R01 Flashcards by Leila Seymour

How does the UK financial market operate in respect of both investments and loans?
A. All short-term investments are used to create short-term loans.
B. Financial intermediaries help transform short-term savings to long-term loans.
C. Long-term risk is transformed to short-term risk via financial intermediation.
D. Small investments are grouped together to facilitate larger loans via financial disintermediation.

B. Financial intermediaries help transform short-term savings to long-term loans.

How well did you know this?

Not at all

Perfectly

Within the UK economy, an example of disintermediation would be the
A. arrangement of a life assurance policy through an independent adviser.
B. arrangement of a personal loan with a bank.
C. purchase of securities from a stockbroker.
D. purchase of UK gilts from the Debt Management Office.

D. purchase of UK gilts from the Debt Management Office.

How well did you know this?

Not at all

Perfectly

With respect to UK short-dated gilts, index-linked gilts and National Savings & Investments
products, a financial adviser should be aware that they
A. are always tax free for the investor.
B. are all issued by the Debt Management Office.
C. are all used by the Government to raise funds.
D. cannot be purchased by corporate investors.

C. are all used by the Government to raise funds.

How well did you know this?

Not at all

Perfectly

When the Bank of England announces it will undertake quantitative easing, a financial adviser
should consider that typically
A. interest rates will fall as a result.
B. a new tranche of gilts will be issued.
C. the Debt Management Office will offer to buy back a limited number of gilts.
D. the Bank of England will purchase an amount of gilts that are in circulation.

D. the Bank of England will purchase an amount of gilts that are in circulation.

How well did you know this?

Not at all

Perfectly

The tripartite regulators of UK financial firms, when considering issues relating to financial stability,
will report to
A. the European Systemic Risk Board.
B. the European Central Bank.
C. the Financial Action Task Force.
D. the Basel Committee on banking supervision.

A. the European Systemic Risk Board.

How well did you know this?

Not at all

Perfectly

The rate of inflation has been steadily increasing in the UK over the last year. In an effort to control
this position, the Bank of England has increased he Bank Rate by 0.5% and the Government have
just announced a 2% increase to the basic rate of Income Tax. These actions are examples of
changes in
A. monetary policy in both cases.
B. fiscal policy in both cases.
C. monetary and fiscal policy respectively.
D. fiscal and monetary policy respectively.

C. monetary and fiscal policy respectively.

How well did you know this?

Not at all

Perfectly

Terry has various debts, including a mortgage, a credit card, a secured personal loan and a hire
purchase finance agreement on his car. When considering how he might reduce his outgoings, he
should be aware that
A. the secured loan cannot be repaid until his mortgage is repaid.
B. debt consolidation may involve increasing the term of his repayments.
C. an introductory deal on a credit card is always available.
D. a hire purchase agreement cannot be repaid before the end of the term.

B. debt consolidation may involve increasing the term of his repayments.

How well did you know this?

Not at all

Perfectly

A client is considering mortgage payments for both capital and interest and interest-only
mortgages. He should be aware that if interest rates stay constant throughout the mortgage term,
compared to a capital and interest mortgage, an interest-only mortgage will result in
A. a lower monthly cost, but a higher overall borrowing cost.
B. a higher monthly cost, but a lower overall borrowing cost.
C. both a lower monthly and overall borrowing cost.
D. both a higher monthly and overall borrowing cost.

A. a lower monthly cost, but a higher overall borrowing cost.

How well did you know this?

Not at all

Perfectly

Claire, aged 38, is concerned about funding the future further education costs for her children, aged
9 and 10. When considering an appropriate timescale for any investment and reflecting her
medium attitude to risk, she is most likely to consider using
A. instantly-accessible deposit accounts providing a guaranteed return.
B. a range of tax-efficient savings plans investing in a range of investment types.
C. contributing to a personal pension plan and drawing income to fund her children’s education
costs.
D. an equity release arrangement secured on her home to fund the education costs.

B. a range of tax-efficient savings plans investing in a range of investment types.

How well did you know this?

Not at all

Perfectly

Michael, aged 27, has recently purchased a property with a mortgage on a capital and interest
basis. He is single and has no dependants and is employed by the local authority. Michael’s main
priority is most likely to be arranging an
A. amount of life assurance that remains constant over the term of the loan.
B. amount of life assurance that reduces over the term of the loan.
C. amount of income protection insurance sufficient to continue meeting the mortgage payments.
D. investment vehicle to create a lump sum to repay the mortgage at the end of the term.

C. amount of income protection insurance sufficient to continue meeting the mortgage payments.

How well did you know this?

Not at all

Perfectly

John, aged 64, is married to Margaret, aged 62, and they are both approaching retirement. They
have always worked for the same company and have both accrued pension benefits through the
company’s group money purchase scheme. If they both purchase annuities at retirement and both
wish to receive the maximum possible income level, they should both select
A. an index-linked annuity payable on a single-life basis with no guarantee.
B. an index-linked annuity payable on a joint-life basis with a 10-year guarantee.
C. a level annuity on a single-life basis with no guarantee.
D. a level annuity on a joint-life basis with a 10-year guarantee.

C. a level annuity on a single-life basis with no guarantee.

How well did you know this?

Not at all

Perfectly

Geoffrey and Andrew are brothers and have both retired. All of Geoffrey’s retirement income, but
only part of Andrew’s, is treated as earned income. This is because
A. Andrew was an employee, Geoffrey was self-employed.
B. Geoffrey is aged 59, Andrew is aged 69.
C. only Andrew receives two forms of State Pension.
D. only Andrew took out a purchased life annuity with the funds raised from his pension
commencement lump sum entitlement.

D. only Andrew took out a purchased life annuity with the funds raised from his pension
commencement lump sum entitlement.

How well did you know this?

Not at all

Perfectly

When considering estate and Inheritance Tax planning for a retired couple, who have no
outstanding debts or liabilities and a substantial estate, their first priority should be
A. arranging a joint whole of life assurance policy under trust and payable on a second death basis
to cover the potential tax liability.
B. ensuring that they have sufficient resources to pay for long-term care.
C. starting to gift assets outside of the estate using annual exemptions.
D. writing a valid will.

D. writing a valid will.

How well did you know this?

Not at all

Perfectly

Bob and Gillian, both aged 28, have recently arranged an interest-only mortgage on their first home
which they intend to repay with the proceeds of a trust fund that Bob will receive when he attains
the age of 35. To ensure that this loan is adequately protected in the event of death before the
trust fund is distributed, the most suitable arrangement is likely to be
A. a reducing term assurance policy on Bob’s life only for the outstanding mortgage amount.
B. a level term assurance policy on a joint-life basis for the outstanding mortgage amount.
C. an income protection insurance policy for both of them to cover the monthly repayments.
D. a whole of life assurance policy on Bob’s life only for the outstanding mortgage amount.

B. a level term assurance policy on a joint-life basis for the outstanding mortgage amount.

How well did you know this?

Not at all

Perfectly

Kim and Richard have two children, aged five and seven. They have no outstanding mortgage and
Richard is the sole wage earner. To ensure that Kim is able to continue looking after the children in
the event of Richard’s death, they should consider a family income benefit policy based on
A. Richard’s life and his income level.
B. Kim’s life and her income requirement.
C. Richard’s life and Kim’s income requirement.
D. Kim’s life and her expenditure.

C. Richard’s life and Kim’s income requirement.

How well did you know this?

Not at all

Perfectly

Jerry, a 37-year-old higher-rate taxpayer, is looking to provide a lump sum in the future, for the
benefit of his 15-year-old son, Paul, when he finishes further education at the age of 22. Jerry
wishes to invest £10,000 per annum. It is likely that the most tax-efficient method of achieving this
would be to consider
A. taking the pension commencement lump sum from his pension scheme.
B. arranging an onshore life assurance bond and assigning the value to Paul at the age of 22.
C. utilising his own ISA allowances and gifting the proceeds to Paul at the age of 22.
D. investing in a Junior ISA.

C. utilising his own ISA allowances and gifting the proceeds to Paul at the age of 22.

How well did you know this?

Not at all

Perfectly

Currently, maximum entitlement to the state pension is determined by
A. a complete National Insurance contribution record for the entire working life of the individual.
B. a complete National Insurance contribution record for a specific period of the working life of the
individual.
C. the amount of Class 2 National Insurance contributions that have been paid by the individual.
D. the amount of Class 4 National Insurance contributions that have been paid by the individual.

B. a complete National Insurance contribution record for a specific period of the working life of the
individual.

How well did you know this?

Not at all

Perfectly

A self-employed jeweller wanting to purchase a shop using his pension scheme should consider a
A. Retirement Annuity Contract.
B. Section 32 buy-out bond.
C. self-invested personal pension (SIPP).
D. small self-administered scheme (SSAS).

C. self-invested personal pension (SIPP).

How well did you know this?

Not at all

Perfectly

How is an authorised firm affected by the Financial Conduct Authority’s fair treatment of customers
requirements?
A. They must be evidenced in all areas of the firm.
B. They only apply to customer-facing staff.
C. They only apply to senior management.
D. They only apply to investment-related business.

A. They must be evidenced in all areas of the firm.

How well did you know this?

Not at all

Perfectly

A financial adviser has been approached by his client, Billy, who has recently been appointed as a
deputy by the Court of Protection on behalf of his mother, Betty, who has lost mental capacity.
Betty is a joint trustee of a discretionary trust with her brother, Jimmy. Who will have the power to
act on any advice given in relation to the trust assets?
A. Billy only.
B. Jimmy only.
C. Only Billy and Jimmy acting together.
D. Either Billy or Jimmy.

B. Jimmy only.

How well did you know this?

Not at all

Perfectly

An independent financial adviser within a large authorised firm is recommending a new personal
pension arrangement to her client. She is acting as
A. agent of personal pension provider only.
B. agent to the client only.
C. agent for the client and the pension provider jointly.
D. agent for the authorised firm only.

B. agent to the client only.

How well did you know this?

Not at all

Perfectly

Katrina entered into a personal loan arrangement with a finance company 3 months before her
18th birthday. What is the legal position in respect of this arrangement?
A. The contract is valid as she was within 6 months of her 18th birthday.
B. Katrina can avoid all liability under the contract.
C. Katrina’s parents could be made liable for the debt.
D. the contract is automatically made void from outset.

B. Katrina can avoid all liability under the contract.

How well did you know this?

Not at all

Perfectly

Tony, Peter and Steve jointly own an investment property as tenants in common. Tony owns 20%,
Steve owns 30% and Peter owns 50% of the property. The property is subject to a mortgage. If
Tony dies, what will happen to his share of the property?
A. It will be automatically shared equally between Steve and Peter.
B. It will be passed to Tony’s estate.
C. It will be passed to Steve and Peter in proportion with their current respective shareholdings in
the property.
D. It will be passed to the lender to repay Tony’s share of the mortgage.

B. It will be passed to Tony’s estate.

How well did you know this?

Not at all

Perfectly

Michaela owns a property outright and in perpetuity, but does NOT own the freehold. This is most
likely to be because the ownership is
A. on a commonhold basis.
B. on a leasehold basis.
C. subject to feudal tenure.
D. subject to a shared ownership agreement.

A. on a commonhold basis.

How well did you know this?

Not at all

Perfectly

In a case of bankruptcy, who has a statutory duty to investigate, where necessary, the bankrupt’s affairs and send a report to the creditors? A. An insolvency practitioner appointed by the creditors. B. The lead creditor. C. The Official Receiver. D. The trustee in bankruptcy.

C. The Official Receiver.

Jessica wrote a will some time ago leaving most of her assets to her husband and a small bequest to her mother. What is the impact, if any, of her recent divorce on the will? A. Her divorce has no impact on the will. B. The bequest to her mother remains valid and her ex-husband will only receive the statutory amount. C. The will becomes invalid and all her assets would pass according to the laws of intestacy. D. The will remains valid and her assets distributed as if her ex-husband had predeceased her.

D. The will remains valid and her assets distributed as if her ex-husband had predeceased her.

Ethel has purchased shares for £5,000 and placed them under a trust for her grandson. She has arranged the trust so that he will automatically receive the shares at the age of 18, but there will NOT be any access before that time. The trust she is most likely to have used is a A. bare trust. B. discretionary trust. C. discounted gift trust. D. flexible trust.

A. bare trust.

In creating a trust for her client, a solicitor recommends the inclusion of a charging clause in the trust wording. What is this most likely to relate to? A. To allow ad hoc payments to beneficiaries, for their education or advancement. B. To allow professional trustees to be remunerated for their services. C. To clearly set out the costs of preparing and executing the trust deed under the Law Society rules. D. To prevent trustees from deriving any personal benefit from the trust.

B. To allow professional trustees to be remunerated for their services.

29. How does the Financial Services Act 2012 directly affect the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) in respect of financial stability? A. It transfers all responsibility to the Bank of England. B. It makes the FCA and PRA directly accountable to the Chancellor of the Exchequer. C. It requires the FCA and the PRA to have an appropriate strategy, and work with the Bank of England and HM Treasury to achieve a satisfactory outcome. D. It requires the FCA and the PRA to work with the European Central Bank to facilitate cross-border co-operation on money laundering activities.

C. It requires the FCA and the PRA to have an appropriate strategy, and work with the Bank of England and HM Treasury to achieve a satisfactory outcome.

A professional firm of pension trustees have been deemed to be in breach of the law whilst administering and managing an occupational pension scheme. What maximum fine may be levied by The Pensions Regulator against the firm? A. £5,000 B. £10,000 C. £50,000 D. £100,000

C. £50,000

An authorised firm is using the services of an external compliance consultancy to advise the firm on all compliance matters. In respect of this arrangement, the authorised firm should be aware that A. responsibility for compliance issues ultimately rests with the senior management of the firm. B. the compliance officer may delegate all responsibility to the external consultants. C. the external consultants will be ultimately responsible for all compliance matters. D. the firm need not appoint a compliance officer, providing that the external consultants have been approved by the Financial Conduct Authority.

A. responsibility for compliance issues ultimately rests with the senior management of the firm.

In what circumstances would the Financial Services Compensation Scheme provide a compensation payment to a customer? A. When a complaint has been upheld by the Financial Ombudsman Service, but the regulated firm refuses to compensate the customer. B. When the scheme is instructed to do so by the Financial Conduct Authority. C. When compensation is due and the firm that the customer dealt with is unable to meet its liabilities and is no longer trading. D. When compensation is due and the regulated firm has a large excess on their professional indemnity insurance policy.

C. When compensation is due and the firm that the customer dealt with is unable to meet its liabilities and is no longer trading.

What is the main function of the Financial Action Task Force with regard to the EU Money Laundering Directives? A. To set standards required to deal with money laundering and terrorist financing. B. To replace the Joint Money Laundering Steering Group and its role as an organisation fighting financial crime. C. To retrieve money obtained through criminal activities. D. To implement and monitor compliance with the latest anti-money laundering regulations.

A. To set standards required to deal with money laundering and terrorist financing.

The consumer outcomes at the heart of the Fair Treatment of Customers initiative within the UK financial services industry are derived from A. EU Directives on the cross-border sale of investment products. B. the Financial Conduct Authority’s Principles for Businesses. C. MiFID II. D. Unfair Terms of Contract regulation.

B. the Financial Conduct Authority’s Principles for Businesses.

The maximum fine, if any, which the Financial Conduct Authority (FCA) can impose on an authorised firm for a breach of the FCA rules is A. £1,000,000 B. £5,000,000 C. £10,000,000 D. unlimited.

D. unlimited.

The objective of MoneyHelper in assisting with the implantation of the National Strategy for Financial Capability is to do so by primarily providing information to A. any individual seeking information on financial products and debt advice. B. individuals who do not have their own financial adviser. C. those on low incomes who require debt advice. D. younger people who do not hold any financial products.

A. any individual seeking information on financial products and debt advice.

The Financial Conduct Authority’s strategic objective is to A. ensure that the relevant markets function well. B. increase consumer protection for financial products and investments. C. reduce financial crime. D. work with the Bank of England to increase financial stability.

A. ensure that the relevant markets function well.

What is the main purpose of the stress-testing which the Financial Conduct Authority requires of certain authorised firms? A. To assess firms’ ability to meet capital and liquidity levels during challenging economic circumstances. B. To assess the impact on investors’ returns when stock markets are subject to volatility. C. To measure firms’ levels of customer service when business volumes are high. D. To test firms’ disaster recovery procedures in the event of loss of data.

A. To assess firms’ ability to meet capital and liquidity levels during challenging economic circumstances.

In relation to breaches of the current Money Laundering and Terrorist Financing (Amendment) Regulations 2019, the Financial Conduct Authority (FCA) has the power to act against A. any firms, but not individuals, regardless of whether they are on the FCA register. B. any firms or individuals regardless of whether they are on the FCA register. C. only firms on the FCA register. D. only firms or individuals on the FCA register.

B. any firms or individuals regardless of whether they are on the FCA register.

What is the maximum term of imprisonment which may be imposed, if any, on an individual who is found guilty of insider dealing? A. One year. B. Five years. C. Seven years. D. Unlimited.

C. Seven years.

Following a breach of their rules, the Financial Conduct Authority has issued a public statement about a firm’s behaviour. The offence is most likely to have been A. market manipulation. B. insider dealing. C. money laundering. D. a significant failure in financial reporting.

D. a significant failure in financial reporting.

A financial adviser is suspected of financial mis-conduct in relation to her regulated activities. How may the Financial Conduct Authority deal with the matter? A. It cannot deal with the matter directly and must instruct the Crown Prosecution Service. B. It may deal with the matter using civil proceedings only. C. It may deal with the matter using criminal proceedings only. D. It may deal with the matter using civil or criminal proceedings.

D. It may deal with the matter using civil or criminal proceedings.

In the Prudential Standards section of the combined handbook of the Financial Conduct Authority Handbook and the Prudential Regulation Authority, which type(s) of firm are covered by the MIPRU requirements? A. All authorised firms. B. Discretionary fund managers only. C. Administrators, home finance providers, intermediaries, and general insurance intermediaries only. D. Investment management firms only.

C. Administrators, home finance providers, intermediaries, and general insurance intermediaries only.

The rules in section 12 of the Prudential Sourcebook for Banks, Building Societies and Investment Firms (BIPRU), are primarily aimed at dealing with the issues of A. liquidity and the management of liquidity issues. B. money laundering responsibilities. C. professional indemnity insurance requirements. D. training and competence requirements.

A. liquidity and the management of liquidity issues.

Gavin, a financial adviser, has sold a payment protection insurance contract to his client. In respect of this sale, he should be aware that the sale is A. not regulated. B. regulated by the provisions of the Insurance: Conduct of Business sourcebook (ICOBS). C. regulated by the provisions of the Mortgages and Home Finance: Conduct of Business Sourcebook (MCOB). D. regulated by the provisions of the Financial Services Act 2012.

B. regulated by the provisions of the Insurance: Conduct of Business sourcebook (ICOBS).

A financial adviser may transact business without the prior existence of a client agreement when A. the client is a retail client. B. a stakeholder pension is being effected. C. risk warnings are not required. D. the business is transacted by telephone.

D. the business is transacted by telephone.

The client’s best interests rule applies to A. all types of client except those transacting execution-only business. B. retail clients only. C. execution-only clients only. D. eligible counterparties only.

A. all types of client except those transacting execution-only business.

An independent financial adviser is comparing free asset ratios. This is most likely to be because she is A. considering a with-profits investment. B. completing her six-monthly Financial Conduct Authority return. C. compiling complaints data. D. seeking to comply with data protection requirements.

A. considering a with-profits investment.

An authorised firm holding client money for designated investment purposes must carry out a reconciliation of client bank account records at least once A. every business day. B. every two business days. C. per week. D. per month.

A. every business day.

In an authorised firm, the services of a nominee company are being used. This would typically be to A. protect the assets of a client. B. increase the returns on an investment or deposit. C. reduce the level of client fees charged. D. comply with Data Protection legislation.

A. protect the assets of a client.

What is the maximum financial penalty, if any, that the Financial Conduct Authority can impose on an authorised advisory firm engaging in misleading conduct? A. No financial penalties may be imposed. B. £5,000,000 C. £10,000,000 D. There is no upper limit.

D. There is no upper limit.

Which authorised firms undertaking financial advice activities in the UK are exempt from the Financial Conduct Authority’s Training and Competence Rules? A. Building societies only. B. General insurance intermediaries only. C. Discretionary fund managers. D. Non-UK-domiciled firms only.

D. Non-UK-domiciled firms only.

Danny is employed as a financial adviser by an appointed representative of an authorised firm. With whom does the primary responsibility for assessing Danny’s continuing competency lie? A. Both Danny and the appointed representative. B. Both the authorised firm and the appointed representative. C. The appointed representative only. D. The authorised firm only.

D. The authorised firm only.

Following the cessation of her employment, for how long must training and competence records be kept in respect of an employee engaged in retail investment mediation only under MiFID II rules? A. One year. B. Three years. C. Five years. D. Indefinitely.

C. Five years.

Patrick has recently left an authorised firm where he advised on pension transfers. For what minimum period, if any, must the firm retain his training records? A. Three years. B. Five years. C. Seven years. D. Indefinitely.

D. Indefinitely.

How, if at all, does being made bankrupt affect an individual in terms of being fit and proper to give financial advice that is regulated by the Financial Conduct Authority (FCA)? A. Bankrupt individuals cannot give regulated advice in any circumstances. B. Bankrupt individuals can always give regulated advice, but cannot have any oversight responsibilities. C. Bankruptcy has no impact if a person is already authorised. D. Bankruptcy would not automatically preclude an individual from giving advice and each case is individually assessed by the FCA.

D. Bankruptcy would not automatically preclude an individual from giving advice and each case is individually assessed by the FCA.

By what latest point must an authorised firm satisfy itself that a new employee meets the Financial Conduct Authority’s fit and proper criteria? A. On receipt of a completed job application form. B. Before the start date. C. Within 3 months of the start date. D. Within 12 months of the start date.

B. Before the start date.

Martin has recently become a trainee financial adviser for the first time, although he has no financial services qualifications. In what circumstances, if any, may he be allowed to provide advice to clients without supervision? A. In no circumstances. B. Only when advising existing clients of the firm. C. Only when providing advice and recommendations for auto-enrolment scheme provision. D. Only

A. In no circumstances.

In relation to enforcement action against an authorised firm, the main options open to the Financial Conduct Authority are A. civil proceedings and criminal proceedings only. B. disciplinary action and civil proceedings only. C. disciplinary action and criminal proceedings only. D. disciplinary action, civil proceedings and criminal proceedings.

D. disciplinary action, civil proceedings and criminal proceedings.

If the Financial Conduct Authority identifies an unfavourable trend in pension advice that may NOT be in the best interests of consumers, how is it most likely to react in the first instance? A. Complete an immediate programme of inspections across all authorised firms. B. Introduce a new minimum qualification level requirement for all pension advisers. C. Issue a guidance statement to all authorised firms. D. Temporarily prohibit all pension advice activities for authorised firms.

C. Issue a guidance statement to all authorised firms.

A director of a publicly-quoted company has been found guilty of insider dealing and misconduct. What is the maximum fine, if any, that may be imposed? A. £250,000 B. £500,000 C. £1,000,000 D. Unlimited.

D. Unlimited.

To assist in delivering the Financial Conduct Authority’s National Strategy for Financial Capability, the main role of MoneyHelper is to provide consumers with A. generic information on relevant product types, excluding regulated investments and debt advice. B. generic information on relevant product types, including regulated investments and debt advice. C. personalised recommendations on products of a limited number of providers, excluding regulated investments and debt advice. D. personalised recommendations on products of a limited number of providers, including regulated investments and debt advice.

B. generic information on relevant product types, including regulated investments and debt advice.

Following settlement of a Financial Ombudsman Service (FOS) case, the complainant was awarded compensation. The complaint related to a loss that occurred in March 2019. The FOS recommended monetary award was £200,000. If the complaint was referred to the FOS on 1 May 2022 excluding interest and cost, how much was the respondent obliged to pay the complainant? A. £100,000 B. £150,000 C. £170,000 D. £200,000

C. £170,000

An authorised firm must report changes to its business, in line with the Financial Conduct Authority’s ad hoc reporting requirements, in which circumstances shown below? i The appointment of a new director ii The appointment of a new customer services manager iii New head office premises being established iv The appointment of a new pension transfer adviser v Reissuing a sales aid A. i, iii and iv only. B. i, ii and iv only. C. ii, iv and v only. D. iii, iv and v only.

A. i, iii and iv only.

Three financial advisers have transacted business over the past 12 months as follows: Rob Pension transfers, life assurance Derek Pension transfers, regular contribution stakeholder pensions Tim Cash ISAs, equity release From this information, it can be deduced that A. Tim will not need to keep his suitability records indefinitely. B. Rob will be subject to the greatest supervisory monitoring requirements. C. Derek will need to keep his Training and Competence records the longest. D. Rob and Derek are likely to be supervisors.

A. Tim will not need to keep his suitability records indefinitely.

The Financial Ombudsman Service (FOS) received a complaint in December 2021 in relation to a financial loss that occurred in September 2019. The FOS has recommended a monetary award of £230,000 for financial loss and £3,000 for interest. Assuming that the FOS make the judgement that the respondent should meet the claim against them, the amount that is binding on the respondent is A. £150,000 B. £160,000 C. £230,000 D. £233,000

D. £233,000

Under the terms of the Financial Conduct Authority Handbook, which category of client may be referred to as a per se eligible counterparty? A. An institutional investor. B. A government of a country. C. A large public limited company. D. A local authority.

B. A government of a country.

Several financial transactions have taken place as follows Adviser status Sale type Client Product arranged i) Direct life office Internet Retail Term assurance ii) Independent In person Professional Whole of life iii) Single tied Direct offer Retail Stocks and shares ISA iv) Multi tied Postal Retail Savings endowment v) Direct life office Internet Professional Income protection insurance For which of the transactions is a client agreement required? A. ii and iv only. B. iii and v only. C. i, ii and iv only. D. i, ii, iii, iv and v.

A. ii and iv only.

An authorised firm arranged the following products for retail clients on the 1 January i A stakeholder personal pension ii A cash ISA iii A level term assurance policy iv An Enterprise Investment Scheme v An open-ended investment company (OEIC) product Which of these products would still be within their cancellation period on the 28 January? A. i only. B. i and iii only. C. i, iv and v only. D. ii, iii, iv and v only.

B. i and iii only.

A financial adviser recommends that a retail client makes a top-up contribution to an existing annual premium personal pension policy and also makes payments into an open-ended investment company (OEIC) and a unit trust. When preparing a suitability report, the financial adviser must give his reasons for recommending the A. top-up contribution only. B. top-up contribution and the OEIC only. C. OEIC and the unit trust only. D. top-up contribution, the OEIC and the unit trust.

C. OEIC and the unit trust only.

Matt and Julia, both aged 19, have existing Help to Buy ISAs that commenced in 2018. What maximum amount of contributions may be invested, in total for Matt and Julia, each year, in their Help to Buy ISAs? A. £2,400 B. £3,400 C. £4,800 D. £6,800

C. £4,800

A financial adviser discovers during a fact-find interview that her client is willing to expand on his future hopes and aspirations. She decides to adapt her line of questioning to make more use of A. direct questions. B. open-ended questions. C. scripted questions. D. leading questions.

B. open-ended questions.

During a fact-find interview, a financial adviser discovers the client is unable to recall the details of his current remuneration. The correct course of action for the financial adviser to take is to A. terminate the interview with immediate effect. B. continue the interview to its conclusion and then decline to offer the client any advice. C. make an estimate of the missing information and base any recommendation on the estimate. D. continue the interview and agree to collect the information at a later date.

D. continue the interview and agree to collect the information at a later date.

Typically, how should a financial adviser gather hard facts during the fact-finding process? A. By asking open questions. B. By asking closed questions. C. By writing to the companies with whom the client already has financial arrangements. D. By seeking written responses from the client only.

B. By asking closed questions.

A financial adviser is specifically discussing issues relating to best in class and engagement with his client. This is most likely to be because the client A. is risk averse. B. is seeking capital growth rather than income. C. wishes to maximise her investment returns. D. wishes to take an ethical approach.

D. wishes to take an ethical approach.

To comply with the Financial Conduct Authority’s Principles for Businesses that relate to protection of clients’ assets, a firm must arrange adequate protection A. in all cases where the firm has direct responsibility for the assets. B. only where clients’ assets under the firm’s control exceed £1,000,000. C. only where clients have a high level of borrowing in comparison with their income level. D. only where clients have purchased products that are inconsistent with their risk profile.

A. in all cases where the firm has direct responsibility for the assets.

What discretion does an authorised firm have, if any, when it sets out to comply with the Financial Conduct Authority’s Principles for Businesses? A. It can apply for exemption if its application is supported by a designated professional body. B. It can apply for exemption provided it is responsible for the activities of less than 10 appointed representatives. C. Some discretion is allowed to the firm in how they comply with the obligations. D. A firm’s obligations are prescribed in a regularly-updated tariff and no discretion is allowed.

C. Some discretion is allowed to the firm in how they comply with the obligations.

An authorised firm should adapt its recruitment and remuneration policies to have a positive impact on the fair treatment of customers outcomes by A. appointing only graduates for placement into positions with the greatest customer interface. B. creating a corporate culture that makes knowledge and training central to career progression. C. offering only non-financial incentives to its most prolific new business producers. D. promoting only those with a proven record of sales success into senior customer-facing positions.

B. creating a corporate culture that makes knowledge and training central to career progression.

Strong leadership within a firm is cited as an example of good practice by the Financial Conduct Authority because it usually indicates that A. the firm’s advisory staff maintain qualifications significantly above the benchmark level. B. the firm has eliminated products carrying high levels of risk. C. positive and fair outcomes exist for customers. D. there is not excessive interference from corporate stakeholders.

C. positive and fair outcomes exist for customers.

Who within an authorised firm is ultimately responsible for compliance with the Financial Conduct Authority’s outcomes-based regulatory regime? A. Senior management only. B. The compliance officer only. C. All members of staff. D. The Money Laundering Reporting Officer only.

A. Senior management only.

Shaun is an architect and a client of Alice, who is a financial adviser. Shaun refers his employee, Brian, to Alice for pensions and protection advice. Brian informs Alice that he is dissatisfied with the benefits package he receives from Shaun. Alice is wary of a potential conflict of interest and must therefore A. advise Brian on pension matters, but not on protection matters. B. advise Brian on protection matters, but not on pension matters. C. decline to offer Brian any financial advice. D. maintain strict neutrality.

D. maintain strict neutrality.

If an authorised firm discovers that one of its Senior Managers no longer meets the fit and proper requirements as he is currently in mortgage arrears, what action must the firm take, if any? A. None, as this would be an internal matter. B. Notify the Financial Conduct Authority. C. Refer the individual to a debt counselling organisation. D. Terminate the adviser’s employment within a maximum period of three months.

B. Notify the Financial Conduct Authority.

The Financial Conduct Authority’s Code of Conduct (COCON), expects senior managers to A. complete bi-annual testing on money laundering rules and complaints handling. B. act with integrity at all times. C. take additional qualifications at least once every two years to maintain professional knowledge. D. always consider compliant outcomes rather than ethical outcomes.

B. act with integrity at all times.

Nigel is a senior manager with a large bank’s financial advice team and is advising Robert on retirement and investment planning. Robert has disclosed to Nigel that his net profit last year was £7,500, but, as a self-employed landscape gardener, he regularly accepts cash payments for work completed and does not declare this additional income to HM Revenue & Customs (HMRC). Considering solely the ethical requirements of the Financial Conduct Authority’s Statements of Principle and Code of Practice for Approved Persons (APER), what action should Nigel take if any with regard to Robert’s additional income? A. He needs to not take any action as Robert is contributing less than £7,500 per annum to his pension. B. Report his concerns to the bank’s Money Laundering Reporting Officer. C. Report his additional income to the pension provider immediately. D. Report this matter to HMRC.

B. Report his concerns to the bank’s Money Laundering Reporting Officer.

When establishing a new risk profile questionnaire for its clients, an authorised firm should consider the use of A. clearly-phrased and unambiguous questions. B. additional charts and graphs. C. technical phrases and abbreviations. D. open questions.

A. clearly-phrased and unambiguous questions.

Janine has joined an authorised firm as a senior manager and overhears one of the staff members, Tim, discussing how he takes advantage of the firm’s lax accounting procedures to handle stolen cheques. He suggests that Janine may wish to become involved in the illegal activities. What action should Janine take? A. Ask Tim to explain his actions and then dismiss him. B. Dismiss Tim immediately without further recourse. C. Report the matter immediately to the firm’s compliance officer without saying anything to Tim. D. Tighten the firm’s accounting procedures to restrict the illegal activities where possible.

C. Report the matter immediately to the firm’s compliance officer without saying anything to Tim.

A financial adviser engages in ethical behaviour. The outcome of this for a client is most likely to be A. advice which meets the client’s needs. B. receipt of recommendations which are socially and ethically responsible. C. product recommendations that focus on stakeholder contracts. D. a waiver of Financial Ombudsman Service referral rights.

A. advice which meets the client’s needs.

MULTIPLE CHOICE Which member of staff in a large authorised firm would usually be deemed to be carrying out a significant influence function? A. A complaints department assistant. B. A customer services manager. C. The Money Laundering Reporting Officer. D. The compliance officer.

C. The Money Laundering Reporting Officer. D. The compliance officer.

MULTIPLE CHOICE In respect of an authorised firm’s record-keeping requirements A. all advice records must be kept indefinitely. B. pension transfer records can be destroyed after seven years. C. financial promotions for occupational pension contracts must be kept for a minimum of six years. D. pension opt-out records must be kept indefinitely. E. life assurance advice and recommendation records must be kept for a minimum of five years.

C. financial promotions for occupational pension contracts must be kept for a minimum of six years. D. pension opt-out records must be kept indefinitely. E. life assurance advice and recommendation records must be kept for a minimum of five years.

MULTIPLE CHOICE Frank posted a letter of complaint to his independent financial adviser (IFA) on 1 March, which was received by the firm on 3 March. The firm sent an acknowledgement on 5 March, a holding response on 30 March and a final response on 26 April. From this information, it can be deduced that the A. acknowledgement was not sent within the prescribed time limit. B. final response was sent within the prescribed time limit. C. Frank was not kept informed of progress correctly. D. IFA must have informed Frank of his Financial Ombudsman Service referral rights by 26 April.

B. final response was sent within the prescribed time limit. D. IFA must have informed Frank of his Financial Ombudsman Service referral rights by 26 April.

MULTIPLE CHOICE Jim, a sole trader independent financial adviser, is considering his position regarding the Financial Ombudsman Service’s (FOS) rules and jurisdiction. He should be aware that A. the maximum award ignoring costs and interest for complaints is currently £170,000. B. compensation may be awarded for both financial and non-financial loss. C. compensation may be awarded to a limited company if it suffers financial loss. D. all FOS decisions are binding on both Jim and the complainant.

B. compensation may be awarded for both financial and non-financial loss. C. compensation may be awarded to a limited company if it suffers financial loss.

MULTIPLE CHOICE What circumstances would give rise to a financial crime under the Financial Conduct Authority’s jurisdiction? A. Failing to report a suspicious transaction. B. Using privileged information about a company to make a financial gain. C. Failing to keep client records up to date. D. Knowingly recommending a product with high charges.

A. Failing to report a suspicious transaction. B. Using privileged information about a company to make a financial gain.

MULTIPLE CHOICE Martin is an independent financial adviser. In the course of dealing with his clients he A. is not required to offer a fee charging option. B. always acts as an agent for his clients. C. may not refer clients to professional connections. D. may undertake pension transfer business if suitably qualified.

B. always acts as an agent for his clients. D. may undertake pension transfer business if suitably qualified.

MULTIPLE CHOICE Who may be categorised as a per se professional client? A. A firm authorised by the Financial Conduct Authority. B. A mortgage applicant in the UK. C. A credit institution. D. A small limited company with a turnover of £10,000.

A. A firm authorised by the Financial Conduct Authority. C. A credit institution.

MULTIPLE CHOICE When a firm of independent financial advisors makes a recommendation and completes a financial transaction for a client, in respect of the firm’s fiduciary relationship with the client, the firm should be aware that A. it acts as an agent for the client only. B. its relationship stops if the client declines a recommendation. C. its relationship continues during all stages of the transaction. D. the responsibilities of the relationship are greater for a professional client than a retail client.

A. it acts as an agent for the client only. C. its relationship continues during all stages of the transaction.

MULTIPLE CHOICE When an authorised firm is dealing with execution-only and limited advice transactions, the firm should be aware that the A. client can request to proceed on a limited advice basis. B. know your customer requirements only apply to limited advice transactions. C. firm is required to assess the appropriateness of limited advice transactions only. D. complaint-handling rules in relation to the Financial Ombudsman Service only apply to limited advice transactions.

A. client can request to proceed on a limited advice basis. B. know your customer requirements only apply to limited advice transactions. D. complaint-handling rules in relation to the Financial Ombudsman Service only apply to limited advice transactions.

MULTIPLE CHOICE When considering client cancellation rights, an authorised firm should be aware that A. if cancellation rights are not issued when required, a client may cancel at any future point. B. for pension transfers, the firm may issue a pre-sale right to withdraw as an alternative. C. the firm must always accept a notice to cancel an annuity, even if the annuitant is deceased. D. the firm must maintain records of cancellation notices for personal pensions for a maximum of 3 years only.

A. if cancellation rights are not issued when required, a client may cancel at any future point. B. for pension transfers, the firm may issue a pre-sale right to withdraw as an alternative.

MULTIPLE CHOICE In connection with suitability reports, an authorised firm should be aware that A. they are always required for friendly society plans. B. for a flexi-access drawdown pension plan, risk factors must be clearly stated. C. they are required if a client commences income withdrawal from a flexi-access drawdown pension plan. D. they are required for execution-only transactions.

B. for a flexi-access drawdown pension plan, risk factors must be clearly stated. C. they are required if a client commences income withdrawal from a flexi-access drawdown

MULTIPLE CHOICE When considering a client’s circumstances, a financial adviser becomes aware of a material change. At what point should he usually take account of the change? A. Within 30 days of the change. B. Only at the next annual review. C. When the change affects the current or previous recommendations made. D. When the change affects the current or future needs. E. On the specific plan anniversary for those products that are affected.

C. When the change affects the current or previous recommendations made. D. When the change affects the current or future needs.

MULTIPLE CHOICE When making referrals to a professional connection, an authorised firm should be aware that A. referrals may be made to only one specialist firm in each area of expertise. B. client permission is always required. C. if referrals are made to another authorised firm, responsibility for the client advice must be clearly agreed. D. a solicitor to whom a client is referred must also be authorised to give advice on investment business. E. a fee-sharing agreement is always required.

B. client permission is always required. C. if referrals are made to another authorised firm, responsibility for the client advice must be clearly agreed.

If the EU issues regulations in respect of the financial services industry, how would the UK be expected to respond? A. It must implement them without any changes. B. It may ignore them if existing national regulations already exist. C. It will amend and then implement them through new UK legislation. D. The regulations must be reviewed by the UK regulators who will decide on the methods of implementation.

A. It must implement them without any changes.

A bank has its own portfolio management team. This would indicate that it A. outsources its compliance responsibilities. B. specialises in wills and executorship. C. owns a life assurance company. D. provides a discretionary management service.

D. provides a discretionary management service.

How are UK gilts issued and traded? A. New issues and subsequent trading are both carried out on the London Stock Exchange. B. New issues and subsequent trading are both done through the Debt Management Office. C. New gilts are issued on the London Stock Exchange and subsequent trading is done through the Debt Management Office. D. New gilts are issued by the Debt Management Office and subsequent trading is done on the London Stock Exchange.

D. New gilts are issued by the Debt Management Office and subsequent trading is done on the London Stock Exchange.

Public companies usually raise long-term capital by issuing A. bonds only. B. debentures only. C. shares only. D. bonds and shares

D. bonds and shares.

What discretion, if any, does the Prudential Regulation Authority and the Financial Conduct Authority have over the decision to implement the requirements laid down by the EU in respect of financial services? A. They have no discretion over any requirements. B. They have discretion over Directives only. C. They have discretion over Regulations only. D. They have discretion over Directives and Regulations

A. They have no discretion over any requirements.

When determining the interaction between the UK and EU on the regulation of the financial services industry, the UK government must always A. seek approval from the European Commission before implementing any new regulations. B. implement new EU Directives by passing acts of Parliament. C. accommodate all EU decisions in existing UK legislation. D. provide copies of new regulations to the European Commission within a reasonable period of time for their approval.

A. seek approval from the European Commission before implementing any new regulations.

Samuel met his financial adviser Charlotte to discuss his financial needs and concerns. Samuel refused to provide details of his income. How should Charlotte react? A. Only arrange stakeholder products. B. Only provide advice on an execution-only basis. C. Record that Samuel refused to provide this detail on the fact-find. D. Refuse to give any advice at all.

C. Record that Samuel refused to provide this detail on the fact-find.

Albert, a widower aged 66, is reviewing his financial needs and priorities with his financial adviser. If his attention is particularly being drawn to tax planning issues, this would most likely be because he has A. amended his will to include his grandchildren. B. a current annual income of £30,000. C. recently downsized his house to fund for long-term care. D. total assets in excess of £1,100,000.

D. total assets in excess of £1,100,000.

Matthew’s financial adviser is considering recommending loan consolidation as a way of managing his debt situation and is satisfied with the affordability of the proposed arrangements. However, this may NOT help Matthew because he has A. demonstrated a consistent history of overspending and taking credit. B. an existing buy-to-let property investment. C. offered his holiday flat as security, rather than his main residence. D. recently cancelled his bank overdraft facility.

A. demonstrated a consistent history of overspending and taking credit.

A financial adviser is conducting an analysis of the likely impact of the receipt of State benefits on the amount of cover thought necessary for his client. This will be particularly useful before recommending A. an income protection insurance policy. B. an increasing term assurance policy. C. a joint life, last survivor, whole of life assurance policy. D. a unit-linked maximum investment plan.

A. an income protection insurance policy.

An insurance policy which includes accident and sickness cover would most likely be used in connection with which particular financial need? A. Estate planning. B. House purchase. C. Tax planning. D. Retirement planning.

B. House purchase.

Andrew, aged 27, is employed and Samantha, his wife, aged 26, is self-employed. They have just had their first child and are deciding who should stop work to look after the baby. They should be aware that A. Samantha may receive Maternity Allowance for a maximum of 52 weeks. B. Andrew may qualify for Statutory Paternity Pay for up to 2 weeks. C. Samantha cannot claim for Statutory Maternity Pay but may elect for the entitlement to be transferred to Andrew. D. Andrew cannot claim Statutory Paternity Pay but can take up to 4 weeks leave from work and claim Statutory Sick Pay.

B. Andrew may qualify for Statutory Paternity Pay for up to 2 weeks.

Paul, aged 38, wishes to save £1,500 per month to build up a lump sum towards a special holiday for his 40th birthday. He is considering investing in either a cash ISA or a stocks and shares ISA and seeks advice on the best option. He should be aware that A. the amount exceeds his annual ISA limit. B. he may transfer funds between the two forms of an ISA if he wishes to do so. C. the stocks and shares ISA is more suitable as pound cost averaging will protect the value of his investment. D. the stocks and shares ISA will always produce higher returns albeit at greater risk.

B. he may transfer funds between the two forms of an ISA if he wishes to do so.

Adam is married with three young children and following a financial review the need for additional life assurance was identified with the proceeds going to someone outside of his family. This was justified because he is A. self-employed. B. the trustee of a deceased estate. C. one of three business partners. D. a discharged bankrupt.

C. one of three business partners.

The life cover protection need for Ivor, aged 28, is of a reducing nature, tailing off by age 40. However, a decreasing term assurance was not considered to be suitable. What other product is likely to best address this need? A. Convertible term assurance. B. Family income benefit assurance. C. Whole of life assurance. D. Gift inter vivos term assurance.

B. Family income benefit assurance.

Keith is considering using the conversion option under his convertible term assurance policy and can easily afford to increase his premiums. What factor is most likely to influence his choice of the two main options typically available under this facility? A. The amount of disability cover he already has in place. B. The degree of risk he is prepared to accept. C. The duration of cover required. D. The state of health of his wife.

B. The degree of risk he is prepared to accept.

William required £100,000 of stand-alone level critical illness cover, but was quoted a prohibitively expensive first year premium. How was he able to immediately reduce the premium whilst maintaining the same cover? A. He increased the deferred period. B. He increased the premium payment frequency. C. He elected for a reviewable premium basis. D. He acted on an execution-only basis.

C. He elected for a reviewable premium basis.

James, aged 64, is planning to retire at age 65 and has a large retirement fund. Despite having considerable cash deposits the most likely reason for him to take his pension commencement lump sum is that A. it will reduce his potential Inheritance Tax liability. B. it will allow him to apply for State Pension Credit. C. he plans to exercise his open market option. D. it is tax efficient to do so.

D. it is tax efficient to do so.

Damian and Collette have been business partners for over 20 years and are reviewing their finances with Jack, their financial adviser. They are keen to mitigate against the risk of being personally responsible for any debts of the business and therefore Jack has advised them to consider A. becoming a limited liability partnership. B. becoming sole traders and employing each other. C. taking out a reinsurance policy to ring-fence future profits. D. taking out separate indemnity insurance policies and assigning them to the other partner.

A. becoming a limited liability partnership.

Karen and Julia both have leases within the same building. They both wish to exercise the right to purchase the freehold of the building. Why can only Karen exercise this right? A. Julia has a commercial lease. B. Karen has an original lease for 20 years and Julia has an original lease for 25 years. C. Karen has lived there for 1 year and Julia has held her lease for 3 years. D. Julia is not one of the original tenants.

A. Julia has a commercial lease.

Customer X is in liquidation and customer Y is in administration. This confirms that A. customer X and customer Y are both subject to Individual Voluntary Arrangements. B. customer X and customer Y are both companies. C. only customer Y has debts in excess of £100,000. D. only customer Y has previously been declared bankrupt.

B. customer X and customer Y are both companies.

Alfred died intestate aged 88 leaving a spouse and one sister. If his estate is valued at £500,000, how will it be distributed? A. It will all go to his spouse. B. His spouse and sister will each receive £250,000. C. £325,000 will go to his spouse and £175,000 will go to his sister. D. £475,000 will go to his spouse and £25,000 will go to his sister.

A. It will all go to his spouse.

. Peter applied to an insurer for a term assurance policy on his own life. The insurer was prepared to accept the risk subject to an increased premium as a result of the medical underwriting process. Peter agreed to the revised terms and submitted a direct debit from which premiums would be collected. Which statement regarding the requirements for establishing the contract is true? A. Offer was satisfied by Peter submitting the direct debit mandate. B. Consideration was satisfied by the insurer completing the underwriting process. C. Consideration was satisfied by Peter submitting the proposal form. D. The revised terms offered by the insurer represent a counter offer.

D. The revised terms offered by the insurer represent a counter offer.

Claire and Charles are the ordinary unsecured creditors of a debtor in bankruptcy. They are respectively owed £1,000 and £2,000. If after all else is settled, £2,400 remains for their total combined settlement, they will respectively receive A. £400 and £2,000. B. £600 and £1,800. C. £800 and £1,600. D. £1,000 and £1,400.

C. £800 and £1,600.

Shirley and Grant are trustees of separate trusts, but Shirley’s duties are much more straightforward than Grant’s. This is most likely to be because A. Grant is also the settlor of his trust. B. they are trustees of an absolute trust and a discretionary trust respectively. C. Shirley is also a beneficiary under her trust. D. they are trustees of a discretionary trust and flexible trust respectively.

B. they are trustees of an absolute trust and a discretionary trust respectively.

Sam, aged 12, has accidentally entered into an online contract whilst using the family computer. What is the legal position regarding this contract? A. It is enforceable as Sam is over the age of 10. B. It is enforceable as he was using a computer owned by his parents. C. It is not enforceable as Sam does not have the capacity to contract. D. It is not enforceable because it is against the rules of the Consumer Contracts Regulations 2013.

C. It is not enforceable as Sam does not have the capacity to contract.

William and George are creating a trust. William is certain who his beneficiaries should be, but George is NOT. Which type of trust(s) should William and George each create? A. Both William and George should create absolute trusts. B. Both William and George should create discretionary trusts. C. William should create a discretionary trust and George should create an absolute trust. D. William should create an absolute trust and George should create a discretionary trust.

D. William should create an absolute trust and George should create a discretionary trust.

Tom and Bobby both run their own businesses but only Tom is personally liable for the debt of his business. This is because A. Tom is self-employed and Bobby is a company director. B. Bobby is self-employed and Tom is a company director. C. Tom is in a limited liability partnership and Bobby is a company director. D. Bobby is in a limited liability partnership and Tom is a company director.

A. Tom is self-employed and Bobby is a company director.

The Competition and Markets Authority (CMA) has submitted a report to HM Treasury following an investigation into retail investment products. If the report requires remedial action to be taken, the most likely immediate outcome will be the A. CMA and HM Treasury will apply the recommendations jointly. B. CMA will issue new regulations. C. Financial Conduct Authority will apply the recommendations unilaterally. D. HM Treasury will provide direction to the Prudential Regulation Authority and the Financial Conduct Authority.

D. HM Treasury will provide direction to the Prudential Regulation Authority and the Financial Conduct Authority.

. A client has previously written to her former adviser opting out of any marketing activities from the firm or any third parties. However, she continues to receive direct investment offers from the firm. She should complain based on the firm NOT complying with which set of regulations? A. Conduct of Business Rules. B. Consumer Contracts Regulations 2013. C. Data protection legislation. D. Fair treatment of customers.

C. Data protection legislation.

The Financial Services and Markets Act 2000 regulates the provision of which type(s) of financial advice? A. Advice to vulnerable individuals only. B. Advice to all individuals. C. Advice to all individuals unless they are elective professional clients. D. Advice to all individuals unless they are per se professional clients.

B. Advice to all individuals.

The directors of an authorised firm have formally appointed an external compliance support company. Why does the authorised firm retain responsibility for the compliance oversight function? A. The authorised firm is not allowed to delegate their regulatory responsibilities. B. The appointment of the compliance support company was not made on the basis of a binding contract. C. The compliance support company does not have suitable professional indemnity cover. D. The compliance support company is not an authorised firm

A. The authorised firm is not allowed to delegate their regulatory responsibilities.

The implementation of financial regulation across EU Member States is carried out under which overarching programme? A. Financial Services Action Plan. B. Financial Services and Markets Act 2000. C. Markets in Financial Investments Directive II (MiFID II). D. Insurance Distribution Directive.

A. Financial Services Action Plan.

Which individual or organisation is directly responsible for overseeing the activities of the Financial Conduct Authority? A. The Governor of the Bank of England. B. HM Treasury. C. The Competition and Markets Authority. D. The Monetary Policy Committee of the Bank of England.

B. HM Treasury.

Which body, set up by the Financial Services and Markets Act 2000, ensures that the investigation and recommendation functions of the Financial Conduct Authority are carried out separately from the determining of any action and issuing of statutory notices? A. Consumer panel. B. Practitioner panel. C. Regulatory Decisions Committee. D. Upper Tribunal.

C. Regulatory Decisions Committee.

Gilbert, a financial adviser, has arranged a new investment bond for his client. According to the Conduct of Business Rules, what should Gilbert do on receipt of the policy document? A. Ask the product provider to retain the document for safekeeping. B. Retain the document until the next annual review. C. Retain the document indefinitely. D. Send out the document to his client as soon as is practically possible.

D. Send out the document to his client as soon as is practically possible.

A firm has successfully appealed to the Financial Conduct Authority’s Upper Tribunal. A possible consequence of this would be A. additional regulated activity authorisation being granted. B. guidance notes automatically being issued to the industry. C. existing controlled functions being reduced. D. senior management functions being outsourced.

A. additional regulated activity authorisation being granted.

Carl, an independent financial adviser, has committed a market abuse offence. He has been fined and as a consequence A. all of his clients must be notified. B. all of his clients’ investment contracts must be reviewed. C. it may affect his future employment prospects. D. he will automatically be prohibited from working in the financial services industry.

C. it may affect his future employment prospects.

. Jon and Carol are both employed by an authorised firm. The firm’s record-keeping requirements for Jon’s responsibilities are greater than for Carol’s. This is because A. Jon is a senior manager and Carol is a customer adviser. B. Jon is head of compliance and Carol is head of internal audit. C. Jon undertakes a sales function and Carol undertakes a senior management function. D. Jon was previously served with a prohibition order but Carol was not.

A. Jon is a senior manager and Carol is a customer adviser.

Keith is a financial adviser for firm X, which is an appointed representative of firm Y. Keith recently arranged a life policy for a client and the paperwork was checked by his supervisor, Mark. Who is deemed to be the principal in relation to this business? A. Mark. B. Keith. C. Firm X. D. Firm Y.

D. Firm Y.

An authorised firm of financial advisers holds a client money bank account. The directors of the firm should be aware that A. an annual client money audit and an annual report is required. B. client money must be paid into the client money bank account on the day it is received. C. interest earned on the account can always be retained by the firm. D. reconciliation of the client money bank account must always be performed daily.

A. an annual client money audit and an annual report is required.

Ian and Paula were both financial advisers and were both subject to disciplinary sanctions. As a result, only Ian’s offence warranted criminal prosecution because A. Ian breached a prohibition order whereas Paula failed to properly deal with a complaint. B. Paula lost adviser records whereas Ian failed to properly control his sales force. C. only Paula was a senior manager. D. only Ian provided advice on defined benefit pension transfers.

A. Ian breached a prohibition order whereas Paula failed to properly deal with a complaint.

Freddie is being prosecuted for market abuse. If he is found guilty of a criminal offence, what is the maximum penalty that can be imposed on him? A. A fine of £100,000 only. B. An unlimited fine only. C. A 7-year prison term only. D. An unlimited fine or a 7-year prison term.

D. An unlimited fine or a 7-year prison term.

Following a recent assessment, the Financial Conduct Authority has advised an authorised firm of its concern over the firm’s efforts to implement the principles for the fair treatment of customers. This was most likely to be because A. the firm was unable to demonstrate the fair treatment of customers across its entire range of activities. B. only four of the fair treatment of customers outcomes were relevant to the firm’s business. C. management information was submitted as evidence for all the fair treatment of customers outcomes being achieved. D. compliance checks were submitted as evidence of the fair treatment of customers outcomes being achieved within the advice process.

A. the firm was unable to demonstrate the fair treatment of customers across its entire range of activities.

Sharon was arranging personal pension plans for her clients, leading them to believe they would be adequate for their retirement needs. A subsequent complaint has indicated that she has failed to meet the requirements of the principles of the fair treatment of customers because she A. created unrealistic client expectations. B. failed to predict a stock market crash. C. failed to take into account possible future changes in State benefits. D. did not take into account the costs of long-term care.

A. created unrealistic client expectations.

Tom is currently an adviser in an authorised firm. He is about to be promoted to undertake a senior manager’s role. This means that he A. must provide a personal guarantee to the firm. B. will still be allowed to advise clients. C. must become a director of the firm. D. must accept ultimate responsibility for all of the firm’s compliance issues.

B. will still be allowed to advise clients.

An individual is acting in accordance with the Financial Services and Markets Act 2000, despite NOT being directly authorised by the Financial Conduct Authority. This is because they are A. providing advice on investment business only. B. providing advice on pension business only. C. the principal of an authorised firm. D. an appointed representative.

D. an appointed representative.

Rachel works in the treasury department of a local authority. How is this activity viewed under the Financial Services and Markets Act 2000? A. She needs to be individually authorised by the Financial Conduct Authority. B. She is exempt but the local authority must obtain authorisation. C. Both Rachel and the local authority must be authorised. D. Neither Rachel nor the local authority must be authorised.

D. Neither Rachel nor the local authority must be authorised.

In what circumstances, if any, must the Financial Conduct Authority notify an adviser of a change in the scope of an ongoing investigation into his conduct? A. There is no requirement to notify of a change of scope. B. If absence of notification may prejudice the adviser. C. If the change is more than six months after the commencement of the investigation. D. If the investigation is likely to lead to criminal charges.

B. If absence of notification may prejudice the adviser.

Caroline and Anne are both financial advisers but only Caroline is a senior manager. In accordance with the regulations, this means that A. the requirement for Caroline to exercise due skill, care and diligence is broader. B. the requirement for Caroline to observe proper market conduct standards lasts for a longer period of time. C. only Anne can be personally fined for an offence. D. only Anne can be imprisoned for an offence

A. the requirement for Caroline to exercise due skill, care and diligence is broader.

The Financial Conduct Authority (FCA) is able to take action against an individual who is a manager performing a senior management role but is NOT authorised to give investment advice because of A. his contract of employment with the employer. B. the fact that he is regulated by the FCA and must adhere to their rules. C. the provisions within the Senior Management Arrangements, Systems and Controls Sourcebook. D. the wider overarching powers contained within the fair treatment of customers outcomes.

B. the fact that he is regulated by the FCA and must adhere to their rules.

An authorised firm is moving offices and during the move discovers a file relating to a pension transfer made in 2014 for a former client. What must the firm do with this record? A. Destroy it under data protection legislation as it relates to a former client. B. Return it to the client. C. Retain it for a further two years where after it may be destroyed. D. Retain it indefinitely.

D. Retain it indefinitely.

Stuart, an employee of an investment management company, is subject to an ongoing Fit and Proper test specifically because he A. is an administration manager. B. is a senior manager. C. is the human resources manager. D. does not require individual registration

B. is a senior manager.

The UK Government seeks to meet its responsibilities under the National Financial Capability Strategy by A. bringing together organisations and interested parties to improve the nation’s knowledge and understanding of personal finance. B. establishing the National Employment Savings Trust (NEST) to promote workplace savings. C. appointing the Financial Skills Partnership to set appropriate and relevant qualifications. D. establishing a module in the national curriculum to deliver financial education in UK schools and colleges.

A. bringing together organisations and interested parties to improve the nation’s knowledge and understanding of personal finance.

When, if at all, can an alternative status disclosure statement be used by an authorised firm? A. Never, as all firms can only state they are authorised and regulated by the Financial Conduct Authority. B. Only if awaiting regulatory approval, when they must state they are provisionally authorised and regulated by the Financial Conduct Authority. C. Only if they are a law firm carrying out investment business, when they must state that they are authorised and regulated by the Law Society. D. Only if they are a firm from another EU member state using a passporting of authorised permissions, when they must state that they are authorised by their respective regulator.

D. Only if they are a firm from another EU member state using a passporting of authorised permissions, when they must state that they are authorised by their respective regulator.

As a result of a recent investigation, the practitioner panel has made a recommendation to the Financial Conduct Authority (FCA). Therefore, the FCA must A. amend the appropriate FCA rules within six months. B. consider the recommendation without any obligation to amend its rules. C. issue a guidance note immediately. D. refer the recommendation to HM Treasury

B. consider the recommendation without any obligation to amend its rules.

An authorised firm’s senior management controls must A. be approved annually by the Financial Conduct Authority. B. form part of the firm’s disclosure documentation. C. be reviewed regularly by the firm. D. conform to accepted industry practice standards.

C. be reviewed regularly by the firm.

The Financial Capability Strategy for the UK is using a programme in schools which is designed to A. embed a basic understanding of financial matters in young people. B. reduce the cost of financial advice for parents with children. C. increase the number of children who progress to careers in financial services. D. shift responsibility for financial education in schools to the Money and Pensions Service.

A. embed a basic understanding of financial matters in young people.

Alan and Colin both work for a life office. Alan is a senior discretionary investment manager and Colin is a junior member of the compliance department. A key regulatory difference between them is that A. only Alan will require prescribed supervision. B. only Alan is carrying out a senior manager role. C. only Colin will be subject to a fit and proper test. D. only Colin will need to be individually registered with the Financial Conduct Authority.

B. only Alan is carrying out a senior manager role.

Firm A has been fined £100,000 by the Prudential Regulation Authority for insider dealing. Firm B has been fined £1,000,000 for market abuse. This indicates that A. both firms have received the maximum fine. B. only firm A has received the maximum fine. C. neither firm have received the maximum fine. D. only firm B has received the maximum fine.

C. neither firm have received the maximum fine.

An authorised firm disagrees with the enforcement action taken by the Financial Conduct Authority. To which body would it appeal? A. The Upper Tribunal. B. The Practitioner Panel. C. The Regulatory Decisions Committee. D. The Treasury Select Committee.

A. The Upper Tribunal.

. An authorised firm has discovered that they have breached one of the Financial Conduct Authority’s (FCA’s) Principles for Businesses. What action must the firm take? A. The firm has a maximum period of six months to notify the FCA and take remedial action. B. The firm’s compliance officer must notify the FCA immediately and implement remedial actions as soon as possible. C. The firm’s compliance officer must include details of the breach and remedy on the firm’s next six-monthly return. D. The breach must be remedied within seven days and the regulator need not be informed.

B. The firm’s compliance officer must notify the FCA immediately and implement remedial actions as soon as possible.

When Lionel and Yvonne’s bank was declared insolvent in May 2019, Lionel had £60,000 on deposit and Yvonne had investments worth £60,000 with the bank. How much in total would they be entitled to receive under the Financial Services Compensation Scheme? A. £100,000 B. £108,000 C. £110,000 D. £120,000

D. £120,000

David sent a letter of complaint to an authorised firm of independent financial advisers on 2 March, which was received on 4 March. The firm acknowledged receipt of the complaint on 7 March. On 1 April a holding response was sent to David to update him on progress of the complaint. What is the latest date on which the firm must provide David with its final decision and right to refer the complaint to the Financial Ombudsman Service? A. 4 April. B. 27 April. C. 29 April. D. 2 May.

C. 29 April.

A client referred his complaint about the investment advice received from his adviser to the Financial Ombudsman Service (FOS) in January 2019. The FOS has ruled that the advice was unsuitable and has recommended an award of £125,000 plus £2,500 costs. How much is the maximum amount of compensation that the adviser firm will be obliged to pay? A. £100,000 B. £102,500 C. £125,000 D. £127,500

D. £127,500

Jonas is an independent mortgage and financial adviser. He has NOT passed long-term care or equity release examinations to enable him to transact business in those areas. Which of the following transactions will Jonas be able to undertake? i) A new term assurance with critical illness cover ii) A remortgage for a 40-year-old applicant iii) An immediate needs annuity iv) A home reversion plan v) A compulsory purchase annuity for a 65-year-old applicant A. i and ii only. B. i, ii and v only. C. ii, iii and iv only. D. iii and iv only.

B. i, ii and v only.

Diane and Martin have two children, aged 16 and 18. The entire family intend to open their first ISA accounts and invest the maximum available amounts. They only wish to consider stocks and shares ISAs and NOT any other form of ISAs. What is the total amount they would be allowed to invest in the tax year 2019/2020? A. £40,000 B. £45,720 C. £60,000 D. £80,000

C. £60,000

i) A government of an EU member state. ii) A credit institution in an EU member state. iii) A central bank in an EU member state. iv) A UK pension fund. From the table, which of these organisations are per se eligible counterparties? A. i only. B. i, and ii only. C. i, ii and iii only. D. i, ii, iii and iv.

D. i, ii, iii and iv.

Various parties to a discretionary trust are set out in the table below. David Trustee Simon Sole-named beneficiary Amanda Beneficiary’s spouse A fiduciary duty exists between A. David and Amanda only. B. David and Simon only. C. Simon and Amanda only. D. David, Simon and Amanda.

B. David and Simon only.

In which of the following situations is a referral to another adviser appropriate? i) A restricted adviser who does not have a suitable product in his company’s range refers to a restricted adviser within another firm. ii) A restricted adviser who does not have a suitable product in his company’s range refers to an independent financial adviser. iii) A restricted adviser who knows a similar product can be obtained cheaper from another provider refers to an adviser of that firm. iv) An independent financial adviser is not deemed competent to provide pension transfer advice refers to another independent financial adviser who is suitably qualified and holds the appropriate Financial Conduct Authority permissions. A. i only. B. ii and iv only. C. ii, iii and iv only. D. iv only.

B. ii and iv only.

An authorised firm has arranged the following products on 1 June. All products were based on recommendations made to retail clients on a face to face basis. For all products arranged the clients received cancellation notices on the same date. i) A cash ISA ii) A level term assurance iii) An Enterprise Investment Scheme iv) A stakeholder pension plan v) A child trust fund Which of the products is still within its cancellation period on 25 June? A. i and iii only. B. ii and iv only. C. iii and iv only. D. i, ii and v only.

B. ii and iv only.

During the course of the fact-finding process, a financial adviser decided to ask a number of open-ended questions. The primary purpose of this approach was to A. instill a sense of commitment from the client. B. obtain the client’s views and opinions. C. quantify the client’s assets and liabilities. D. secure the client’s trust.

B. obtain the client’s views and opinions.

Susan and Nicola both have lump sums to invest and both intend to use life office managed funds. Why are the opportunities for Susan to benefit from diversification more limited than Nicola’s? A. Susan has decided to adopt a socially responsible approach. B. Nicola has less to invest than Susan. C. Susan is significantly younger than Nicola. D. Nicola is in significantly better health than Susan.

A. Susan has decided to adopt a socially responsible approach.

Following the completion of a fact-find, a financial adviser has recommended a unit trust and an investment bond to a retail client. In addition, the client has requested a personal pension be arranged on an execution-only basis. The disadvantages of which product(s) must be included within the suitability report? A. Personal pension only. B. Unit trust and investment bond only. C. Personal pension and unit trust only. D. Personal pension, unit trust and investment bond.

B. Unit trust and investment bond only.

In considering a number of pension products, Jenny’s adviser has pointed out that the reduction in yield figures are important in helping her understand the A. financial strength of the providers. B. impact of charges. C. impact of inflation on the fund. D. volatility of investment performance.

B. impact of charges.

Julian, a financial adviser, has been praised for the quality of his recent professional conduct. This would most likely indicate that he has A. achieved his annual sales target. B. acted with appropriate integrity. C. been influenced by colleagues. D. maintained up-to-date continuing professional development records.

B. acted with appropriate integrity.

How should an authorised firm react in the event of a conflict of interest arising from a couple’s divorce where both parties are clients of the firm? A. By recommending an independent arbitrator. B. By referring the couple to another authorised firm. C. By seeking to maintain strict neutrality. D. By supporting the client who provides most business.

C. By seeking to maintain strict neutrality.

An investment provider has announced new charges for switching between its funds. If these charges are likely to be deemed excessive, this would A. be regarded as a breach of the financial regulators’ Principles for Businesses. B. lead to an investigation by the Competition and Markets Authority. C. require the investment provider to reapply to the Financial Conduct Authority for relevant permissions. D. trigger the immediate imposition of a Prudential Regulation Authority approved default charging structure.

A. be regarded as a breach of the financial regulators’ Principles for Businesses.

In order to adhere to the Financial Prudence principle of the Financial Conduct Authority’s Principles for Businesses, an authorised firm should A. ensure that its customers do not take on more debt than they can afford. B. aim to increase its customers’ understanding of day-to-day money management. C. have adequate financial resources to meet its obligations. D. not market financial products with excessive investment risk

C. have adequate financial resources to meet its obligations.

To what degree, if any, must an authorised firm adhere to the Financial Conduct Authority’s Principles for Businesses? A. They must adhere to them but they have discretion as to how they comply with their obligations. B. They can ignore them provided they follow the rules within the relevant sourcebooks C. They can elect to become exempt from them subject to holding prescribed levels of capital resources. D. They can elect to be exempt from them provided they are a member of a recognised trade association.

A. They must adhere to them but they have discretion as to how they comply with their obligations.

The compliance officer of an authorised firm has discovered that one of the firm’s senior managers has been declared bankrupt. What action must the authorised firm take? A. Terminate the managers employment. B. Ensure that all the manager’s future recommendations are checked by his supervisor. C. Notify the Financial Conduct Authority in the firm’s next 6-monthly return. D. Notify the Financial Conduct Authority immediately.

D. Notify the Financial Conduct Authority immediately.

An individual has applied to an authorised firm for the role of compliance manager. In accordance with the Financial Conduct Authority’s (FCA’s) fit and proper requirements, how will she be treated as a result of a previous conviction for driving under the influence of alcohol seven years ago? A. The individual will not be deemed fit and proper. B. The FCA will only consider the issue if it relates to the ability to carry out her role. C. The FCA will require a further period of three years to elapse before approving the application. D. The individual will not be allowed to perform a senior management role.

B. The FCA will only consider the issue if it relates to the ability to carry out her role.

William, an independent financial adviser, is advising Emily, a self-employed designer. Emily has an income protection insurance policy which has a maximum benefit level of £30,000 per annum, but her earnings have recently fallen to £25,000 per annum. Considering only the Financial Conduct Authority’s Statements of Principle and Code of Practice for Approved Persons (APER), what should William do, if anything? A. Nothing as Emily’s earnings may improve in the future. B. Inform Emily that she may be paying for cover on which she cannot claim. C. Advise cancellation of the product and replace it with a cheaper one with a lower maximum benefit. D. Refer Emily to the product provider for guidance.

B. Inform Emily that she may be paying for cover on which she cannot claim.

Considering only the Financial Conduct Authority’s Statements of Principle and Code of Practice for Approved Persons (APER), the issue of financial loss or financial detriment in the advice process applies to A. clients only. B. product providers only. C. product providers and retail clients only. D. all clients and product providers.

D. all clients and product providers.

In reviewing its management information, an authorised firm has identified a high number of pure protection policies being cancelled immediately after the end of the commission earnings period. What kind of behaviour is this likely to indicate? A. Unethical behaviour by advisers through churning of policies. B. Unethical behaviour by advisers through over-committing customers’ budgets. C. Non-compliant behaviour by sales staff made on a direct offer basis. D. Non-compliant behaviour by sales staff made using the simplified advice process.

A. Unethical behaviour by advisers through churning of policies.

According to the Financial Conduct Authority’s High Level Standards, an individual holding a senior managers role in an authorised firm must A. be qualified to at least the same level as the advisers he supervises. B. provide the same level of client service offering to all clients. C. review all client files at least annually. D. uphold the highest personal and professional standards at all times.

D. uphold the highest personal and professional standards at all times.

How may an authorised firm demonstrate that they have successfully considered ethical outcomes? A. High persistency levels. B. An increase in execution-only business levels. C. Low persistency levels. D. Reduced client referrals.

A. High persistency levels.

MULTIPLE CHOICE Barry and Caroline are restricted advisers and Paul is an independent financial adviser. In respect of their current authorisations, they should each be aware that A. Barry can only advise on a single product. B. Caroline can be tied to different providers for different products. C. Barry and Caroline can both introduce clients to Paul. D. only Caroline can receive commission from more than one provider.

B. Caroline can be tied to different providers for different products. C. Barry and Caroline can both introduce clients to Paul.

MULTIPLE CHOICE Which roles within authorised firms would automatically be senior management functions? A. Compliance manager. B. Financial adviser. C. IT manager. D. Money Laundering Reporting Officer.

A. Compliance manager. D. Money Laundering Reporting Officer.

MULTIPLE CHOICE Simon has experience of dealing with retail clients and is now training to be able to give advice on pension transfers. As a consequence, Simon should be aware that A. he must have at least 3 years’ experience as an adviser before his training can commence. B. his firm is allowed to impose a time limit on completion of the qualification. C. once qualified, CPD requirements are waived for 12 months. D. all records of his training and CPD must be maintained indefinitely.

B. his firm is allowed to impose a time limit on completion of the qualification. D. all records of his training and CPD must be maintained indefinitely.

MULTIPLE CHOICE Which of the following constitute ‘close links’ for the purposes of Threshold Conditions (COND), where party X is seeking authorisation and Y is the other party? A. Y is a parent undertaking of X. B. X has a director in common with Y. C. Y shares premises with X. D. Y owns or controls 20% or more of the voting rights or capital of X.

A. Y is a parent undertaking of X. D. Y owns or controls 20% or more of the voting rights or capital of X.

MULTIPLE CHOICE Several clients held long-term deposits and investment contracts with a UK bank that became insolvent and ceased trading due to insolvency in June 2019. Under the terms of the Financial Services Compensation Scheme (FSCS), which clients will be fully reimbursed by the FSCS to cover their losses? A. James, who has £100,000 on deposit. B. Moira, who has a stocks and shares ISA investment of £80,000. C. Paolo and Kyla, who jointly hold £150,000 in their savings account. D. Lola, who has an onshore investment bond with a surrender value of £60,000.

B. Moira, who has a stocks and shares ISA investment of £80,000. C. Paolo and Kyla, who jointly hold £150,000 in their savings account. D. Lola, who has an onshore investment bond with a surrender value of £60,000.

MULTIPLE CHOICE When considering the preparation of client suitability reports in accordance with the Financial Conduct Authority’s rules, a financial adviser should be aware that A. suitability should be the consequence of proper adherence to the know your customer rule. B. when arranging a regulated mortgage contract, a suitability report is not required. C. suitability reports are always required for both pension transfers and friendly society policies. D. suitability reports are required for increases to regular premium life assurance contracts, but not for single premium contract top-ups.

A. suitability should be the consequence of proper adherence to the know your customer rule. B. when arranging a regulated mortgage contract, a suitability report is not required.

MULTIPLE CHOICE Firms X and Y are both authorised firms providing financial advice. Firm X is paid by commission only, firm Y is paid by fee only. When comparing their disclosure obligations to retail customers, the firms should be aware that A. both firms must disclose details of what they can expect to receive. B. both firms must confirm their regulatory status. C. only firm X must give full disclosure of its regulatory status. D. only firm Y must give full disclosure of loans and ownership.

A. both firms must disclose details of what they can expect to receive. B. both firms must confirm their regulatory status.

MULTIPLE CHOICE Fiona, a financial adviser, is reviewing her client’s circumstances. When looking into the client’s current assets, Fiona should be aware that A. it is always acceptable to cancel and replace a life policy. B. the amount of accessible funds held on deposit will impact on investment decisions. C. opting out of an occupational pension scheme must never be recommended. D. the consequences of any recommendation to surrender a long-term contract must be explained

B. the amount of accessible funds held on deposit will impact on investment decisions. D. the consequences of any recommendation to surrender a long-term contract must be explained

MULTIPLE CHOICE An authorised firm transacts business with a new professional client on 1 February. In respect of the firm’s client agreement between the two parties A. the firm must provide the agreement by 31 January. B. risk warnings need only be included where the client has elective professional status. C. the agreement must include details of the firm’s complaints procedures. D. the agreement must be retained indefinitely where pensions transfer business is conducted.

C. the agreement must include details of the firm’s complaints procedures. D. the agreement must be retained indefinitely where pensions transfer business is conducted.

MULTIPLE CHOICE When considering cancellation rights in respect of regulated products A. notice can be served other than by post, so long as the provider has stated the alternative method is acceptable. B. sending a notice one day before the deadline is acceptable even if it is not received until after the deadline. C. investment shortfall deduction only applies to unit trusts and open-ended investment companies. D. investment shortfall deduction only applies to regular premium contracts. E. the duration for which cancellation records must be retained varies according to the product involved.

A. notice can be served other than by post, so long as the provider has stated the alternative method is acceptable. B. sending a notice one day before the deadline is acceptable even if it is not received until after the deadline. E. the duration for which cancellation records must be retained varies according to the product involved.

MULTIPLE CHOICE A financial adviser is working in collaboration with a client’s accountant and solicitor in respect of the client’s divorce. In relation to the financial advice provided, the financial adviser should be aware that A. the financial adviser cannot give generic information on matrimonial law. B. the financial adviser can give generic information in relation to taxation issues. C. all three parties share equal responsibility for the financial advice given. D. the financial adviser is solely responsible for the financial advice given. E. if the financial adviser instigated the referral to the solicitor, he may share the client’s details without their prior consent.

B. the financial adviser can give generic information in relation to taxation issues. D. the financial adviser is solely responsible for the financial advice given.

MULTIPLE CHOICE A financial adviser in an authorised firm is discussing areas of advice with a client for which he is authorised but does NOT feel confident and lacks experience in this area. What should he do? A. Suggest a joint meeting with another adviser within the firm who has greater experience. B. Cease dealing with the client immediately and transfer him to another adviser within the firm. C. Persuade the client that they do not need to consider the areas on which he is not experienced. D. Rearrange the meeting to such time that he has researched the areas to gain greater knowledge.

A. Suggest a joint meeting with another adviser within the firm who has greater experience. D. Rearrange the meeting to such time that he has researched the areas to gain greater knowledge.

R01 Flashcards

(199 cards)