Unit 2 Topic 17

Question 1

The Financial Conduct Authority’s single strategic objective is to:
A govern organisations that manage investments on behalf of other people.
B ensure that relevant markets work well so that customers get a fair deal.
C regulate the marketing and sale of all life assurance products.
D oversee the administration of all types of investment business.

Answer 1

B ensure that relevant markets work well so that customers get a fair deal.

Question 2

Individuals who are allowed to carry out certain functions in relation to a firm's regulated activities are often referred to as:
A authorised persons 
B approved persons
C appointed persons 
D appropriate persons

Answer 2

B approved persons

Question 3

The second key Principle of Business as defined by the regulator is that firms must act with skill, care and:
A control 
B integrity 
C diligence 
D honesty

Answer 3

C diligence

Question 4

‘A situation where individuals use information about a company that is
not generally available to deal for their own financial advantage’ is a definition of:
A insider dealing
B best execution
C market manipulation
D money laundering

Answer 4

A insider dealing

Question 5

When did mortgages become regulated?
A October 2004
B January 2005
C April 2006
D June 1998

Answer 5

A October 2004

Question 6

Which of the following is NOT one of the FCA’s operational objectives?
A Reducing the scope for financial crime
B Protecting and enhancing the integrity of the UK financial system
C Protecting competition in the interests of consumers
D Securing an appropriate degree of protection for consumers

Answer 6

A Reducing the scope for financial crime

Question 7

Which one of the following is NOT one of the Financial Conduct Authority’s Principles for Business with which a firm must comply?
A Conduct its business with integrity
B Communicate with customers in a clear manner
C Observe proper standards of market conduct
D Maintain an independent compliance function

Answer 7

D Maintain an independent compliance function

Question 8

Knowingly giving out false information to influence the price of shares for personal gain is known as:
A money laundering 
B market manipulation
C best execution 
D insider dealing

Answer 8

B market manipulation

Question 9

In seeking to promote competition, the FCA uses its power to ensure all of the following except which of the following:
A customers are engaged to drive competition
B there are no undue barriers preventing new providers from entering the market
C offering ‘light touch’ regulation for providers that show a strong record
in product innovation
D preventing any single firm from dominating the market

Answer 9

C offering ‘light touch’ regulation for providers that show a strong record
in product innovation

Question 10

What was the main driver for the Financial Services and Markets Act 2000?
A Increasingly high levels of fraud
B The lack of compliance within the banking industry
C Lack of consumer confidence in existing provisions
D The need for integrated legislation and regulation

Answer 10

D The need for integrated legislation and regulation

Question 11

One of the operational objectives of the Financial Conduct Authority is to:

A oversee the activities of financial organisations such as clearing houses, the London Stock Exchange and Lloyd’s.
B provide appropriate customer protection.
C regulate mortgage lending and enforce the Mortgage Code.
D maintain market confidence and recommend suitable investments.

Answer 11

B provide appropriate customer protection.

Question 12

Who has prudential responsibility for deposit takers and insurers?
A Financial Policy Committee
B Financial Conduct Authority
C Financial Services Authority
D Prudential Regulatory Authority

Answer 12

D Prudential Regulatory Authority

Question 13

There are three main areas of financial crime that the FCA seeks to control. Which one of the following is the exception?
A Mis-selling investments
B Money laundering
C Fraud and dishonesty
D Criminal market conduct

Answer 13

A Mis-selling investments

Question 14

The FCA has powers under the Competition Act 1998 and the Enterprise
Act 2002, meaning in respect of competition, it is a concurrent regulator
with the:
A Competition Commission
B Office of Fair Trading
C PRA
D Competition and Markets Authority

Answer 14

D Competition and Markets Authority

Question 15

Which one of the following contained within the FCA Handbook is binding on authorised firms?
A Rules 
B Guidelines
C Standards 
D Procedures

Answer 15

A Rules

Question 16

In which sourcebook does the FCA Handbook cover investor complaints 
and compensation?
A Interim Prudential 
B Market Conduct
C Specialist 
D Redress

Answer 16

D Redress

Question 17

In which sourcebook does the FCA Handbook cover standards for
stockbrokers and financial market traders?
A Interim Prudential
B Market Conduct
C Specialist
D Redress

Answer 17

B Market Conduct

Question 18

Which one of the following BEST describes the reason why the Financial
Services and Markets Act 2000 was introduced?
A The existing regulatory structure was too fragmented
B It was necessary to make the Treasury the main authorising body
C The existing regulatory structure was too bureaucratic
D It was necessary to make the Home Office the main authorising body

Answer 18

A The existing regulatory structure was too fragmented

Question 19

Which one of the following is NOT covered by the Financial Conduct
Authority’s Principles for Business?
A A firm’s relations with its regulators
B The protection of customers’ assets
C Guidelines on financial promotions
D Maintenance of adequate financial resources

Answer 19

C Guidelines on financial promotions

Question 20

In relation to how a firm deals with its regulator, which one of the following is NOT defined within the Principles of Business? A firm must:
A deal with its regulators in an open way
B disclose appropriate data to its regulator
C deal with its regulators in a co-operative way
D disclose data on a regular basis to its regulator

Answer 20

D disclose data on a regular basis to its regulator

Question 21

Which of the following is NOT one of the Financial Conduct Authority’s Principles of Business with which a firm must comply?
A Be open and honest with the market in all respects
B Communicate with clients in a clear manner
C Conduct business with integrity
D Observe proper standards of market conduct

Answer 21

A Be open and honest with the market in all respects

Question 22

The FCA considers that responsibility for the fair treatment of consumers 
lies with which of the following?
A A firm’s advisers
B A firm’s senior management
C All employees
D Operational managers

Answer 22

B A firm’s senior management