R01 - pp3

100問 • 1年前

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問題一覧

1. Reinsurance means:

C. Assessing and accepting a risk but passing it on for a proportion of the premium.

2. Within the UK economy, an example of disintermediation would be the?

D. Purchase of UK gilts from the Debt Management Office

3. Government-approved products fall within clearly defined CAT standards. Which three specific areas are covered?

C. Charges, Access and Terms

4. Friendly Societies were originally able to offer a very attractive investment proposition to their customers for what reason?

C. Investors had complete exemption from taxation on their funds

5. What main tool is used to influence economic activity by the Bank of England?

B. The level of the UK base interest rate

6. The rate of inflation has been steadily increasing in the UK over the last year. 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:

C. Monetary and fiscal policy respectively

7. Peter 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?

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

8. Nigel has recently become unemployed and is aware he may be eligible for Support for Mortgage Interest (SMI). Nigel is aware any benefit payable will be paid direct to his mortgage lender and is limited to the interest on the first:

C. £200,000 of a mortgage

9. How many weeks must Henry have been unemployed before he can make a claim for Support for Mortgage Interest (SMI)?

D. 39

10. Which of the following is a taxable State benefit for bringing up children?

A. Statutory Maternity Pay

11. Erica & Jake have recently completed a Lifetime Mortgage to help fund their retirement; their application includes a Shared Appreciation element, what does this mean?

C. The lender has a share of Erica & Jake’s property

12. Bob and Charles are brothers and have both retired. All of Bob’s retirement income, but only part of Charles’s, is treated as earned income. This is because:

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

13. When completing a Suitability report for a client it is important to ensure the report is tailored to your client’s circumstances. Which of the following statements is incorrect in relation to writing a Suitability Report?

D. The report should explain the reason why other solutions were discounted

14. Your customer Mike has come to see you regarding managing his debts, you recommend he speak to an expert debt management organisation. You are aware several organisations offer a free face to face service. Which of the following organisations would you NOT recommend Mike speak to?

D. The Occupational Money Purchase Scheme

15. Nigella has recently completed a Capital Repayment mortgage with a local Building Society, which of the following Interest rate options would Nigella not have been offered?

D. Structured

16. Philip, 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, Nigel, when he finishes further education at the age of 22. Philip wishes to invest £10,000 per annum. It is likely that the most tax-efficient method of achieving this would be to consider?

C. Utilising his own ISA allowances and gifting the proceeds to Nigel at the age of 22.

17. Currently, maximum entitlement to the state pension is determined by:

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

18. Saving and investing are ways to make money grow. Before people save or invest it is important that they consider three other priorities before they commit to any long term savings or investment plans. Which below is NOT considered a priority in this circumstance?

B. Understand the individual’s attitude to risk

19. Mohammed calls into your office to transact some investments for his elderly mother and produces a Power of Attorney document on her behalf. What checks should you make before proceeding?

C. Exactly what powers are conferred on Mohammed

20. Who of the following individuals is deemed to have the capacity to contract?

C. Alex, a 45 year-old plumber, who is aware that stocks and shares involve a degree of risk-taking but at a level he is prepared to accept when he invests his money.

21. Customer X is in liquidation and customer Y is in administration. This confirms that:

B. Customer X and customer Y are both companies.

22. Maria entered a personal loan arrangement with a finance company 3 months before her 18th birthday. What is the legal position in respect of this arrangement?

B. Katrina can avoid all liability under the contract.

23. Bill has recently struggled financially and has been the subject of a bankruptcy order. He thinks that he can hold on to some of his assets – you tell him that he is unable to retain:

A. Family heirloom.

24. Before Fred died, he expressed his desire to family that it was his desire to leave some of his investments to his grandchildren, on a basis to be agreed in the future by his two children. What type of trust is most likely to have arranged?

D. Discretionary.

25. What type of Trust arises when there is a failure of an established Trust to fulfil its required distribution of assets?

C. Resulting Trust.

26. Janette 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?

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

27. 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.

28. Which of these is NOT an operational objective of the FCA?

A. Reviewing Complaints

29. Identifying, monitoring and taking action to remove or reduce systemic risks, with a view to protecting and enhancing the resilience of the UK financial system is a task for which organisation?

C. The Financial Policy Committee.

30. The Bank of England has two Core purposes, the first of which is to maintain Monetary Stability. What does Monetary Stability mean in this context?

C. Confidence in Sterling and Stable Prices.

31. The Competition and Markets Authority came into force on 1 April 2014, taking over many of the functions of which regulators?

C. The Competition Commission and The Office of Fair Trading.

32. In what circumstances would the Financial Services Compensation Scheme provide a compensation payment to a customer?

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

33. What is the role of the Financial Action Task Force (FATF)?

D. To set international standards against money laundering and terrorist financing.

34. The FCA’s overarching strategic objective can best be described as:

B. Ensure that the relevant markets function well

35. The PRA has three characteristics in its approach to regulation and supervision, which one of the following is NOT one of those characteristics?

B. Light touch

36. The objective of Money Helper 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.

37. Which body is responsible for making the PRA's most important micro-prudential decisions?

C. Prudential Regulation Committee.

38. The FCA has the power to prosecute several specific criminal offences relating to regulated activities, which can be dealt with through the:

C. Magistrates' courts or the Crown Court.

39. What term is used to describe the FCA’s day-to-day regulatory relationship with authorised firms?

A. Supervision

40. The FCA conducts regular inspections of large insurance firms and their associated compliance monitoring processes. When would these firms be expected to comply with suggested remedial work?

D. Within time limits

41. Setting capital buffers, variable risk weights and limiting leverage are all risk management tools available to which organisation?

D. Financial Policy Committee

42. 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?

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

43. What area would a firm’s compliance with the FCA’s Treating Customer Fairly initiative fall within, during an FCA inspection?

C. Business Operations.

44. Which role has primary responsibility for a regulated firm’s compliance with FCA rules?

A. Compliance Officer

45. Which of the following is not one of the FCA’s eight regulatory principles?

D. Consumer protection

46. A financial adviser may transact business without the prior existence of a client agreement when:

D. The business is transacted by telephone.

47. The client’s best interests rule applies to:

A. All types of clients except those transacting execution-only business.

48. A measure of financial strength is expressed as a firms’ Free Asset Ratio. If a firm’s total assets were £100m and it had ongoing liabilities of £25m, what is its FAR?

A. 75%

49. Which of the following is an act of Prudential regulation the FCA / PRA may take in agreeing to a firm's Part 4a permission?

D. Impose a higher capital requirement to ensure authorisation is appropriate.

50. HUP Insurance PLC has been threatened with de-authorisation by the FCA. This is because it has announced its intention:

B. To relocate its Head Office and Registered Office to India to reduce costs.

51. Appropriate remuneration policies must take what into consideration?

A. Risk management.

52. Which authorised firms undertaking financial advice activities in the UK are exempt from the Financial Conduct Authority’s Training and Competence Rules?

D. Non-UK-domiciled firms only.

53. The FCA’s supervision is based around which model?

D. A three-pillar model: comprising proactive firm supervision, reactive supervision and issues/products supervision.

54. If no agreement exists, who is entitled to the interest on a client money account?

A. The client

55. The Market Abuse Directive (MAD) has given which name to the offences of providing false and misleading information to the market?

C. Market manipulation

56. 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)?

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

57. By what latest point must an authorised firm satisfy itself that a new employee meets the Financial Conduct Authority’s fit and proper criteria?

B. Before the start date.

58. The Upper Tribunal is an appeal body which hears appeals against which FCA decisions?

D. All the above

59. Which of the following indirect benefits is NOT allowable under COBS rules?

B. IT hardware not linked to a software project

60. What powers does the FCA hold to challenge unfair terms in standard form consumer contracts?

C. The FCA has the power to tackle unfair terms as a qualifying body under the regulations

61. How is an ‘unfair’ term in a standard consumer contract defined?

B. One that causes a significant imbalance between the rights of the firm and the consumer, to the detriment of the consumer.

62. To assist in delivering the Financial Conduct Authority’s National Strategy for Financial Capability, the main role of Money Helper is to provide consumers with:

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

63. If the cancellation period for a home insurance policy commenced on 10th October, when will it expire?

C. 24th October.

64. Pippa, an IFA has received a letter of complaint from a client. The complaint relates to the poor attitude and service offered by an insurance company when the client telephoned to get information on her policy. What are Pippa’s obligations regarding this complaint?

B. Pippa may refer the complaint to the insurance company if she writes to the client and provides the insurance company’s contact details.

65. The Financial Ombudsman Service has investigated a complaint made by Eric. They have found Eric’s conduct during the complaint to be unreasonable and have not upheld the complaint. What costs, if any, can they charge Eric?

D. All costs incurred by the Financial Ombudsman Service during their investigation.

66. 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. If the FOS make the judgement that the respondent should meet the claim against them, the amount that is binding on the respondent is:

D. £233,000

67. Under the terms of the Financial Conduct Authority Handbook, which category of client may be referred to as a per se eligible counterparty?

B. A government of a country.

68. Your client has asked you to complete the application form on his behalf to speed things up. What should you do?

A. Make sure the client reads the form properly after completion.

69. You have just completed a sale with one of your clients. A Principles and Practice of Financial Management document was included in the paperwork presented to him. This was because it was for?

D. A with-profit regular savings policy.

70. How do the client asset rules apply to an appointed representative?

B. It is permitted to hold its clients' assets for a maximum period of 28 days, but it is not permitted to hold client money under any circumstances.

71. You have just completed a case with one of your wealthier clients. The principle of best execution applied. This is because…?

D. It involved dealing in stocks and shares.

72. 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:

B. Open-ended questions.

73. According to the generally accepted priority order of needs (PIPSI), which of the following has the highest priority?

D. Protection

74. When establishing a client’s attitude to risk, which of the following questions would be LEAST helpful to the client?

B. How would you rate your attitude to risk on a scale of 1 – 10?

75. Which of the following questions would be considered as ‘Closed’?

B. Can you do that?

76. 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.

77. What discretion does an authorised firm have, if any, when it sets out to comply with the Financial Conduct Authority’s Principles for Businesses?

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

78. In order to adhere to the Management and Control principle of the FCA’s Principles of Businesses, an authorised firm should:

B. Take care to organise its affairs, with adequate risk management systems.

79. Which of the following is NOT a positive indicator of the cultural driver of decision making?

A. TCF messages are only delivered by staff who have had relevant training.

80. Which of the following is NOT a principle for an approved person? In carrying out their controlled function, an approved person must:

C. Adhere to the formal conflicts policy

81. You discover that one of your advisers has embezzled a client’s money. What action/actions would you be expected to take?

C. Dismiss the adviser and inform the FCA

82. 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?

B. Notify the Financial Conduct Authority.

83. The Government’s national strategy on financial capability, debt and financial education is the responsibility of which organisation?

D. Money and Pensions Service.

84. Lance recently received a letter of complaint from a client. Lance read the letter, realised he had made an error and telephoned the client immediately to apologise and agree with the client how to put the error right. He confirmed their agreement in writing the same day. Lance’s actions would be considered as:

B. Compliant and ethical.

85. 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.

86. Helen has joined an authorised firm as a senior manager and overhears one of the staff members, Terry, discussing how he takes advantage of the firm’s lax accounting procedures to handle stolen cheques. He suggests that Helen may wish to become involved in the illegal activities. What action should Helen take?

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

87. 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.

88. Which of these bodies would be exempt from authorisation under the FSMA?

B. An appointed representative of a large insurance company, D. A local authority

89. Which of these would you expect to be registered as an approved person?

A. Head of compliance., B. The company actuary., D. The money laundering reporting officer.

90. The Proceeds of Crime Act 2002 covers money laundering. Which of these would be a regulated activity?

A. Money changing, B. Dealing, advising on or managing investments, C. Arranging general insurance, D. Deposit taking

91. William, 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:

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.

92. 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.

93. Keith is an independent financial adviser. While dealing with his clients he:

B. Always acts as an agent for his clients., D. May undertake pension transfer business if suitably qualified

94. During the process of applying to the FCA for authorisation to carry out a regulated activity, a firm must:

A. Wait up to twelve months for a decision from the FCA if its application was incomplete., B. Make it clear to the regulator which activities it wishes to be included in its Part 4A permission., D. Ensure that the persons running the firm are fit and proper.

95. Which of the following are not classed as pure protection policies?

A. Unemployment cover, D. Endowment

96. 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., D. complaint-handling rules in relation to the Financial Ombudsman Service only apply to limited advice transactions.

97. 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.

98. Which of these would NOT be regarded automatically as a retail client?

A. A government of a country, B. Another authorised firm, C. A central bank, D. A local authority

99. You are meeting a client for the first time. Under the status disclosure rules you must provide the client with.

A. Details of how the firm is paid, B. The complaints procedure, C. Details of the services to be provided, E. Details of ownership of the firm

100

100. Client agreements are NOT required for:

C. Life offices selling life products as a principal., D. Direct offer financial promotions.

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