TOPIC 20 - Conduct of business requirements I Flashcards
Harminder is an investment adviser who makes decisions and executes investments for his customer without seeking permission each time. As part of initial disclosure for a new customer interested in that service, what additional document must Harminder present at the beginning of the relationship, specifically due to the nature of his services?
a) An initial disclosure document.
b) A written client agreement.
c) A product disclosure document.
d) A services disclaimer document.
b) A written client agreement.
A division of a major bank needs some advice on an investment matter. They would be classified as:
a) An eligible counterparty.
b) A retail client.
c) A professional client.
d) A professional counterparty.
c) A professional client.
Which of the following is true in relation to advice and suitability?
a) An independent financial adviser can use panels of providers to provide advice.
b) An independent financial adviser cannot offer advice restricted to certain areas of need.
c) If a suitable product is not available to an adviser, they can recommend a product that meets some of the need criteria.
d) An independent financial adviser must provide advice from all products available in the market.
a) An independent financial adviser can use panels of providers to provide advice
For which product might a customer not receive a full refund of money paid to the provider when exercising their statutory cancellation rights?
a) Personal pension.
b) An annuity.
c) Unit-linked investment bond.
d) Unit-linked whole-of-life policy.
c) Unit-linked investment bond.
What is the cooling-off period for a whole-of-life assurance policy?
a) 14 days from the later of the date the contract begins or when the customer receives contractual terms.
b) 14 days from the date the application is received from the customer.
c) 30 days from the later of date the contract begins or when the customer receives contractual terms.
d) 30 days from the date the application is received from the customer.
c) 30 days from the later of date the contract begins or when the customer receives contractual terms.
An investment firm is producing promotional material for one of their unit trust funds, which has been running for 20 years. Any performance figures used must show the fund’s performance for what minimum period? The past:
a) 12 months.
b) 5 years.
c) 10 years.
d) 20 years.
b) 5 years.
Bobbie has declined her adviser’s recommendation and instructed them to arrange a different product. This means Bobbie will be regarded as:
a) a professional client.
b) an exception client.
c) an execution-only client.
d) an insistent client.
d) an insistent client.
Which product would not require the adviser to give the customer a key information document (KID) as part of the product disclosure requirements?
a) A personal pension.
b) An investment trust.
c) Derivatives.
d) A unit-linked endowment.
a) A personal pension.
A suitability report is not required for:
a) Personal pensions.
b) Open-ended investment companies.
c) Whole of life assurance policies.
d) Mortgages.
d) Mortgages.
Yvonne’s customer is about to sign applications for a term-assurance policy and a personal pension. What is the position with Yvonne’s remuneration?
a) She cannot receive commission from either provider, but can take an adviser charge from the customer for both products.
b) She can receive commission from both product providers.
c) She can receive commission from the life company but can only take an adviser charge from the customer for the pension policy.
d) She can receive commission from the pension provider but can only take an adviser charge from the customer for the life policy.
c) She can receive commission from the life company but can only take an adviser charge from the customer for the pension policy.
Which of the three categories of investor identified in COBS is provided with the highest level of regulatory protection?
Retail clients are assumed to have least expertise in relation to financial services and consequently require more support from the adviser.
Dealings with retail clients are more highly regulated than those with eligible counterparties or professional clients.
If a client intends to purchase an investment product on an ‘execution only’ basis, then:
a) no recommendation is provided.
b) no charges will be payable.
c) they can only use an independent adviser.
d) they will have to complete all the paperwork themselves.
a) no recommendation is provided.
A restricted adviser is one who:
a) can only make recommendations based on the products of a single provider.
b) has not passed all of the relevant exams to enable them to give independent advice.
c) does not meet the FCA criteria to be considered ‘independent’.
d) can only give basic advice on stakeholder products.
c) does not meet the FCA criteria to be considered ‘independent’.
A firm is keen to develop its mortgage business and has acquired a list of potential new customers from a marketing company. It plans to call the listed individuals in the evenings and at weekends. In what respects would this plan breach COBS rules on financial promotions?
As the individuals are not existing customers, contacting them by telephone would constitute cold calling, which is not permitted in relation to mortgage contracts. Additionally, cold calls may only be made at an ‘appropriate time of day’ – evenings (to 9.00pm) and Saturdays would be permissible but not Sundays.
Which of the following reflects the FCA’s rules on adviser charging?
a) Advisers may minimise the upfront cost of their services to clients by charging in instalments over a number of years.
b) Advisers’ charges must be based on hourly fees.
c) Advisers have discretion to determine their charging structures but they must pay due regard to the best interests of the client.
d) It is accepted that it is not possible to provide an estimate in advance of chargeable hours because of the potential complexity of some transactions.
c) Advisers have discretion to determine their charging structures but they must pay due regard to the best interests of the client.
