Complete FCA and PRA Supervision Framework |
Updated & Verified Questions and Answers
Which of the following does not have any rights under FSCS? - ✔✔Authorized firm with respect to
general insurance.
- A retail client, trustee of scheme with assets and a small biz with regard to general insurance all have
rights
What best represents FCA view on industry guidance? - ✔✔The FCA will not monitor or enforce
compliance of INDUSTRY guidance b/c it is not mandatory
Market abuse is different than insider dealing in all of the following ways except? - ✔✔Market abuse is
based on civil burden-balance of probabilities; it should be easier for the FCA to demonstrate abusive
behavier; and it can be applied to commodity derivatives.
It is not true that it should be easier for the FCA to impose a custodial sentence as only FINES can be
imposed.
What best reflects the firm systematic framework (FSF) of FCA? - ✔✔Risk-based approach
Proactive Supervision = FSF = preventative work through the structured conduct assessment of firms.
Event driven = remedial/reactive work = deals with problems that are emerging or have happened
Issues and Products = thematic supervision/intensive campaigns
Tools = Diagnostic; Monitoring; Preventative; Remedial
,What is minimum reflection period for sale of life or pension product irrespective of whether the firm
offers advice? - ✔✔30 days for life and pension products. Firms may voluntarily offer longer periods at
the same or better terms.
The Collective Investment Scheme Sourcebook does not apply to:
Depository of ICVC
Trustees of authorized unit trust
Director of investment trust
Manager of an authorized unit trust - ✔✔Director of an investment trust
-Investment companies are not classified as a CIS and therefore not covered by the CIS sourcebook
Which is responsibility of HOST:
Authorization of branch
COBS
Fitness and prop of firm employees
Capital adequacy - ✔✔COBS is responsibility of HOST
- A firm when conducting biz in another EEA state under MiFID must follow HOST COBS
The Tax and Chancery Chamber of the Upper Tribunal is operated by? - ✔✔A government department
The Tribunal as an appeal committee is independent of the Regulator. Run by Ministry of Justice.
To which do COBS apply:
Long term insurance related to life policy
Offering car breakdown insurance
Credit unions
Regulated mortgages - ✔✔Long term insurance
,- Insurance is DIB and rest are not
Under FSMA 2000 can a person be both authorized and exempt depending on activities? - ✔✔A person
cannot be both authorized and exempt regardless of activities at the same time.
For example, a firm cannot conduct some regulated activities as an authorized person and others in the
capacity of an appointed representative of another firm.
Who can be an eligible complainant - ✔✔A small retail customer
How often should an authorized firm report to the FCA re: customer complaints? - ✔✔Twice a year
Under RDR what is true about fees? - ✔✔The charge can be ongoing and based on a percentage of the
funds invested.
Advisors must move to fee-based charging. This can be upfront or an ongoing fee for a percentage of
funds invested (as long as an ongoing service is provided). Fees should be itemied and disclosed up front
and based on service not on product.
Which is client money?
A transaction fee due the firm
Money deposited in an approved bank account
Settlement charge due the firm
Money held in excess to client's obligations - ✔✔Money held in excess to client's obligations
Any money due the firm is not client money. Approved banks do not need to treat money deposited
with them as client money. Where a firm sells assets held as security against client obligations, the
amount equal to the obligation is the firm's money. However anything in excess of this obligation has to
be returned to the client or treated as client money.
, Which is always a specified activity?
Acting as ccy dealer
An accountant offering investment advice
Operating a stakeholder pension scheme
Acting as trustee for a trust - ✔✔Operating a stakeholder pension scheme
- Currency options and currency futures would be specified but not spot or forward deals. Accountant
offering advice will not be specified if incindental. Acting as a trustee is not specified provided he is not
being paid.
A financial advisor makes a personal recommendation on a retail investment product to a retail client.
When would he NOT send suitability report?
Transactions in a reg CIS
Surrender of stakeholder pension
Making withdrawals on short term annuity
Small life policy from friendly society - ✔✔Small life policy
Other exclusions are recommendations relating to: a regulated CIS where the firm is acting as
investment manager, the client is habitually resident outside EEA, increases to a reg premium in an
exsiting contract; an additional single contribution to a product where a single contribution had already
been paid.
According to JMLSG, how long must client verification records be kept? - ✔✔5 years from date account
was closed
Which is not a per se eligible cpty?
Insurance co
UCITS scheme
Local authority
Supranational org - ✔✔Local authority
Updated & Verified Questions and Answers
Which of the following does not have any rights under FSCS? - ✔✔Authorized firm with respect to
general insurance.
- A retail client, trustee of scheme with assets and a small biz with regard to general insurance all have
rights
What best represents FCA view on industry guidance? - ✔✔The FCA will not monitor or enforce
compliance of INDUSTRY guidance b/c it is not mandatory
Market abuse is different than insider dealing in all of the following ways except? - ✔✔Market abuse is
based on civil burden-balance of probabilities; it should be easier for the FCA to demonstrate abusive
behavier; and it can be applied to commodity derivatives.
It is not true that it should be easier for the FCA to impose a custodial sentence as only FINES can be
imposed.
What best reflects the firm systematic framework (FSF) of FCA? - ✔✔Risk-based approach
Proactive Supervision = FSF = preventative work through the structured conduct assessment of firms.
Event driven = remedial/reactive work = deals with problems that are emerging or have happened
Issues and Products = thematic supervision/intensive campaigns
Tools = Diagnostic; Monitoring; Preventative; Remedial
,What is minimum reflection period for sale of life or pension product irrespective of whether the firm
offers advice? - ✔✔30 days for life and pension products. Firms may voluntarily offer longer periods at
the same or better terms.
The Collective Investment Scheme Sourcebook does not apply to:
Depository of ICVC
Trustees of authorized unit trust
Director of investment trust
Manager of an authorized unit trust - ✔✔Director of an investment trust
-Investment companies are not classified as a CIS and therefore not covered by the CIS sourcebook
Which is responsibility of HOST:
Authorization of branch
COBS
Fitness and prop of firm employees
Capital adequacy - ✔✔COBS is responsibility of HOST
- A firm when conducting biz in another EEA state under MiFID must follow HOST COBS
The Tax and Chancery Chamber of the Upper Tribunal is operated by? - ✔✔A government department
The Tribunal as an appeal committee is independent of the Regulator. Run by Ministry of Justice.
To which do COBS apply:
Long term insurance related to life policy
Offering car breakdown insurance
Credit unions
Regulated mortgages - ✔✔Long term insurance
,- Insurance is DIB and rest are not
Under FSMA 2000 can a person be both authorized and exempt depending on activities? - ✔✔A person
cannot be both authorized and exempt regardless of activities at the same time.
For example, a firm cannot conduct some regulated activities as an authorized person and others in the
capacity of an appointed representative of another firm.
Who can be an eligible complainant - ✔✔A small retail customer
How often should an authorized firm report to the FCA re: customer complaints? - ✔✔Twice a year
Under RDR what is true about fees? - ✔✔The charge can be ongoing and based on a percentage of the
funds invested.
Advisors must move to fee-based charging. This can be upfront or an ongoing fee for a percentage of
funds invested (as long as an ongoing service is provided). Fees should be itemied and disclosed up front
and based on service not on product.
Which is client money?
A transaction fee due the firm
Money deposited in an approved bank account
Settlement charge due the firm
Money held in excess to client's obligations - ✔✔Money held in excess to client's obligations
Any money due the firm is not client money. Approved banks do not need to treat money deposited
with them as client money. Where a firm sells assets held as security against client obligations, the
amount equal to the obligation is the firm's money. However anything in excess of this obligation has to
be returned to the client or treated as client money.
, Which is always a specified activity?
Acting as ccy dealer
An accountant offering investment advice
Operating a stakeholder pension scheme
Acting as trustee for a trust - ✔✔Operating a stakeholder pension scheme
- Currency options and currency futures would be specified but not spot or forward deals. Accountant
offering advice will not be specified if incindental. Acting as a trustee is not specified provided he is not
being paid.
A financial advisor makes a personal recommendation on a retail investment product to a retail client.
When would he NOT send suitability report?
Transactions in a reg CIS
Surrender of stakeholder pension
Making withdrawals on short term annuity
Small life policy from friendly society - ✔✔Small life policy
Other exclusions are recommendations relating to: a regulated CIS where the firm is acting as
investment manager, the client is habitually resident outside EEA, increases to a reg premium in an
exsiting contract; an additional single contribution to a product where a single contribution had already
been paid.
According to JMLSG, how long must client verification records be kept? - ✔✔5 years from date account
was closed
Which is not a per se eligible cpty?
Insurance co
UCITS scheme
Local authority
Supranational org - ✔✔Local authority
