Topic 18 Flashcards
Regulating firms and individuals
Miranda performs a senior management function in the firm she works for. Which of the following principles does not specifically apply to her role?
She must:
a. at all times, act to avoid situations that could lead to risks to the business.
b. disclose appropriately any information of which the FCA or PRA would reasonably expect notice.
c. take reasonable steps to ensure that the business of the firm for which she is responsible complies with relevant regulatory requirements and standards.
d. take reasonable steps to ensure that the business of the firm for which she is responsible is controlled effectively.
a. at all times, act to avoid situations that could lead to risks to the business.
ey individuals who perform significant roles within a bank and who must be individually approved by the FCA are those who carry out:
a. authorised functions.
b. certification functions.
c. responsible functions.
d. senior management functions.
d. senior management functions.
For what minimum period of time must the training and competence records of a stockbroker who is conducting MiFID business be retained after they have left that role?
a. Three years.
b. Five years.
c. Six years.
d. Indefinitely.
b. Five years.
A regulated investment includes all of the following categories, except:
a. cash ISAs.
b. debentures.
c. gilts.
d. options.
a. cash ISAs.
Under the Senior Managers & Certification Regime (SM&CR), what is a key requirement for firms regarding senior managers?
a. Firms are only required to assess the fitness and propriety of senior managers at the point of hiring.
b. Firms must ensure the ongoing fitness and propriety of their senior managers.
c. Senior managers are exempt from the certification regime if they have more than ten years of relevant industry experience.
d. Senior managers are required to undergo annual reapproval by the FCA.
b. Firms must ensure the ongoing fitness and propriety of their senior managers.
Under the Senior Managers Regime, into which type of function would the Money Laundering Reporting Function be categorised?
a. Customer function.
b. Governing function.
c. Risk function.
d. Senior management function.
d. Senior management function.
The regulatory approval of the appointment of a chair to a building society is covered by the FCA’s:
a. Senior Managers Regime.
b. Certification Regime.
c. principles for supervision.
d. supervision model.
a. Senior Managers Regime.
Which of the following is not one of the FCA’s principles for supervision?
a. Being forward-looking and pre-emptive to avoid risk and serious harm.
b. Encouraging two-way communication and being transparent about FCA priorities and work.
c. Focusing on firms’ culture and governance to identify and mitigate risks.
d. Providing financial incentives for firms to adopt higher-risk business models.
d. Providing financial incentives for firms to adopt higher-risk business models.
If a financial adviser is judged to be guilty of misconduct, the FCA may apply a range of different disciplinary measures against the employer.
Which of the following is not a disciplinary option open to the FCA?
a. Imposing a financial penalty.
b. Imprisonment.
c. Issuing a warning notice.
d. Publishing a statement of misconduct.
b. Imprisonment.
For what minimum period of time must the training and competence records of an individual carrying out MiFID business be retained after they have stopped carrying out regulated activities?
a. Three years.
b. Four years.
c. Five years.
d. Six years.
c. Five years.
Before an investment adviser is able to advise on investments without close supervision, they should:
a. be assessed as competent and pass an appropriate examination.
b. be assessed on technical knowledge and its application.
c. have completed the required number of hours of continuing professional development.
d. have successfully completed their probation period.
a. be assessed as competent and pass an appropriate examination.
Under the FCA Senior Managers Regime, where a senior manager is found guilty of reckless misconduct, what maximum prison sentence may apply?
a. 5 years.
b. 7 years.
c. 10 years.
d. 12 years.
b. 7 years.
Under the Senior Managers and Certification Regime, individuals are required to obtain approval from the FCA to carry out certain roles, which are referred to as:
a. authorised functions.
b. certified functions.
c. controlled functions.
d. senior management functions.
d. senior management functions.
Under the Certification Regime, individuals performing a specific function that isn’t a senior management function but that can have a significant impact on customers must be approved by:
a. both the FCA and their employing firm.
b. either the FCA or their employing firm.
c. the FCA only.
d. their employing firm only.
d. their employing firm only.
Which of the following is not a criterion used by the FCA to determine if an individual is ‘fit and proper’ to perform a senior management role?
a. Has undergone or is undergoing training relevant to the role.
b. The individual’s financial soundness.
c. The individual’s honesty, integrity and reputation.
d. References from previous employers covering the last ten years.
d. References from previous employers covering the last ten years.
If a bank takes disciplinary action against a senior manager, as a result of a breach of the FCA’s conduct rules, what additional action should it take?
a. Report it to the FCA within seven days.
b. Report it to the FCA within 14 days.
c. Revoke the manager’s statement of responsibilities.
d. Suspend the manager immediately.
a. Report it to the FCA within seven days.
For what minimum period of time must the training and competence records of an individual carrying out non-MiFID business be retained after they have stopped carrying out regulated activities?
a. Three years.
b. Five years.
c. Seven years.
d. Ten years.
a. Three years.
Which of the following pieces of information would not be detailed on a key features document?
a. A summary of the client’s data protection rights.
b. Information about the Financial Services Compensation Scheme.
c. Details of the right to cancel.
d. The consequences of failing to maintain required contributions.
a. A summary of the client’s data protection rights.
Which of the following statements is true in relation to training and competence rules?
a. All employees must pass an appropriate examination.
b. All new entrants to the industry must attain competence within 12 months.
c. Firms must monitor the continuing competence of their employees.
d. Records of assessment criteria must be kept for six years.
c. Firms must monitor the continuing competence of their employees.
The FCA Training and Competence Sourcebook applies to:
a. financial advisers, supervisors of those advisers and supervisors of certain ‘back office’ functions.
b. supervisors of advisers, supervisors of certain ‘back office’ functions and clerical input staff.
c. supervisors of certain ‘back office’ functions, clerical claims staff and supervisors of advisers.
d. the company accountants, financial advisers and supervisors of certain ‘back office’ functions.
a. financial advisers, supervisors of those advisers and supervisors of certain ‘back office’ functions.
Key individuals who perform significant roles within a bank and who must be individually approved by the FCA are those who carry out:
a. authorised functions.
b. certification functions.
c. responsible functions.
d. senior management functions.
d. senior management functions.
A firm that provides debt collecting services only, will need to be authorised by:
a. Citizens Advice.
b. MoneyHelper.
c. the FCA.
d. the PRA.
c. the FCA.
If the FCA discovers a contravention of its rules, one of the steps it may take is to vary a firm’s permissions.
This means that the firm:
a. may have its authorisation withdrawn.
b. may have one of its regulated activities removed or restricted.
c. will have all business temporarily checked by the FCA.
d. will be subject to an injunction preventing it from profiting from the breach.
b. may have one of its regulated activities removed or restricted.
Simon has undergone his initial training as an investment adviser but has not yet passed the regulatory module of an appropriate qualification.
Under what circumstances might he be allowed to advise customers about regulated products, if at all?
a. He may do so, provided he acts under close supervision.
b. He may do so, provided investments are below an agreed level.
c. He may do so if Simon has the appropriate amount of relevant industry experience.
d. Under no circumstances can he offer advice to customers.
d. Under no circumstances can he offer advice to customers.
Which of the following actions is not an option available to the FCA in exercising its enforcement powers?
a. Applying for an injunction.
b. Awarding compensation.
c. Disciplinary action.
d. Enhanced supervision.
b. Awarding compensation.
Misha started a role as a trainee investment adviser with a firm of independent financial advisers in January 2022. By when must Misha pass an appropriate qualification?
a) December 2026.
b) March 2024.
c) December 2025.
d) January 2026.
d) January 2026.
Misha must achieve the qualification within 48 months of starting the role.
Jeremy’s firm is assessing his fitness and propriety and is considering his complaints record. Which element of the test would this be considering?
a) Capability.
b) Competence.
c) Honesty, integrity and reputation.
d) Financial soundness.
c) Honesty, integrity and reputation.
Geoff is a financial adviser, specialising in non-MiFID investments. For how long must Geoff’s firm keep records of his training and competence after he leaves the firm?
a) As long as the firms deems to be appropriate.
b) At least three years.
c) At least five years.
d) Indefinitely.
b) At least three years.
A firm has taken disciplinary action against a senior manager for a breach of FCA conduct rules. Within what period must the firm report the breach to the FCA?
a) 7 days.
b) 10 days.
c) 14 days.
d) 28 days.
a) 7 days.
FCA rules require a firm to seek references from previous employers before an individual can be appointed to a senior manager or certification function. The references must cover what period?
a) The last 3 years.
b) The last 5 years.
c) The last 6 years.
d) The last 10 years.
c) The last 6 years.
Compliant Finance is a small firm of advisers that have been categorised as a flexible portfolio firm for supervision purposes. This means that the firm:
a) is supervised through the FCA customer contact centre.
b) is able to add new regulated activities without seeking permission.
c) is supervised by a named individual.
d) only deals with retail customers.
a) is supervised through the FCA customer contact centre.
Which of these roles would not be subject to the FCA Tier 1 conduct rules?
a) Claims manager.
b) Mortgage adviser.
c) IT technician.
d) New business assistant.
c) IT technician.
Which of the following is not an FCA-regulated activity?
a) Debt collecting.
b) Cryptoassets.
c) Accepting deposits.
d) Mortgage administration.
b) Cryptoassets.
Which of the following is not an FCA enforcement power?
a) Withdrawal of a permitted activity.
b) Prosecution.
c) Redress.
d) Seek an injunction.
b) Prosecution.
When a pension transfer specialist leaves that role or leaves the firm, for what minimum period of time must records of their competence in this field be retained by the firm?
a.Three years.
b. Five years.
c. Ten years.
d. Indefinitely.
d. Indefinitely.
