RO1: Chapter 8

Question 1

What does KIID stand for?

Answer 1

Key Investor Information Document

Question 2

What is a KIID used for?

Answer 2

Provides information on a product.

Question 3

What are projections used for?

Answer 3

Provided to clients to estimate the future of their product, the future must be based on realistic assumptions supported by data.

Question 4

What is a informed choice?

Answer 4

When a client receives information (not advice) on a product, and they use this to decide whether to proceed with setting up the product etc.

Question 5

What has the Money and Pensions Service been set up for?

Answer 5

It has been set up in place to provide quality guidance on debt and financial education which should help people with managing their own money effectively and avoid falling into debt.

Question 6

What is Pension Wise’s purpose?

Answer 6

Set up for over 50’s to have guidance on defined contribution pension schemes that require them how to decide to take their benefits in retirement.

Question 7

What does a Independent Financial Adviser have permission to do?

Answer 7

Provide advice on a broad range of products using different providers.

Question 8

What is Restricted Financial Advice?

Answer 8

Provide recommendations to clients about products which is not independent advice

Question 9

What is restricted whole of market advice?

Answer 9

Restricted to a certain product but can provide advice on all providers who have that product.

Question 10

What is a financial promotion?

Answer 10

Invitation to engage in investment activity

Question 11

Who should check non-real time promotions (static advertisements) before publishing to the public to make sure it is compliant?

Answer 11

Company Compliance Officer

Question 12

What is a retail client?

Answer 12

Require the highest protection, they are not professional or counterparty clients and must be provided with disclosure of products.

Question 13

What is a ‘per se’ professional client?

Answer 13

Client with market knowledge and experience

Question 14

What is a elective professional client?

Answer 14

Do not have market knowledge but not on same level as retail clients either.

Question 15

What is a eligible counterparty?

Answer 15

Clients who have a limited service as they either deal with their own accounts using a firms shares/funds or request deals to their firm).

Question 16

What is a insistent client?

Answer 16

Where a client receives advice but does not want to take it and wishes to take a different course but still wants the adviser to facilitate the transaction against their advice.

Question 17

What does best execution mean?

Answer 17

Mainly applies to firms dealing with stocks and shares. Transaction should be carried out on the best terms available for example price, speed, cost.

Question 18

What does execution-only mean?

Answer 18

This is where an investor states what they want and does not ask for or receive advice on the transaction. Firms are required to assess the appropriateness of the transaction for execution-only and will simply arrange the deal not provide any advice.

Question 19

Which policies have a 14 day cancellation period?

Answer 19

• Cash ISA
• Collective investment schemes
• Child trust fund
• Opening or transferring an ISA
• EIS

Question 20

Which policies have a 30 day cancellation period?

Answer 20

• Life policies
• Pension annuity
• Pension
• Pension transfer
• Personal recommendations for a lifetime ISA

Question 21

What is written notice?

Answer 21

(notice that the client can cancel) must be given to the client before the agreement is concluded. Cancellation notice must specify the right to cancel and the time they have to cancel and what steps are required.