CISI UK FINANCIAL REGULATION EXAM SCRIPT
2026 QUESTIONS AND FULL ANSWERS
GRADED A+
◉ What does the FCA assess in its evaluation process? Answer: The
effectiveness of actions taken to address identified harms
◉ What does the term 'fixed portfolio firms' refer to? Answer: Firms
that are subject to proactive supervision by the FCA
◉ What is the FCA's approach to dealing with problem firms?
Answer: To improve the redress process and put consumers' needs
first
◉ What are the general powers of the FCA? Answer: The FCA can
supervise, enforce, impose sanctions, and take disciplinary action. It
also prosecutes financial crimes and has rule-making authority for
operational objectives.
◉ What is the significance of the Financial Services and Markets Act
2023? Answer: It is part of various reforms allowing the UK to
diverge from EU regulations post-Brexit.
,◉ What does 'onshoring' refer to in the context of EU regulations?
Answer: It refers to drafting EU regulations into UK law while
preserving existing UK laws that implement EU obligations.
◉ What is the purpose of the FCA Handbook? Answer: The FCA
Handbook provides rules, codes, and guidance within the UK's legal
framework, enabling the FCA to enforce its rules.
◉ What are the types of provisions in the FCA handbooks? Answer:
The provisions include binding rules (R), evidential provisions (E),
guidance (G), directions (D), statements of principle (P), conduct (C),
and UK law text.
◉ What is principle-based regulation? Answer: It emphasizes high-
level principles rather than detailed prescriptive rules, allowing for
flexibility and focusing on the purpose of regulation.
◉ What are the FCA's principles for businesses? Answer: The
principles include integrity, skill and care, management and control,
financial prudence, market conduct, customers' interests,
communications with clients, conflicts of interest, customers'
relationship of trust, clients' assets, relations with regulators, and
consumer duty.
,◉ What does the Consumer Duty require from firms? Answer: Firms
must ensure good outcomes for retail customers and provide clear
understanding of products and services.
◉ What is the impact of Consumer Duty on FCA principles? Answer:
It replaces Principles 6 and 7, focusing on customer interests and
communication with clients.
◉ What are the PRA Fundamental Rules? Answer: The PRA
Fundamental Rules include integrity, skill and care, prudence,
adequate financial resources, effective risk management,
organization and control, relationship with regulators, and
resolution procedures.
◉ What does the term 'client' refer to in the FCA context? Answer: A
client can be a retail client, professional client, or eligible
counterparty.
◉ What is the role of the FCA in relation to financial promotions?
Answer: The FCA enforces rules regarding financial promotions and
can take disciplinary action for non-compliance.
◉ What is the significance of the European Union (Withdrawal) Act
2018? Answer: It governs the UK's withdrawal from the EU and the
application of EU directives and regulations in UK law.
, ◉ What is meant by 'passporting rights' in the context of UK firms?
Answer: Passporting rights allowed UK firms to operate across the
EEA without needing additional authorization, which they currently
lack post-Brexit.
◉ What is the focus of the FCA's regulatory approach? Answer: The
FCA focuses on ensuring that firms act in the best interests of their
customers and comply with regulatory standards.
◉ What is the difference between 'customers' and 'clients' according
to FCA terminology? Answer: Customers refer to retail and
professional clients, while clients can include retail clients,
professional clients, and eligible counterparties.
◉ What are the potential exemptions to the Consumer Duty?
Answer: Exemptions include non-retail activities, services directed
to professional clients, and certain commercial products.
◉ What are the challenges associated with principle-based
regulation? Answer: It can lead to inflexibility due to one-size-fits-all
rules and a box-ticking culture.
2026 QUESTIONS AND FULL ANSWERS
GRADED A+
◉ What does the FCA assess in its evaluation process? Answer: The
effectiveness of actions taken to address identified harms
◉ What does the term 'fixed portfolio firms' refer to? Answer: Firms
that are subject to proactive supervision by the FCA
◉ What is the FCA's approach to dealing with problem firms?
Answer: To improve the redress process and put consumers' needs
first
◉ What are the general powers of the FCA? Answer: The FCA can
supervise, enforce, impose sanctions, and take disciplinary action. It
also prosecutes financial crimes and has rule-making authority for
operational objectives.
◉ What is the significance of the Financial Services and Markets Act
2023? Answer: It is part of various reforms allowing the UK to
diverge from EU regulations post-Brexit.
,◉ What does 'onshoring' refer to in the context of EU regulations?
Answer: It refers to drafting EU regulations into UK law while
preserving existing UK laws that implement EU obligations.
◉ What is the purpose of the FCA Handbook? Answer: The FCA
Handbook provides rules, codes, and guidance within the UK's legal
framework, enabling the FCA to enforce its rules.
◉ What are the types of provisions in the FCA handbooks? Answer:
The provisions include binding rules (R), evidential provisions (E),
guidance (G), directions (D), statements of principle (P), conduct (C),
and UK law text.
◉ What is principle-based regulation? Answer: It emphasizes high-
level principles rather than detailed prescriptive rules, allowing for
flexibility and focusing on the purpose of regulation.
◉ What are the FCA's principles for businesses? Answer: The
principles include integrity, skill and care, management and control,
financial prudence, market conduct, customers' interests,
communications with clients, conflicts of interest, customers'
relationship of trust, clients' assets, relations with regulators, and
consumer duty.
,◉ What does the Consumer Duty require from firms? Answer: Firms
must ensure good outcomes for retail customers and provide clear
understanding of products and services.
◉ What is the impact of Consumer Duty on FCA principles? Answer:
It replaces Principles 6 and 7, focusing on customer interests and
communication with clients.
◉ What are the PRA Fundamental Rules? Answer: The PRA
Fundamental Rules include integrity, skill and care, prudence,
adequate financial resources, effective risk management,
organization and control, relationship with regulators, and
resolution procedures.
◉ What does the term 'client' refer to in the FCA context? Answer: A
client can be a retail client, professional client, or eligible
counterparty.
◉ What is the role of the FCA in relation to financial promotions?
Answer: The FCA enforces rules regarding financial promotions and
can take disciplinary action for non-compliance.
◉ What is the significance of the European Union (Withdrawal) Act
2018? Answer: It governs the UK's withdrawal from the EU and the
application of EU directives and regulations in UK law.
, ◉ What is meant by 'passporting rights' in the context of UK firms?
Answer: Passporting rights allowed UK firms to operate across the
EEA without needing additional authorization, which they currently
lack post-Brexit.
◉ What is the focus of the FCA's regulatory approach? Answer: The
FCA focuses on ensuring that firms act in the best interests of their
customers and comply with regulatory standards.
◉ What is the difference between 'customers' and 'clients' according
to FCA terminology? Answer: Customers refer to retail and
professional clients, while clients can include retail clients,
professional clients, and eligible counterparties.
◉ What are the potential exemptions to the Consumer Duty?
Answer: Exemptions include non-retail activities, services directed
to professional clients, and certain commercial products.
◉ What are the challenges associated with principle-based
regulation? Answer: It can lead to inflexibility due to one-size-fits-all
rules and a box-ticking culture.
