Unit 2 Flashcards
Name the three operational objectives of the FCA
Protect consumers
Enhance integrity of the UK financial system
Maintain competitive markets and promote competition in the interests of consumers
What is the difference between Rules and Guidance in the FCA handbook?
Rules create binding regulations whereas guidance provides assistance in understanding how to abide by the rules
How according to the ‘Principles for Business’ must authorised firms behave in their dealings with their regulators?
In an open and co-operative way, disclosing anything that the FCA or PRA might reasonably expect to be told
What, according the the FCA, must be ‘embedded into the culture and day to day operations’ of authorised firms?
The principle of TFC
Whose rights are protected by the Public Interest Disclosure act 1998?
- Borrowers for fall into arrears
- Whistle-blowing employees
- Bank deposit account holders
Whistle-blowing employees
What are the two forms of market abuse defined by the EU?
- Insider dealing
- Market manipulation
Which of the following is NOT a ‘regulated investment’ under the Financial Services and Markets act 2000?
- Works of art
- Funeral plans
- Insurance policies
Works of art
What is ‘Basel 2’?
An international standard for the capital adequacy requirements of financial institutions
‘The risk of losses from failed or inadequate internal processes, people and systems, or from external events.’ What is this a description of?
Operational risk
What European legislation determines the capital adequacy requirements of investment businesses?
The capital requirements directive (CRD)
In relation to the FCA’s enforcement powers, explain the difference between ‘restitution’ and ‘redress’
Restitution is the FCA’s power with a court order to require a person of firm to forfeit any profit made from contravening an FCA rules.
Redress is an identifiable customer has made a loss as a result of contravention of a rule and the FCA with a court order can require the loss to be made good
The role of Financial advisor is a ‘controlled function’ Which category of controlled function is it?
Customer function
During what hours can an unsolicited sales call be made be a financial advisor?
At an appropriate time (between 9am - 9pm Monday to Saturday) to an existing client.
What is an eligible counter party?
Someone who is ‘in the business’ i.e. someone who transacts the same kind of business for their own customers as they are proposing to transact for themselves.
An advisor has just sold a personal pension plan to a client. What is the minimum period for which the fact find and related information must be retained?
5 years
If the current BoE base rate is 4.5%, what is the minimum rate of interest that can be offered on a stakeholder cash deposit scheme?
- 1.5%
- 2.5%
- 3.5%
3.5%
Transferring criminally obtained money through different accounts is not the only action treated as money laundering. What other activities are also defined as money laundering?
- Concealing the true nature or source of property that you know to result from criminal activity.
- Acquiring or using property that you know to result from criminal activity.
- Aiding or abetting any of type of money laundering activity
What is the name of the international body that co-ordinates the fight against Money laundering?
The Financial Action Task Force (FATF)
What is the transaction level above which firms must obtain evidence of identity of the client?
15,000 EUROS
How often must a Money Laundering Reporting Officer provide a report to their firm’s senior management?
Once a year
What is tipping off?
Disclosing to a person who is suspected of money laundering that they are under investigation
How long must evince of identification be retained for anti-money laundering purposes?
Five years after the relationship with the client has ended
If a Money Laundering reports Officer suspects a case of attempted money laundering, to whom must this be reported?
The National Crime Agency (NCA)
Which types of financial services employees must be given training about money laundering?
Anyone who handles transactions that could involve money laundering
The FCA expects firms to aim to resolve complaints within?
8 weeks
A customer has received a final response letter in which the firm he has complained to declines to uphold his complaint. What is the time limit for the customer to refer the matter to the FOS?
6 months
A customer has lost £35,000 as a result of the insolvency of an investment firm. How much compensation can she receive from the Financial Services Compensation Scheme?
£35,000
If an investor looses her £100,000 deposit when a building society collapses, how much compensation can she receive from the Financial Services Compensation Scheme?
£85,000
What type of complaints can be dealt with by the Pensions Ombudsman?
Complaints about maladministration of pension schemes. The pensions ombudsman can also deal with disputes about facts or the interpretation of the law
What is the correct term for an individual whose personal information held and used by a commercial organisation?
Data subject
What are the main categories of ‘sensitive data’ under the date protection act 1998?
Racial origin, religious beliefs, political persuasion, physical and mental health, criminal proceedings
What is the difference between a data controller and a data processor?
A data controller is is the person or organisation who determines why and how the data will be processed. The data processor is the person who processes the data on behalf of the data controller
What is the time limit for the supply of a copy of information held, following a written request by a data subject?
- 14 days
- 30 days
- 40 days
40 days
Which body enforces the terms of the Dead Protection Act 1998?
The Office of the Information Commissioner
What is the purpose of an ‘information notice’, issued in the relation to the Data Protection Act 1998?
It is issued to indicate that a data controller has failed to comply with some aspect of the law and requires the data controller to specify what steps will be taken to ensure compliance
What is the correct term for the process by which a data controller registers the fact that personal information is being held and processed?
Notification
The powers of the Pensions regulator fall into three main categories. What are they?
Investigating schemes, putting things rights and acting against avoidance
What is the maximum level of compensation the Pension Protection Fund can pay to someone who is an existing pensioner?
100% of the pension benefits
What is the maximum level of compensation the Pension Protection Fund can pay to someone who is a scheme member but has yet to retire yet?
90% of pension benefits subject to a cap
How is the compensation from the Pension Protection fund paid for?
By taking over the assets of pension schemes with insolvent employers and by applying a levy on all private sector defined benefit schemes and the defined benefit element of hybrid schemes
The Pensions Regulator has jurisdiction over work-based pension schemes. What constitutes ‘work-based’ schemes?
Worked based pension schemes mean all occupational schemes, and also any stakeholder and personal pension schemes, where employees have direct payment arrangements
If the Pension Protection Fund issues a contribution notice to an employer, what action is the employer obliged to take?
To make good the amount of any debt either to the scheme or to the PPF
What are the two main elements of the pension protection levy, by which the Pension Protection Fund is funded?
An element based on risk factors, such as under-funding, credit rating and investment strategy. A pension protection levy based of scheme factors, such as the numbers of active and retired members
What are the common forms of credit institution in the UK?
Banks and Building societies
What are the four categories of business, defined by European life assurance directives?
- Life Assurance
- Annuities
- Income protection insurance
- Personal injury, incapacity for employment and accidental death
A UK insurance company provides insurance in France. The insurance is a type that is compulsory under french law. Which regulatory authorities are responsible for regulating that insurance business?
The French regulatory authorities
What activities are included under the EU definition of ‘insurance mediation’?
Introducing, proposing or other work preparatory to the taking out of insurance policies, or assisting in the administration and performance of policies, particularly claims.
Insurance intermediaries are required by EU law to be of ‘good repute’ What does this mean?
They must not have been convicted of a serious criminal offence relating to crimes against property of other financial crimes, or declared bankrupt
What is the maximum arrangement fee that can be charged for a CAT-standard discounted variable-rate mortgage?
- £0
- £100
- £150
£0
Under the terms of the lending code, how will banks treat customers who are experiencing financial difficulty
Sympathetically and positively
The section within the FCA handbook covering specialist sourcebooks includes arrangements for?
- Individual responsibilities
- International trading
- Product derivatives
- Professional firms
Professional firms
Which body is responsible for the FOS?
FCA
One of the six outcomes for retail consumers in relation to TCF requires that firms ensure that there are no unreasonable barrier to:
- Accessing products, receiving suitable advice, or complaining
- Accessing products, switching product or provider or making a claim
- Switching product or provider, receiving suitable advice or making a claim
- Switching product or provider, making a claim, or complaining
Switching product or provider, making a claim or complaining
Miranda is an approved person in a customer function. Which of the following principles does not specifically apply to her role?
- She must act with due skill, care and dillgence
- She must act with integrity
- She must observe proper standards of market conduct
- She must take reasonable steps to ensure that the whole business complies with the regulations
She must take reasonable steps to ensure that the whole business complies with the regulations
The FCA requires that a firm’s systems and controls must:
- Be agreed by the FCA before implementation
- Be notified to customers
- Be reviewed regularly
- Meet an agreed industry standard
Be reviewed regularly
Which statement best describes the relationship between the ‘fit and proper’ test and approved persons?
- A ‘fit and proper’ test is recommended by the FCA for anyone applying for a role in a controlled function
- A satisfactory ‘fit and proper’ test is necessary before an individual can fulfil a role in a controlled function
- The ‘fit and proper’ test is mainly designed to establish the creditworthiness of an authorised person
A satisfactory ‘fit and proper’ test is necessary before an individual can fulfil a role in a controlled function
Under the definitions of market abuse, which of the following is specifically covered?
- Dishonesty
- Insider dealing
- Money laundering
- Pricing
Insider dealing
Which of the following is not one of the FCA’s principles for business?
- To act with due skill, care and diligence
- To act with integrity
- To have a clear chain of responsibility
- To observe proper standards of market conduct
To have a clear chain of responsilbity
Which of the following is exempt from the Consumer Credit Act 2006?
- A credit card account with a limit of £15,000
- A further advance for £15,000 for home improvements, from the existing lender
- A second-charge loan for £20,000, secured on property, for a car purchase
- An unsecured personal loan of £10,000
A further advance for £15,000 for home improvements, from their existing lender
When John received his monthly payslip on 21 June, his normal occupational pension scheme contribution of £250 had been deducted by his employer. What is the latest date that his employer should pass this contribution to the scheme?
19 July (19th day of the following month)
The maximum loan size, if any, regulated by the Consumer Credit Act 2006 is?
Unlimited
A firm of stockbrokers is conducting MiFID business. When giving advice to their clients, for what minimum period must they keep the records of that advice?
5 years
Which of the following statements would be the correct definition of the solvency margin required of a life assurance company
- The excess of the company’s assets over its mathematical provisions
- The excess of the company’s assets over the projected monthly mortality rate
- The excess of the company’s mathematical provisions over its assets
The excess of the company’s assets over its mathematical provisions
In the context of FCA supervision of firms, there term ‘flexible portfolio’ means?
Firms supervised by a team of sector specialists
Mark sold an investment bond in 2007 and receives trail commission. In June 2014, he advised that the client make an additional investment into the bond. How should Mark be paid?
The trail commission may continue but the additional investment must be paid under adviser charging
If the FCA discovers a contravention of its rules, one of the steps it may take is to vary a firm’s permissions;
This mean that the firm;
- May have its authorisation withdrawn
- May have one of its regulated activities removed or restricted
- Will be forced to transact business that it does not wish to conduct
May have one of its regulated activities removed or restricted
For dual-regulated firms, which of the following controlled functions is approved as a required function by the PRA?
- Appointed actuary
- Chief executive officer
- Director
- Head of internal audit
Appointed actuary
Which of the following individuals roles in a regulated firm would be classified by the FCA as a ‘customer function’
- Barry, who is in charge of the risk assessment department
- David, a non-executive director of a multi-national insurer
- George, who is a pension transfer adviser
George
What specific FCA financial promotions rules requirements apply to direct offer financial promotions?
- Records must be retained for 7 years
- The promotion must be approved by a director of the firm
- The promotion must contain the name of the conduct regulator, the FCA
The promotion must contain the name of the conduct regulator, the FCA
Which risk warning must appear on all advertising material containing details of past investment performance?
Past performance;
- Is not necessarily a guide to future performance
- Is not necessarily better than future promotion
- Is only a general guide to the future
Is not necessarily a guide to future performance
Once an employee of a regulated company is deemed to be competent, the firm must have arrangements in place for this competence to be maintained. This is most commonly achieved through?
Continuing professional development
Simon has undergone his initial training as a financial adviser but has not yet passed the regulatory module of an appropriate approved examination. Under what circumstances might he be allowed to advise customers about regulated products, if at all?
Under no circumstances
For a non-MiFID firm, training and competence records for all individuals must be retained for what minimum period after they have stopped carrying out regulated activity?
3 years
Which of the following statements is true in relation to training and competence rules?
- All employees must pass an appropriate examination
- All new entrants to the industry must attain competence within 12 months
- Firms must monitor continuing competence
Firms must monitor continuing competence
A number of particular advantages were identified as resulting from the basic advice process. Which of the following was not specifically identified as an advantage?
- Larger average investments
- Less complex regulation
- Reduced costs
Larger average investments
Simon has found that his loan, take out in 2005, is subject to FCA regulation, this is because it is a?
- Business loan
- Buy to let loan
- Debt consolidation loan
- Home improvement loan
Home improvement loan
Ben, an adviser, is required under FCA rules to provide a key features illustration (KFI) detailing the APR to his client. This confirms that the client is interested in?
Mortgage business
Jason is in the process of applying for a mortgage and has just received a tariff of charges from the lender. What is the latest point the process has reached?
- Issue of initial disclosure documentation
- Pre-application disclosure
- Offer stage
- Legal completion
Offer stage
David, an existing mortgage adviser, is required to take a further examination to be permitted to give advice on which of the following mortgages?
- Buy to let mortgages
- Equity release
- Second charges
Equity release
If a customer cancels their general insurance contract within the cooling off period, the insurance company must return any sums paid within how many days?
- 7
- 14
- 21
- 30
30 days
Which of the following is most likely to be an eligible counter-party?
- A firm acting on behalf of a retail client
- A private individual
- A small business
- Another authorised firm
Another authorised firm
When disclosing the adviser charge to a client in cash terms, what information is not required when the charge is payable over a period of time?
- The amount due
- The frequency
- The term
The term
To meet the FCA definition of independent advice, recommendations must be based on what?
A comprehensive and fair analysis of the relevant market
Which of the following most accurately describes the advice that must be given by independent intermediaries?
- A suitable product from the hose employer
- That which is unrestricted, unbiased and comprehensive
- The cheapest product from any provider
That which is unrestricted, unbiased and comprehensive
When carrying out designated investment business, other than advising on packaged products, a firm must give what to the client?
- A business card
- A client agreement
- A suitability letter
- An IDD and a menu
A client agreement
Joe runs his own firm of independent financial advisers and wishes to create his own fact find document. Can this be permitted?
Yes, he’s free to prepare his own document
David has sold a life policy to his customer, Jane. What is the latest date that the suitability report can be sent to Jane?
- 5 days after the end of the cooling-off period
- Five days after the final interview
- Five days after the initial interview
- Before conclusion of the contract
Before conclusion of the contract
Responsibility for product selection in relation to ‘execution-only’ business rests with the:
- Adviser
- Customer
- Product provider
- Regulator
Customer
When an adviser transacts designated investment business for a client, the basis or amount of the adviser’s charges would normally be disclosed in which document?
- The client agreement
- The key features documents
- The statutory cancellation notice
- The suitability report
The client agreement
Henry invested 10k in a unit-linked lump sum product and cancelled 7 days later. He only got £9,500 back. What did the reduction in his original investment represent?
The reduction in the value of investment
A financial adviser must issue a key features illustration prior to a sale being concluded, for all of the following products except;
- gilt-edged securities
- life assurance
- stakeholder pension
- unit trusts
Gilt-edged securities
In relation to money laundering, how is ‘property’ defined under the European Directive 2005?
- Assets held in cash within the European Union only
- Assets of every kind including legal papers giving titles to such assets
- Intangible assets only
- Tangible assets only
Assets of every kind including legal papers giving title to such assets
What is the main reason why an authorised firm’s senior management must obtain an annual report from its Money Laundering Reporting Officer?
- So that they can be compliant with the Financial Services and Markets act
- So they can be compliant with the proceeds of crime act
- To monitor activities and report suspicions
- To monitor activities and strengthen controls
To monitor activities and strengthen controls
Why was the Financial Action Task force set up?
To co-ordinate the international fight against money laundering
Why might money laundering regulations create financial exclusion?
- Because certain non-residents cannot be offered banking facilities
- Because customers want to know why they have been declined for a financial product
- Because financial organisations are wary of opening bank accounts with cash deposits
- Because not everyone can provide the necessary identification
Because not everyone can provide the necessary identification
Under the FCA’s complaints-handling requirements, firms must make a commitment to try to resolve complaints within?
- 3 days
- one month
- 8 weeks
- three months
8 weeks
Which of the following statements regarding complaints referred to the FOS is false?
- The firm involved should investigate the complaint before the Ombudsman
- The Ombudsman’s decision is binding on the firm and the client
- The Ombudsman’s decision is binding on the firm only
- The Ombudsman will not usually consider any complaint that is the subject of a court case.
The Ombudsman’s decision is binding on the firm and the client
When an insurance company defaulted, both Company A and Company B lost £40,000. Company A, however received greater compensation from the FSCS than Company B because only:
- Company A was UK based
- Company A’s policy was for employer’s liability cover
- Company B has another claim regarding a different insurance company.
- Company B was paying premiums monthly
Company A’s policy was for employer’s liability cover
Under the Data Protection Act 1998, the definition of ‘sensitive personal data’ includes all of the following areas except;
- Mental health
- Political persuasion
- Proceedings in civil courts
- Religious beliefs
Proceedings in civil courts
Fred has requested copy of his personal data held by his bank. The Data Protection Act 1998 requires that;
- Any corrections must be completed within 14 days
- He first confirms his identity, by providing a copy of his birth certificate or passport.
- His bank provides his data within 40 days of Fred’s written request
- The bank limits any administrative charge to a maximum of £25
His bank provides his data within 40 days of Fred’s written request
Individuals who are allowed to carried out controlled functions are known as?
- Appointed person
- Appropriate person
- Approved person
- Authorised person
Approved person
Which of the following is not one of the FCA’s Principles for Business?
- Customers: relationship of trust
- Facilitation of competition
- Management and control
- Relation with regulators
Facilitation of competition
In relation to how a firm deals with the regulatory bodies, which of the following is not defined within the FCA’s Principles for Business? A firm must:
- Deal with its regulators in a co-operative way
- Deal with its regulators in an open way
- Disclose all data on a regular basis
- Disclose data that regulator would reasonably expect
Disclose all data on a regular basis
Under the FCA’s rules regulating approved persons, into which type of function would the Money Laundering Reporting Officer be categorised?
- Customer function
- Governing function
- Required function
- Risk function
Required function
Which of the following areas in not included in the fit and proper test required by the FCA?
- Complaints received
- Criminal record
- Current level of earnings
- Disqualification as a director
Current level of earnings
Which of the following is most likely to be in evidence for insider dealing to take place?
- A person being in a position of trust
- A person having access to restricted information
- A significant degree of trading
A person having access to restricted information
Under TCF, firms must ensure that product literature is clear and:
- Appropriate to the expected financial sophistication of the target customer group
- Available in all EU languages
- Contains relevant comparisons with products available from competitors
Appropriate to the expected financial sophistication of the target customer group
Which of the following facts must be included on all quotations for loan regulated by the Consumer Credit Act 2006?
- The annual percentage rate
- The BoE’s base rate
- The purpose of the loan
The APR
Paula wants to make a complaint about the treatment she has received as a member of the society’s final-salary pension scheme. To whom should she FIRST refer her complaint if she is unable to gain satisfaction from the scheme’s trustees?
- The FCA
- The Pension Advisory Service
- The Pension Ombudsman
- The Pension Regulator
The Pension Advisory Service
Which of the following would be covered by the Unfair Terms in Consumer Contracts Regulations 1999?
- A national builder selling a new house
- A parent lending their child a deposit for a house purchase
- A private seller putting their house on the market
- The advice of an estate agent of the price of a house
A national builder selling a new house
To which of the following will the provisions of MiFID always apply?
A firm which:
- is under writing the issue of any of the specified financial instruments
- provides life assurance advice
- provides mortgage advice
- transmits orders for collective investments
Is under writing the issue of any of the specified financial investments
To satisfy the Capital Requirements Directive, an investment firm operating as a matched principal broken must have minimum base capital of?
- £125,000
- £730,000
- €125,000
- €730,000
€125,000
Which of the following bank employees would not normally require individual FCA approval?
- A branch cashier
- A money laundering report officer
- A pension adviser
A branch cashier
For supervision purposes under the FCA, firms fall into one of four categories. What type of firm fall into the first category, C1?
- Banking and insurance groups
- Investment advisers
- Small firms, including most intermediaries
- Wholesale firms
Banking and insurance groups
If an approved person or authorised firm is judged to be guilty of misconduct, which of the following is not a disciplinary option open to the FCA?
- Financial penalty
- Imprisonment
- Issue a warning notice
- Publish a statement of misconduct
Imprisonment
Which of the following individuals’ roles in a regulated firm would be classified by the FCA as a required function?
- An investment adviser
- Chief exec of an insurer
- Money laundering report officer
- Corporate financial adviser
Money laundering report officer
Which of the following is most likely to be classified as an approved person?
- A compliance officer
- A personnel manager
- A training officer
- An internal auditor
A compliance officer
A firm is preparing a promotion for retail customers. Under FCA rules and guidance, the information must be understandable:
- By the average member of the target group
- Easily by all potential members of the target group
- Unless defined technical terms are used
By the average member of the target group
A balanced view of any benefits and risks must be included in a postal campaign of a building society to meet the FCA’s rules. True or false
True
The FCA training and competence sourcebook applies to:
- FAs, supervisors of those advisors and supervisors of certain ‘back office’ functions
- Supervisors of advisors and clerical input staff
- Supervisors of certain back office functions and clerical input staff
FAs, supervisors of those advisors and supervisors of certain back office functions
What is the minimum period for which customer suitability records, in respect of a regular contribution personal pension contract which is not an opt-out, must be kept?
5 years
Which of the following should be part of a firm’s training regime for FCA training and competence purposes?
- Employees should be given 1-2-1 training
- New employees should be given the most intense training
- The effectiveness of training should be evaluated
The effectiveness of training should be evaluated
Why is it important that finical advisors keep records of their advice?
- In case similar advice is required for another customer
- Is it mandatory under the Data Protection Act
- To be able to demonstrate compliance with the regulations
To be able to demonstrate compliance with the regulations
For what period of time must records be kept that a firm has chosen to offer basic advice and the range of stakeholder products used?
5 years
Gary has found that the mortgage he is arranging, which is secured by a first charge, is not regulated under the terms of MCOB. This is because:
- He is using the mortgage to build an extension on his existing residential property
- He is securing the mortgage on a buy-to-let property
- The mortgage will be partly used to repay credit card debts
He is securing the mortgage on a buy-to-let property
When MCOB rules apply to a residential mortgage, what minimum % of property must be occupied as a residence by the borrower?
40%
For which type of mortgage, if any, is a firm required to issue a suitability report?
None
John and Ellie have an interest only mortgage and have received written advice to check the performance of their repayment vehicle. Under MCOB rules, this is most likely to have been issued by?
- The FCA
- Their FA
- Their Mortgage lender
Mortgage lender
The introduction of regulations for general insurance from Jan ‘05 was partly in response to the EU directive on insurance mediation. The directive was designed to;
- Limit the commissions of fees that can be paid on general insurance products
- Open and standardise the market for insurance intermediaries throughout the European Union
- Set minimum qualification standards for advisers
Open and standardise the market for insurance intermediaries throughout the European Union
Which of the following is not one of the 3 categories of customer as defined by the FCA?
- A corporate client
- A professional client
- A retail client
- An eligible counterparty
A corporate client
For a non MiFID firm, when is it not necessary to provide a client agreement?
- If the transaction involves investment advice
- When the client has been given a business card
- When the client has received one in the past and circumstances have not changed
When the client has received one in the past and the circumstances have not changed
How does the use of specialists within a firm impact on their status as independent advisers?
- If an individual decides to a specialise in one product or advice area, they can no longer describe themselves as being independent
- A specialist in one product or advice area can only advise on other products and advice areas on a restricted
- Within a firm, a specialist may claim to offer independent advice provided that he can meet the independence rule in every personal recommendation he provides
Within a firm, a specialist may claim to offer independent advice provided that he can meet the independence rule in every persona recommendation he provides
Under what circumstances is a firm of IFAs permitted to select products from a panel of product providers?
- Never
- For investment based products only
- For any type of product, provided that the panel is sufficiently broad and is reviewed regularly
For any type of product, provided that the panel is sufficiently broad and is reviewed regularly
A restricted adviser means?
He does not meet the requirements to be independent under the FCA handbook definition
Joe runs his own firm of IFAs and wishes to create his own fact find. Is he permitted to do so?
Joe is free to prepare his own fact find
When an adviser makes a recommendation to a client, but the client insists on selecting a different product, the adviser:
- Cannot proceed and should terminate the process
- Should record the advice given and ask the client to sign to the effect that they wish to pursue an alternative
- Should refer the client to another IFA
Should record the advice given and ask the client to sign to the effect that they wish to pursue an alternative
What does an execution only transaction require an adviser to do?
To give no advice and only process the transaction
Fred is being advised to purchase a life assurance product. This means that the adviser’s charger must be disclosed…
in writing before any business is discussed
Janice has cancelled an investment plan within the cancellation period but has received back less than she invested. Why is this?
- A surrender charge has been applied to this plan
- A withdrawal charge may have been applied to this plan
- She investment a lump sum into a unit-linked plan, which has fallen in value
Invested into unit-linked plan, which has fallen in value
Investment business is being transacted by an IFA with a client. Who is responsible for presenting a key features document to the client?
The adviser
The Financial Action Task Force (FATF) specifically transfers law enforcement activities to?
The National Crime Agency (NCA)
If a staff member of a financial services organisation were to be accused of arranging under the proceeds of Crime Act 2002, it could mean that they:
- Knowingly become involved in the process of converting criminal property
- Personally owned the proceeds of criminal activity
- Failed to report a potentially suspicious transaction
Knowingly become involved in the process of converting criminal property
A provider of investments has set up a stocks and shares NISA for a new client. Why was it not necessary for the company to obtain evidence of identity for money-laundering purposes?
- The client is only temporarily in the UK
- The client was introduced by an intermediary who obtained the necessary evidence
- Investment amount of less than £10k are exempt from money-laundering identification requirements
The client was introduced by an intermediary who obtained the necessary evidence
Staff training on money laundering must cover all of the following requirements except how to:
- Evidence client identity
- Identify potentially suspicious transactions
- Liaise with the National Crime Agency
- Report suspicious transactions
Liaise with the National Crime Agency
If a member of an Occupational Pension scheme has an unresolved complaint after exhausting both the trustee and TPAS procedures, what period of time is usually permitted in which to refer the matter to the Pension Ombudsman?
- 3 months
- 6 months
- 1 year
- 3 years
3 years
John has been waiting 8 weeks for a response regarding his complaint about a financial services product. Under FCA rules, what action is he entitled to take?
Refer his complaint to the Financial Ombudsman Scheme (FOS)
David’s car insurance has gone out of business and he has lost £2k on his compulsory third party policy. How much compensation, if any, may he be entitled to receive from the FSCS?
£2000
If a customer requests to see information held about him in an organisations files, how long does the organisation have to respond to that request under the Data Protection Act 1998?
- 14 days
- 28 days
- 30 days
- 40 days
40 days
Which FCA sourcebook specifies the length of time for which information collected during the course of a customer fact find is kept?
- Conduct of Business Sourcebook
- The Prudential Sourcebook
- The Systems and Controls Sourcebook
- The Training and Competence Sourcebook
Conduct of Business Sourcebook
Which of the following is not one of the FCA’s Principles for Businesses with which a firm must comply?
- Be open and honest with the market in all respects
- Communicate with clients in a clear manner
- Conduct business with integrity
- Observe proper standards of market conduct
Be open and honest with the market in all respects
One of the Principles for Businesses as defined by the FCA is that firms must act with skill, care and?
Diligence
Removing all risk from the UK financial system is an objective of the FCA. True or False?
False
Which of the following is not regarded as a financial crime by the FCA?
- Criminal market conduct
- Fraud and dishonesty
- Mis-selling investments
- Money laundering
Mis-selling investments
Under the FCA’s rules relating to approved persons, into which type of function would the head of internal audit be categorised?
- Customer function
- Governing function
- Required function
- Systems and controls function
Systems and controls function
Which of the following job applicants is least likely to meet the FCA ‘fit and proper’ requirements?
- Irene, who currently has an authorised overdraft of £2k
- Josie, whose father’s house has repossessed three years ago
- Tammy, who has recently received two county court judgments for non-payment of bills
Tammy who has recently received two county court judgments for non-payment of bills
Ivor deliberately leaked an incorrect story that his bank was sustaining significant losses due to credit problems, and then made a profit through share dealing. This type of activity is defined as?
Market manipulation
Treating Customers Fairly (TCF) is an example of which type of approach to regulation?
- High-level standards
- Principles-based regulation
- Principles for Businesses
Principles-based regulation
Which of the following bodies is ultimately responsible for exercising powers under the Unfair Terms in Consumer Contracts regulations in respect of an unfair mortgage contract term?
- The Competitions and Markets Authority
- The FCA
- The FOS
- The FSCS
The FOS
One of the Pension Regulator’s powers is that they are able to investigate schemes to identify and monitor risks. All schemes must carry out the following actions except:
- Give notification of any changes to important information
- Inform the regulator quickly if it discovers that it cannot meet the funding requirements
- Make regular returns to the Pension Regulator
- Provide details to the regulator of every transfer out of the scheme
Provide details to the regulator of every transfer out of the scheme
Which of the following is not one of the areas covered by the Unfair Terms in Consumer Contracts Regulations 1999?
- The contract should be made in good faith
- The contract should be written in plain language
- The terms should be fair
- There must be insurable interest
g
Which oversight group would be most likely to review an authorised firm’s financial statements and accounts?
- Compliance officers
- External auditors
- Internal auditors
- Trustees
g
A bank currently has mortgage loans secured on residential property, totalling, £10m. What minimum level of ‘own funds’ must be retained to satisfy solvency ratio requirements
- £80k
- £160k
- £400k
- £800k
g
Which of the following best describes the range of products that may be sold by a restricted adviser who is fully authorised?
- Any product from the market as a whole
- Products from a limited range of specific providers
- Products from any company regulated by the FCA
- Products from any non-registered company
g
The FCA’s supervision model is based on three pillars, which are:
- ARROW visits, skilled persons reports, risk assessment
- Firm systematic framework, ARROW visits, event-driven work
- Firm systematic framework, event-driven work, issues and products
- Skilled person’s reports, risk assessments, allocated supervisor visits
g
Which of the following is not an option available to the FCA in enforcing standards for both organisations and authorised individuals
- Applying for an injunction
- Awarding compensation
- Disciplining
- Investigating
g
Which of the following is not an FCA controlled function?
- Appointed actuary
- Internal auditor
- Investment adviser
- Money Laundering Reporting Officer
g
Douglas is a sleeping partner in a limited liability company with his son. How does the FCA view Douglas’ position in the business?
- The FCA ignores his role as he is a sleeping partner
- As he is not a director, there is no requirement for his approval by the FCA
- He is regarded as being a governing function and must be approved by the FCA
g
A firm intends to makes a series of cold calls to promote certain mortgage contracts. What rule applies?
g
Which of the following is not something that must be satisfied by an advertisement to comply with the FCA’s guidelines on advertising?
- Information about past performance must be based on a period of not less than 5 years, if possible
- It must be approved by the FCA
- It must be fair and not misleading
- It must include a clear and adequate description of the product or service
g
According to the Conduct of Business Sourcebook (COBS), it is necessary to keep adequate recordings of dealings with customers. Which of the following is not a reason for this requirement?
- To assist in responding to customer complaints
- To constitute an audit trail for inspections
- To provide evidence of compliance procedures
- To verify adviser remuneration
g
For non-MiFID firms, what is the minimum number of years for which companies are required to maintain records of an employee’s training and competence, after the employee has left the company?
- 3 years
- 5 years
- 6 years
g
Before employees are able to advise on investments without close supervision, they should?
Be assessed as competent to undertake the role
In May 2013 John left a non-MiFID firm. What is the earliest date that the firm is permitted to destroy her training and competence records?
May 2016
Sam has been encouraged to take basic financial advice, as she is not particularly financially astute. However, a friend has suggested that she receive full advice because:
- a more detailed needs assessment would take place
- risk would then be considered
- she has no financial dependants
- she recently took out a new mortgage
g
