Unit 2 - Topic 19/20

Question 1

Sandra, a financial adviser, hopes to extend his client bank by making unsolicited telephone calls to a list of people he has taken from the telephone directory. As he is aware of the FCA rules, he will only be making contact:

Answer 1

Between 9am and 9pm Monday to Saturday

Question 2

Which of the following criteria is NOT one that must be satisfied by an advertisement in order to comply with the FCA’s guidelines on advertising?

Answer 2

The advert must be authorised by the FCA

Question 3

What is the minimum period for which customer records, in respect of pension transfer and opt out contracts must be kept?

Answer 3

Indefinitely

Question 4

A key function of a client agreement is to set out:

Answer 4

The right and obligations of the firm and client and disclose charges

Question 5

A restricted adviser is one who:

Answer 5

Does not meet the requirements to be independent

Question 6

Under the ‘know your customer’ requirements, advisers should:

Answer 6

Provide the highest level of advice and duty of care to clients categorised as retail customers

Question 7

When an adviser transacts designated investment business for a client. the basis or amount of the charges would normally be disclosed in which document?

Answer 7

The client agreement

Question 8

Which compliance health warning MUST appear on all advertising material containing details of past investment performance? Past performance:

Answer 8

Is not necessarily a guide to future performance

Question 9

From 2018, a Key Information Document (KID) will be required for all these products except:

Answer 9

Personal pension plan

Question 10

If a client intends to purchase an investment product from an adviser on an execution only basis, then:

Answer 10

No recommendation will be required

Question 11

Under the FCA client categories, which of the following is least likely to be categorised as being an eligible counterparty?

Answer 11

An institutional investor

Question 12

To meet the FCA definition of independent advise, recommendations must be based on:

Answer 12

A comprehensive and fair analysis of the relevant market

Question 13

What is the latest date, if any, that the suitability letter can be sent to a customer who is considering investing in a personal pension plan?

Answer 13

No later than 14 days after the contract is concluded

Question 14

When carrying out a sale on an ‘execution-only’ basis, the responsibility for the transaction rests with the:

Answer 14

Customer

Question 15

Terry invested £1,000 in a unit linked lump sum product and called seven days later and received back £950. What did this reduction most likely represent?

Answer 15

Reduction in market value

Question 16

Fact Find information for firms covered by MiFID must be kept for how long?

Answer 16

Five years

Question 17

Which of these best fits the description of a professional customer?

Answer 17

An authorised investment firm seeking advice and recommendation from a financial adviser

Question 18

What does an execution only transaction require an adviser to do?

Answer 18

To ensure that the client signs to confirm it is an execution only transaction

Question 19

For which of these customers is a specific client agreement least likely to be given to a client?

Answer 19

Bob who is looking for a repayment mortgage

Question 20

Which of the following will not be included in an initial disclosure document?

Answer 20

Product recommendations

Question 21

The ‘cooling-off’ period usually stars from the date:

Answer 21

The contract begins

Question 22

How long should most customer records be kept in relation to pension contracts?

Answer 22

5 years

Question 23

A £12,000 unit linked single premium investment bond is cancelled by a customer within the cooling-off period. However, during this period, the stock market fell sharply. Consequently, do di the value of the bond. What is the customer likely to receive?

Answer 23

£12,000 less a market adjustment, if specified in the contract

Question 24

An adviser must issue a key feature document or a key information document prior to a sale being concluded, for all of the following products except:

Answer 24

Gilt edged securities

Question 25

Beltin Bank are about to begin an advertising campaign to promote fresh interest in their UK Equity Fund, which was launched ten years ago. Since they intend to show recent performance of the fund, what is the MINIMUM period over which performance figures must be shown?

Answer 25

5 years

Question 26

Which of the following risks would be defined as that arising from the way that a business is run and managed?

Answer 26

Operational risk

Question 27

A bank’s capital as a proportion of its risk weighted assets is referred to as the:

Answer 27

Solvency ratio

Question 28

Liquidity is a measure of:

Answer 28

The ease and speed with which a business’s assets can be converted into cash