on the information if granted approval by the firm's compliance
703
What is the purpose of the Pension Protection Fund?
To compensate members of insolvent final salary pension schemes
704
Under the Money Laundering Regulations all of the following are considered high-risk factors EXCEPT:
Bilateral transactions with an authorised counterparty
705
Which of the following points is true in relations to the Proceeds of Crime Act 2002?
Money Laundering covers property related to all crimes
706
Under the Securities Financing Trasactions Regulation (SFTR) which of the is true of the reporting obligations?
Securities financing transactions need to be reported at initiation and for lifecycle events
707
Which of the following statements is true under the FCA's periodic reporting rules?
Where a client has a leveraged portfolio, the periodic statement must be sent out monthly
708
Which of the following statements regarding Chinese walls are false?
The FCA specify that Chinese walls must be implemented in all asset management firms
709
A Money Laundering Reporting Officer (MLRO) has not organised any money laundering training in the firm for the past 30 months.
Two new employees, who joined the firm last month, have been found to have been involved in handling criminal funds. The criminals have since fled the UK.
Which of the following parties are the FCA most likely to prosecute?
The MLRO will be personally liable
710
An authorised firm has made a mass detriment reference to the FCA, because it feels that if the customer complaint was referred to the FOS, that the FOS is likely to find in favour of the complainant.
What action, if any, is the FCA required to make?
The FCA must respond within 90 calendar days to the firm
711
After completing the sale of a personal pension to a retail client, the advisory firm must follow up with which of the following?
A suitability report within 14 calendar days
712
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
713
A broker receives an order from a professional client to sell 1,000 shares at a limit price of 100p via a firm-provided mobile phone.
How long should the broker keep a record of this phone call?
5 years
714
Under the FCA Training and Competency rules, who must be supervised?
All staff performing specified activities
715
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
716
The FCA has found that a firm's structured product contains unacceptable risks to consumers. Under the powers granted by the Financial Services Act 2012, which of the following steps can the FCA take to manage these risks?
The FCA can ban the product for up to 12 months without consultation with the firm
717
For which of the following products is a firm required to judge appropriateness when approached by a retail client for execution only services?
Warrants
718
One of the FCA Supervisory Principles is to focus on two-way communication. What does this mean the FCA will do?
Engage directly with consumers to understand the issues they face
719
According to COBS, a firm must take reasonable steps to manage any conflicts of interest with respect to independent research in which of the following cases?
The firm is making a recommendation to a client
720
Who, under the Training and Competence rules, is responsible for setting out the standards of competence for employees of authorised firms?
The authorised firm
721
Which of these is true in relation to comparisons provided in a promotion for a MiFID investment?
The source of the data must be stated
722
Which of the following set out regulations ensuring firms control information to prevent the exchange of information that may harm the interests of one or more clients?
Financial Conduct Authority
723
Which of the following is responsible for regulating the capital adequacy of large investment firms in the UK?
Prudential Regulation Authority
724
Principle of Business 10 (client assets) applies to:
Retail Clients, Professional Clients and Eligible Counterparties
725
Which of these is a senior manager function?
Chair of Risk Committee
726
As a designated body under the Unfair Terms in Consumer Contracts Regulation 1999, the FCA has the power to:
Force financial services firm to amend or remove unfair contract terms
727
Which of the following is an exemption from the rule on front running?
Market making in the normal course of business
728
What is the notice issued by the PRA stating when it will take disciplinary action against an authorised firm or approved individual called?
Final notice
729
Which of these is true in relation to the Tax and Chancery Chamber of the Upper
Tribunal?
Its decisions are binding on the FCA
730
When a firm's application for authorisation is reviewed, the FCA follows a set of principles. Which of the following is NOT such a principle?
Look closely at the business model and the viability of the firm over the long-term
731
If an organisation is declined part 4a permission the decision will be communicated by the:
RDC
732
When disclosing past performance regarding a seven year old equity fund to retail clients, which of the following is required according to the COBS?
The impact of fees and commissions must be clearly displayed
733
An individual who is accused of insider dealing may not be able to use which of the following defence?
Dealt in the process of stabilisation
734
Under which piece of legislation is the FCA empowered to issue fines for money laundering offences?
FSMA 2000
735
Which of the following is a difference between money laundering and terrorist financing?
Terrorist financing may involve legitimate funds
736
Which of the following is able to perform their job role under supervision prior to attaining the full qualification that is required of them?
An overseer
737
For which of the following actions can a firm NOT appeal to the Tax and Chancery Chamber of the Upper Tribunal?
Imposition of penalties under the Criminal Justice Act
738
A technology firm has decided to sell its shares to the public using the internet. Which of the following rules would govern this offer?
Promotions rules
739
A sponsor suspects that the organisation they are working with may be involved with money laundering. To whom would they report this information?
MLRO or Nominated officer
740
Which of these would be exempt from the need for authorisation under the Financial Services and Markets Act 2000?
A French firm conducting an FX trade with a UK counterparty
741
A trade in a UK exchange traded security is executed off-order book at 5:23. When does the trade report need to be made?
Before the start of the next trading period
742
A broker is unable to execute a client order due to a trading halt on the exchange. This has led to the client order being postponed. In which of the following situations would the broker have to notify the client? If the order:
Came from a retail client
743
When must a firm gather more information from the client in order to assess appropriateness?
Information already held by the firm was provided by the client and the firm is aware it is out of date
744
What is the purpose of the Prospectus Regulation?
Make it easier and cheaper for companies to raise capital in Europe
745
To whom should a firm report if it is unable to obtain satisfactory corporate verification?
NCA
746
Which of the following best reflects the territorial scope of MiFID?
EEA
747
For the Senior Management Arrangements, Systems and Controls with respect to money laundering, which one of the following is true?
Appropriate training should be provided to employees who might be exposed to money laundering activities
748
Which of these are specified investments?
Warrants
749
Which of the following is a general defence for insider dealing?
An individual who would have dealt anyway
750
Which of the following is not true in relation to the prospectus regulation?
It requires a prospectus to be approved by each member states
751
From which point in time must certification functions comply with the Conduct Rules under the SMCR regime?
All relevant staff are immediately on appointment bound by the Conduct Rules
