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IOC - UK financial reg > Test questions in book > Flashcards

Test questions in book Flashcards

1
Q
  1. Which of the following is one of the FCA’s operational objectives?
    A To ensure retail clients are not overcharged for financial products
    B To prevent authorised firms from going into default
    C To secure an appropriate degree of protection for consumers
    D To ensure authorised firms have adequate financial resources
A

C

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2
Q
  1. Appeals against FCA decisions are normally considered by which body?
    A Advisory, Conciliation and Arbitration Service
    B Financial Ombudsman Service
    C Office of Fair Trading
    D Upper Tribunal
A

D

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3
Q
  1. All of the following are operational objectives given to the FCA under the Financial Services Act 2012, EXCEPT:
    A Securing an appropriate degree of protection for consumers
    B Protecting and enhancing the integrity of the UK financial system
    C Promoting effective competition in the markets for financial services
    D Ensuring that the relevant markets function well
A

D

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4
Q 
4. The FCAs ‘management and control’ Principle for Businesses requires firms to have adequate systems in place specifically relating to:
A Customer fairness
B Cash flow resources
C Risk management
D Staff training
A

C

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5
Q
  1. Which of the following is a statutory consequence of contravening the general prohibition?
    A Approved persons lose their approved status
    B A firm may not conduct any business within the UK
    C Civil proceedings may commence
    D Financial services agreements are likely to be unenforceable
A

D

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6
Q 
6. Which of the following must be DIRECTLY authorised under FSMA to carry on regulated activities?
A Recognised investment exchange
B Hedge fund manager
C Recognised clearing house
D Appointed representative
A

B

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7
Q
  1. Which of the following is an excluded activity and, hence, does not require authorisation under FSMA?
    A Safeguarding and administering investments
    B Dealing on an agency basis
    C Dealing as principal in connection with an employee share scheme
    D Accepting deposits
A

C

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8
Q
  1. Which of the following is a specified investment under the Regulated Activities Order?
    A NS&I certificates
    B Building society bank accounts
    C Commodity futures for commercial purposes
    D OEIC shares
A

D

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9
Q 
9. Which of the following may conduct a limited range of regulated activity under the Part 20 (Provision of Financial Services by Members of the Professions) regime, without the need for authorisation?
A Accountants
B Independent financial advisers
C Market makers dealing in principal
D Home finance advisers
A

A

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10
Q 
10. In order to satisfy the suitability threshold conditions for authorisation, firms are specifically required to:
A commission an external assessment
B appoint a standards officer
C prove that they are fit and proper
D provide an acceptability declaration
A

C

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11
Q
  1. A director of a firm, who is responsible for compliance, MUST apply for which of the following controlled functions under APER?
    A Director function
    B Non-executive director function
    C Customer function
    D Director function and compliance oversight function
A

D

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12
Q 
12. What is the FCA’s general approach to the supervision of authorised firms?
A Precedent-based
B Advisory-based
C Risk-based
D Experience-based
A

C

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13
Q
  1. Which of the following are statutory notices?
    A Warning, decision and supervisory notices
    B Warning, decision and final decision notices
    C Warning, decision and discontinuance notices
    D Supervisory, discontinuance and final decision notices
A

A

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14
Q 
14. If someone deposits criminally obtained banknotes in a building society account, what stage of the money laundering process is this normally known as?
A Integration
B Layering
C Phasing
D Placement
A

D

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15
Q
  1. What action should a Money Laundering Reporting Officer take if a member of staff has identified a suspicious transaction?
    A Make a notification to HM Treasury
    B Make a notification to the Financial Conduct Authority
    C Contact the Serious Fraud Office for advice
    D Make a report to the National Crime Agency
A

D

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16
Q 
16. Which of the following instruments are caught under the insider dealing legislation?
A Debt securities
B Commodities
C Foreign exchange
D Open-ended investment companies
A

A

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17
Q
  1. Which of the following is an inside deal?
    A An investment manager buys shares in his brother’s company knowing that it is about to be taken over
    B An investment manager sells units in a collective investment scheme held jointly with his wife
    C A director encourages an employee to purchase units in a collective investment scheme
    D A director makes a loan to his own company
A

A

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18
Q
  1. Which of the following is a special defence against the charge of insider dealing under the Criminal Justice Act?
    A An individual is providing information in the role of a journalist
    B An individual is acting on behalf of a friend or relative
    C A market maker is acting in good faith in the course of his business as a market maker
    D A market maker is providing data purely for information purposes
A

C

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19
Q
  1. An individual has acquired inside information and has encouraged a friend to deal in the affected securities. Which of the following statements is TRUE?
    A This is a perfectly legitimate action
    B The individual is likely to have committed an offence
    C Only the friend will be guilty of an offence
    D Any deal will be automatically void
A

B

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20
Q
  1. To satisfy the definition of ‘market abuse’, an individual’s behaviour must:
    A be based on generally available information
    B be likely to distort the market
    C constitute a breach of the Criminal Justice Act 1993
    D constitute a breach of the Money Laundering Regulations 2007
A

B

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21
Q
  1. The Guidance provided by the Joint Money Laundering Steering Group:
    A has been approved by the FCA and forms part of the Handbook
    B is mandatory for all investment firms
    C has been approved by the EU Commission and derives from the Money Laundering Directive
    D highlights best practice has been approved by the Treasury
A

D

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22
Q
  1. Which of the following is an offence under POCA 2002?
    A Committing the criminal offence of handling stolen goods
    B Acquiring, using or having possession of criminal property
    C Conspiring to commit insider dealing
    D Talking to your solicitor about the details of an offence of concealing criminal property
A

B

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23
Q
  1. One of the two broad reasons for the JMLSG customer due diligence requirements is to help the firm be satisfied that the customer is who the firm say they are and there are no legal reasons preventing the relationship; the other reason is to:
    A Identify the customer or beneficial owner
    B Obtain verification of the beneficial owner and conduct additional checks
    C Assist law enforcement
    D Obtain information about the intended nature of the business relationship
A

C

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24
Q
  1. Which of the following is a MiFID financial instrument?
    A Bank account
    B Contracts for differences on sporting events
    C Foreign exchange
    D Credit derivatives
A

D

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25
Q 
25. If a firm is carrying on activity on an eligible counterparty basis, which of the following rules applies to them?
A Best execution
B Client order handling
C Conflicts of interest
D Inducements
A

C

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26
Q
  1. Under the COBS rules, which financial promotions communicated by their appointed representatives are firms responsible for?
    A Only those promoting MiFID financial instruments
    B Those which are published in the consumer press
    C Those which relate to high-risk investments
    D All types of financial promotions
A

D

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27
Q
  1. Why is a commodity derivatives dealer classified as a per se professional client?
    A Commodity derivatives are MiFID financial instruments
    B The activity is conducted by way of business
    C The dealer is an investment firm
    D The dealer is unable to qualify as a retail client
A

C

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28
Q
  1. In relation to non-MiFID business, which of the following retail clients may be suitable for reclassification as an elective professional client?
    A A newly appointed trustee of a trust exceeding €500,000
    B A client to whom the firm regularly sends financial promotions for non-mainstream investment opportunities
    C A client who has recently inherited a sizeable portfolio
    D The spouse of one of the firm’s investment managers
A

B

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29
Q 
29. Which of the following is a retail investment product?
A Home income plan
B Occupational pension scheme
C Unit trust
D Commodity derivative
A

C

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30
Q
  1. Which of the following statements is TRUE about a client that is an eligible counterparty for executing orders?
    A If the client requires investment advice they will be classified as a per se professional client for that service
    B The eligible counterparty status provides the client with regulatory protection for the execution of orders
    C The firm must conduct both qualitative and quantitative assessments on the client before executing orders
    D The firm is only required to conduct a qualitative assessment on the client before executing orders
A

A

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31
Q
  1. Which of the following is TRUE of the client categorisation requirements in the FCA Handbook?
    A Customers are classed as either retail clients or private clients
    B Retail clients cannot be opted up to be professional clients
    C Professional clients can be either elective or per se professional clients
    D The client classification rules do not apply to non-MiFID business
A

C

32
Q 
32. Firms carrying on MiFID business must provide clients with appropriate information on which of the following?
A Compliance officer’s name
B The firm’s major shareholders
C Where the firm’s shares are listed
D Costs and associated charges
A

D

33
Q
  1. Client agreements must be provided for designated investment business carried out for:
    A Eligible counterparties (in respect of non-MiFID business)
    B Professional clients (in respect of non-MiFID business)
    C Professional clients (in respect of MiFID business)
    D Eligible counterparties (in respect of MiFID business)
A

C

34
Q
  1. Which of the following is TRUE in relation to the rules on disclosure of costs and associated charges?
    A They apply to retail and professional clients
    B Commissions have to be shown separately
    C All fees, commissions and charges must be disclosed by the firm
    D A firm has to disclose any taxes payable via the firm
A

C

35
Q 
35. Unless a retail client has agreed otherwise with the firm, what is the frequency that an investment manager must send a periodic statement?
A Weekly
B Quarterly
C Six-monthly
D Annually
A

B

36
Q
  1. In which of the following circumstances does a firm have to send a suitability report?
    A If the recommendation is to increase a regular premium to an existing life insurance contract
    B If the recommendation is for a client to undertake a pension transfer
    C If the firm is acting as an investment manager for a retail client and recommends a regulated collective investment scheme
    D If the recommendation is to make a further investment into an existing packaged product
A

B

37
Q
  1. In which of the following circumstances do the rules on appropriateness apply?
    A Personal recommendation to a retail client to purchase a UK-authorised collective investment scheme
    B Retail client responding to a direct offer financial promotion to deal in warrants
    C Discretionary portfolio management for a retail client
    D Personal recommendation to a professional client to invest in a hedge fund
A

B

38
Q
  1. In which of the following circumstances is a suitability assessment NOT required?
    A Portfolio manager making a discretionary decision to deal
    B Financial adviser who advises a client to invest in a UK-authorised collective investment scheme
    C Private wealth manager who advises a professional client to invest in a hedge fund
    D A firm transmitting an execution-only order in a security admitted to trading on a recognised investment exchange
A

D

39
Q
  1. Why must a suitability report be issued within 14 days of concluding a personal pension scheme?
    A To allow the client the opportunity to consider the recommendations before the end of the 14-day cancellation period
    B To allow the pension scheme provider to establish the scheme
    C To enable the client to compare the costs of the scheme with others
    D Because this is a MiFID requirement
A

A

40
Q 
40. The three categories of products for which Key Features Documents must be provided to clients are packaged products, cash-based ISAs and:
A Deposit accounts
B Cash-based JISAs
C Conventional annuities
D Wrap accounts
A

B

41
Q
  1. Which of the following is EXEMPT from the financial promotion rules?
    A A promotion to a professional client
    B The promotion of non-MiFID business to a retail client
    C The promotion of packaged products to a UK-domiciled retail client
    D One-off promotions of non-MiFID business that are not cold calls
A

D

42
Q
  1. The rules requiring charges to be included in a direct offer promotion to retail clients can be waived if:
    A the product is considered to be low-risk
    B the product has previously been promoted
    C the charges are included in another document that the client needs to refer to in order to respond to the offer
    D the charges are below a threshold level which is assessed each year in line with the retail price index
A

C

43
Q
  1. What action might a firm take to ensure investment research staff do not pass price-sensitive information to other departments?
    A Make this a condition of employment for all staff
    B Establish a Chinese wall policy
    C Conduct appropriate supervision
    D Establish a training and competence scheme
A

B

44
Q
  1. MiFID firms may accept payments or non-monetary benefits from a third party only if:
    A the client is a professional client
    B the amount is below that specified in the firm’s conflicts of interest policy
    C the payment is recorded and details provided to the client on request
    D the payment enhances the quality of service and is disclosed to the client
A

D

45
Q
  1. What is the purpose of an order execution policy?
    A It enables firms to obtain the best possible results for their clients
    B It tells clients exactly how their trades will be dealt
    C It lets clients know the precise venue on which their order will be executed
    D It ensures the client will always get the best price
A

A

46
Q
  1. The best execution rules under COBS require firms to:
    A execute orders on the terms that are most favourable to their client
    B execute orders that achieve the best price first
    C execute orders that usually achieve the best price and cost for the client
    D execute orders that achieve the best price and speed of execution for the client
A

A

47
Q
  1. What is the MAIN purpose of the client money rules?
    A To compensate clients if an authorised firm becomes insolvent
    B To ensure client money benefits from the best possible rate of returns
    C To segregate and protect client money from a firm’s own money
    D To prevent clients from encashing client money before the due date
A

C

48
Q
  1. How often must a firm internally reconcile client assets?
    A Every day
    B Monthly
    C As often as is necessary
    D At whatever frequency is requested by the client
A

C

49
Q
  1. A firm must hold client money accounts in trust with a bank to ensure that:
    A the firm cannot use client money to repay its own creditors
    B the bank is able to maintain its regulatory status as designated trustee
    C no loss will be borne by the client money accounts should the bank become insolvent
    D the bank is able to retain the client money should the firm become insolvent
A

A

50
Q 
50. What is the MAXIMUM amount of monetary award against an authorised firm that the Financial Ombudsman Service can make?
A £35,000
B £50,000
C £100,000
D £150,000
A

D

51
Q
  1. Why does the Money Laundering Reporting Officer (MLRO) have responsibility for the training of staff in relation to identifying money laundering activity?
    A Compliance officers require MLROs to undertake this function
    B It is required by the Joint Money Laundering Steering Group
    C It is required by the Financial Conduct Authority
    D It is required by the Proceeds of Crime Act
A

C

52
Q
  1. Which of the following does NOT summarise any of the Chartered Institute for Securities & Investment Principles?
    A To act honestly and fairly at all times when dealing with clients
    B To ensure that staff for whom you are responsible maintain relevant standards of competence
    C To observe standards of market integrity
    D To identify and manage conflicts of interest to the best of your ability
A

B

53
Q
  1. When a firm gives permission to an employee to undertake a personal account transaction it must:
    A promptly notify the FCA
    B promptly notify the employee
    C receive prompt notification that the transaction has been conducted
    D obtain permission from the FCA
A

C

54
Q 
54. For how long must MiFID firms retain copies of confirmations of transactions carried out for retail clients?
A Indefinitely
B Three years
C Five years
D Six years
A

C

55
Q 
55. Who deals with unresolved disputes between an authorised firm and complainants?
A Financial Ombudsman Service
B Upper Tribunal
C Financial Services Compensation Scheme
D FCA’s Regulatory Decisions Committee
A

A

56
Q
  1. The Proceeds of Crime Act 2002 includes provisions relating to which of the following?
    A The offence of market abuse
    B The offence of making false and misleading statements
    C The protection of persons who inform authorities of their concerns
    D The requirement to disclose suspicious money laundering transactions
A

D

57
Q 
57. Dealing on the basis of inside information on which of the following investments constitutes an offence under the Criminal Justice Act?
A Commodity futures
B Energy futures
C Options on gold
D Options on shares
A

D

58
Q 
58. When must a firm normally send a written confirmation after carrying out an order for a retail client?
A The same business day
B The next business day
C Within three business days
D Within five business days
A

B

59
Q 
59. Which of the following bodies is established to provide a safety net for customers of financial services firms that become insolvent?
A Financial Services Compensation Scheme
B Financial Conduct Authority
C Financial Ombudsman Service
D Upper Tribunal
A

A

60
Q 
60. Which type of statutory notice can be issued by the FCA only with the consent of the recipient?
A Final Decision Notice
B Further Decision Notice
C Notice of Discontinuance
D Supervisory Notice
A

B

61
Q
  1. With whom must the firm register a data controller under the Data Protection Act?
    A The UK Department for Business, Innovation and Skills
    B The FCA
    C The Information Commissioner
    D HM Treasury
A

C

62
Q
  1. In relation to the FCA’s complaints handling requirements, which of the following is TRUE?
    A The complaint must be dealt with at the firm by an individual involved in the original matter
    B The firms is not obliged to advise the complainant of their rights to take the complaint to the FOS
    C The firm’s procedures for the receiving of eligible complaints apply to complaints received by both oral and written notification
    D The firm must maintain a document on its internal procedures for dealing with complaints. However it is only required to provide this to clients/complainants when requested to do so
A

C

63
Q 
63. The Financial Services Compensation Scheme can make awards to:
A eligible complainants
B eligible counterparties
C eligible claimants
D approved persons
A

C

64
Q
  1. Which of the following is TRUE in connection with a MiFID firm communicating with retail clients?
    A The firm’s name must be included in the communication
    B The information can highlight benefits without having to highlight risks
    C Financial promotions must name the FCA or PRA as the firm’s regulator
    D Where comparisons are made, the source of the information does not have to be identified
A

A

65
Q 
65. The rules on personal account dealing do not apply to which of the following?
A Options
B Overseas markets
C Life policies
D IPOs
A

C

66
Q 
66. Which of the following is an excluded person in the conduct of regulated activity?
A A member of the Society of Lloyd’s
B A firm dealing as principal
C The London Stock Exchange
D An appointed representative
A

D

67
Q 
67. ADRs are included in which category of specified investment?
A Certificates representing securities
B Contracts for differences
C Lloyd’s investments
D Warrants
A

A

68
Q
  1. Overseas persons are excluded from the need for authorisation when conducting business after a legitimate approach from a UK client for which of the following activities?
    A Accepting deposits
    B Carrying out insurance contracts
    C Dealing in investments as principal
    D Establishing stakeholder pension schemes
A

C

69
Q
  1. Best execution requires a firm to:
    A achieve the fastest result for the order
    B execute orders on the most favourable terms for the client
    C obtain consistent rules by using the same venue for the majority of orders
    D select venues based on commissions receivable
A

B

70
Q
  1. A firm is permitted to deal for itself prior to the publication of a research recommendation under which of the following circumstances?
    A It anticipates customer demand
    B It is a market maker acting in good faith
    C The market price is likely to be unaffected by publication
    D The firm’s documentation states that it may deal ahead of publication
A

B

71
Q
  1. In relation to an eligible complaint that reaches the Financial Ombudsman, which of the following is TRUE?
    A It is resolved between the firm and the complainant under supervision
    B It is resolved by the Ombudsman
    C It is resolved by an FCA inspector
    D It is funded by the Ombudsman and considered in a court of law
A

B

72
Q
  1. Which of the following is a regulated activity?
    A Discussing term assurance generally
    B Explaining different types of investments
    C Advising on shares
    D Advising on bank deposit accounts
A

C

73
Q 
73. Which of the following types of client is entitled to the most protection?
A Professional
B Institutional
C Eligible counterparty
D Retail
A

D

74
Q
  1. Which of the following is not required to be included in a notice to clients with the details of the deal?
    A The venue where the transaction was executed
    B The name of the dealer who executed the trade
    C The number of trades outstanding
    D The client’s name and date of birth
A

A

75
Q
  1. What is the frequency of reporting for periodic statements?
    A Periodic statements have to be sent annually
    B Periodic statements are required quarterly but they may be half-yearly at the client’s request
    C Periodic statements must be sent quarterly unless the portfolio is leveraged then it must be dispatched monthly
    D Periodic statements must be sent to the client every month
A

C

IOC - UK financial reg (6 decks)

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