RO1: Chapter 7

Question 1

For which regulated activities do designated Professional Bodies (DPB) member firms not require FCA authorisation?

Answer 1

Activities which are incidental to their professional services, for example assisting a client but not providing advice in their field (Insurer = Insurance)

Question 2

Employees of FCA regulated firms advertising retail clients should obtain ongoing training in changes in which areas?

Answer 2

• changes in the market
• products
• legislation and regulation.

Question 3

What are the three stages of money laundering?

Answer 3

• Placement
• Layering
• Integration

Question 4

What is exempt status?

Answer 4

A person that is exempt from regulatory activity as an authorised firm has accepted responsibility in writing for them.

Question 5

What is a appointed representative?

Answer 5

A firm which has a contract with an authorised firm, not liable for its actions but can act on behalf of the authorised firm.

Question 6

What is a tied agent?

Answer 6

Person who is under the responsibility of one investment firm and acts on their behalf.

Question 7

How long can an individual cover for senior management in their absence?

Answer 7

Up to twelve weeks over twelve months without approval where the absence is temporary, as soon as it becomes apparent that the individual will be performing as Senior Manager for more than 12 weeks.

Question 8

What are the senior management aims?

Answer 8

• Aim to reduce harm to consumers and strengthen market integrity by making individuals accountable for their conduct and competence
• Encourages staff at all levels to take personal responsibility for their actions and make sure they can demonstrate where their responsibility lies.

Question 9

What is a solo-regulated firm?

Answer 9

A firm regulated by one regulator for example just the FCA.

Question 10

What are limited scope firms?

Answer 10

Smaller firms that are subject to fewer requirements such as Sole Traders and Authorised Professional Firms.

Question 11

What is a enhanced firm?

Answer 11

Larger firms with higher risks, will need additional requirements compared to limited and core firms.

Question 12

What is a core firm?

Answer 12

Do not qualify to be limited or enhanced and are subject to the baseline regime

Question 13

What sort of disciplinary powers does the FCA have over a approved person?

Answer 13

an approved person can be withdrawn if it is decided they are no longer Fit and Proper such as behaviour changes falling below standard, this can result in banning from regulated activities.

Question 14

What are prescribed responsibilities ?

Answer 14

Allocated to senior managers, if the firm breaches a FCA requirement the senior manager in charge of that responsibility will be held accountable if they did not take steps to prevent it.

Question 15

What does the certification regime do?

Answer 15

covers specific roles and functions which are not senior management function but still have a impact on customers such as financial advisers and mortgage advisers.

Question 16

Who approves financial advisers?

Answer 16

It is up to the firm to make sure they are suitable and fit and proper by ensuring they are competent and capable to do their job (such as relevant qualifications).

Question 17

What records should be kept indefinitely?

Answer 17

• Pension transfers
• Pension opt-outs
• Free-standing additional voluntary contributions

Question 18

Which records should be kept for 5 years?

Answer 18

-Life policies documents
-Pension contracts
(If promotions on these products they must be kept for 6 years!)

Question 19

What records should be kept for 3 years?

Answer 19

MIFID firms only need to hold information for 3 years.

Question 20

How often should firms produce a report which discloses the number of complaints received?

Answer 20

Twice yearly

Question 21

What does T&C stand for?

Answer 21

Training and Comptetence

Question 22

What is the purpose of T&C’s?

Answer 22

Designed to make sure that firms’ employees are competent in the work they do and are properly supervised and regularly reviewed.

Question 23

Why could a employee not be allowed to deal with a retail client?

Answer 23

Not competent, must pass regulatory module of an approved examination (RO1 for example)

Question 24

How soon should a firm report changes in a employees competence status?

Answer 24

ASAP to the FCA

Question 25

What are the rules of consent to provide personal details that apply with Data Protection?

Answer 25

Consent to provide details must not be approved through pre-ticked boxes and it must also be easy for a client to withdraw their consent. Consent must also be separate from other terms and conditions to avoid confusion.

Question 26

What is a SAR?

Answer 26

Subject access request

Question 27

What is the purpose of a SAR?

Answer 27

This is simply where a client is requesting their information from a firm in regard to personal data

Question 28

What are the stages to the complaint procedure?

Answer 28

• Receive complaint and straight away send a Letter of Acknowledgement
• Client must be kept updated throughout complaint procedure
• After 8 weeks a final response letter should be sent which should advise the client that they have the right to take the complaint to the FOS if not satisfied (They have 6 months to do this)

Question 29

If a firm receives more than 500 complaints in a 6 month period what must they do?

Answer 29

Must publish their complaints handling statistics and information twice yearly.

Question 30

Who does the FCA deal with complaints for?

Answer 30

• consumers
• micro-enterprise with fewer than 10 employees
• charities with a annual income of less than 6.5million
• Trustees of trusts with a value of less than 5million,
• guarantors and small businesses with a annual turnover of less than 6.5million.

Question 31

What is maximum monetary award the FOS can instruct a firm to pay if client is not satisfied with outcome and would like money for their loses?

Answer 31

£355,000.00