Chapter 2 - CISI Financial Regulations || 100% Accurate
Solutions.
Exemptions from General Prohibition correct answers APRIL:
A: Appointed representatives (tied agents)
P: Members of professions (apply to their own designated professional bodies (DPBs rather than
FCA and PRA)
R: Recognised investment exchanges (RIEs) and recognised clearing houses (RCHs)
I: Institutions - supranational, central banks (under the FSMA Exemption Order 2001)
L: Syndicate members of Lloyd's of London
Which section of FSMA 200 does the General Prohibition come under? correct answers S19
What does the General Prohibition state? correct answers No person can carry out a regulated
activity in the UK unless they are authorised or exempt.
What two types of consequences are there for unauthorised persons that perform regulated
activities are there (and details about them)? correct answers 1. Criminal offense - max 2yrs
and/or unlimited fine
2. Civil remedies - contracts enforceable by injured party, but not by offending person.
What are the two categories of regulated activities? correct answers 1. Specified investments
2. Specified Activities
What is NOT classified as a specified investment? Card #1 (types of derivatives) correct answers
1. Options that don't involve securities, currencies and precious metals (e.g. option on non-
precious metals)
2. Futures for commercial use (i.e. for hedging)
What is NOT classified as a specified investment? Card #2 (everything else) correct answers 1.
Property deals
2. Currency deals
3. National savings products (NS&I)
4. Commercial/buy-to-let mortgages
, 5.Motor breakdown insurance
What is NOT classified as a specified activity? correct answers DEMOTE:
D: Dealing as principle (not including professional dealings like market makers)
E: Employee share schemes
M: Media (TV, newspaper) unless providing subscription tip sheet
OT: Trustees, nominees, and personal representatives (non-paid)
E: Employee Share Schemes
What occupations are classed under 'DPBs'? correct answers 1. Accountants
2. Solicitors
3. Actuaries
4. Charted Surveyors
4. Licensed Conveyors
What are the two authorisation routes? correct answers 1. FSMA Part 4A Permission (given by
FCA or PRA,dual regulated firms make 1 application to PRA but Fca needs to approve)
2. Passporting under MiFID (not for UK firms anymore #brexit)
What are the authorisation threshold conditions (for Part 4A permission)? (Conditions 1-4)
correct answers 1. Legal status - acceptable legal form (PRA)
2. Location of offices - head and registered office in the UK (PRA)
3. Business conducted in a prudent manner - appropriate financial and non-financial resources
(PRA)
4. Effective supervision, including close links (person with >20% shares holding) (FCA/PRA)
What are the authorisation threshold conditions? (Conditions 5-8) correct answers 5. Appropriate
resources - appropriate financial and non-financial resources (FCA)
6. Suitability - fit and proper (FCA/PRA)
7. Business model -suitable business strategy (FCA)
Solutions.
Exemptions from General Prohibition correct answers APRIL:
A: Appointed representatives (tied agents)
P: Members of professions (apply to their own designated professional bodies (DPBs rather than
FCA and PRA)
R: Recognised investment exchanges (RIEs) and recognised clearing houses (RCHs)
I: Institutions - supranational, central banks (under the FSMA Exemption Order 2001)
L: Syndicate members of Lloyd's of London
Which section of FSMA 200 does the General Prohibition come under? correct answers S19
What does the General Prohibition state? correct answers No person can carry out a regulated
activity in the UK unless they are authorised or exempt.
What two types of consequences are there for unauthorised persons that perform regulated
activities are there (and details about them)? correct answers 1. Criminal offense - max 2yrs
and/or unlimited fine
2. Civil remedies - contracts enforceable by injured party, but not by offending person.
What are the two categories of regulated activities? correct answers 1. Specified investments
2. Specified Activities
What is NOT classified as a specified investment? Card #1 (types of derivatives) correct answers
1. Options that don't involve securities, currencies and precious metals (e.g. option on non-
precious metals)
2. Futures for commercial use (i.e. for hedging)
What is NOT classified as a specified investment? Card #2 (everything else) correct answers 1.
Property deals
2. Currency deals
3. National savings products (NS&I)
4. Commercial/buy-to-let mortgages
, 5.Motor breakdown insurance
What is NOT classified as a specified activity? correct answers DEMOTE:
D: Dealing as principle (not including professional dealings like market makers)
E: Employee share schemes
M: Media (TV, newspaper) unless providing subscription tip sheet
OT: Trustees, nominees, and personal representatives (non-paid)
E: Employee Share Schemes
What occupations are classed under 'DPBs'? correct answers 1. Accountants
2. Solicitors
3. Actuaries
4. Charted Surveyors
4. Licensed Conveyors
What are the two authorisation routes? correct answers 1. FSMA Part 4A Permission (given by
FCA or PRA,dual regulated firms make 1 application to PRA but Fca needs to approve)
2. Passporting under MiFID (not for UK firms anymore #brexit)
What are the authorisation threshold conditions (for Part 4A permission)? (Conditions 1-4)
correct answers 1. Legal status - acceptable legal form (PRA)
2. Location of offices - head and registered office in the UK (PRA)
3. Business conducted in a prudent manner - appropriate financial and non-financial resources
(PRA)
4. Effective supervision, including close links (person with >20% shares holding) (FCA/PRA)
What are the authorisation threshold conditions? (Conditions 5-8) correct answers 5. Appropriate
resources - appropriate financial and non-financial resources (FCA)
6. Suitability - fit and proper (FCA/PRA)
7. Business model -suitable business strategy (FCA)
