CISI UK Regulation and Professional Integrity
Multiple Choice Questions
1. Which of the following does NOT form part of the main purpose
of the SYSC requirements?
A) Encouraging directors and senior managers to take responsibility for
areas of the firm likely to be of interest to the FCA
B) Ensuring firms organise and control their affairs responsibly and
effectively with adequate risk management systems
C) Assigning responsibility for effective organisation to specific senior
individuals
D) Ensuring directors and senior managers are able to monitor
transactions specifically from an anti-money laundering perspective
Answer: D
2. Under SYSC, what is a firm required to do in relation to
conflicts of interest?
A) Have its conflicts policy agreed and signed by each retail client
B) Implement effective organisational and administrative arrangements to
prevent conflicts harming the firm
C) Remove information barriers that restrict internal communication
D) Disclose conflicts to clients before trading where they cannot be
effectively managed
Answer: B
3. Which of the following is NOT one of the principles of Treating
Customers Fairly?
A) Consumers can be confident trades are executed at the best possible
price
B) Consumers do not face unreasonable post-sale barriers
C) Products perform as firms have led customers to expect
D) Consumers should receive suitable advice
Answer: A
4. Market abuse involving manipulating devices would most likely
apply to which instrument?
A) Life insurance policies
B) Units in a unit trust
C) Shares in an OEIC
D) Shares in an investment trust
Answer: C
5. An adviser recommends shares based on non-public takeover
information received socially. What is the correct ethical
assessment?
A) No breach as information was obtained outside work
B) No breach as clients benefited
C) Breach because she encouraged dealing on inside information
1
,CISI UK Regulation and Professional Integrity
D) No breach because it concerned a takeover
Answer: C
6. In a distance sale of a cash deposit ISA without advice, which
statement is FALSE?
A) A minimum 14-day reflection period must be provided
B) The client has the right to cancel
C) The maximum reflection period is 30 days
D) A post-sale notice detailing cancellation rights must be sent
Answer: C
7. Which of the following best reflects the risk-based approach to
anti-money laundering under JMLSG guidance?
A) Risk mitigation need not be assigned to specific individuals
B) Firms may remove identification checks if unnecessary
C) Firms must take appropriate steps to verify identity and business
D) Staff may prioritise suspicious reports based on importance
Answer: C
8. A firm wants to lend out client assets under an outdated
agreement. What should it do?
A) Proceed as originally agreed
B) Replace the stock after lending
C) Confirm verbally with the client
D) Issue a new legally binding agreement clearly setting out the terms
Answer: D
9. Under insider dealing legislation, which statement is correct?
Rita, a research analyst, knowingly passes inside information to
her brother and encourages him to deal. Iris, the owner of a fast
food restaurant, looks after criminal property until it appears
legitimate. William, an asset manager, deals on investment
research produced specifically for the firm's clients.
A) Only two individuals could receive unlimited fines
B) Two individuals could face ten years’ imprisonment
C) Only one individual is guilty of insider dealing (Rita)
D) One individual cannot be charged with financial crime
Answer: C
10. Which of the following statements about FCA guidance is
FALSE?
A) It expands on rules
B) It is binding on firms
C) It allows clarification of regulatory expectations
D) It is marked in the Handbook with the letter “G”
Answer: B
11. Which activity is ALWAYS a specified activity under FSMA
2000?
2
,CISI UK Regulation and Professional Integrity
A) Acting as a currency dealer
B) Giving incidental investment advice
C) Operating a stakeholder pension scheme
D) Acting as trustee of a trust
Answer: D
12. Which statement correctly reflects a PRA responsibility?
A) Ensuring firms always maintain market integrity
B) Requiring firms to demonstrate effective resolution planning
C) Supervising AML reporting
D) Preventing any PRA-regulated firm from failing
Answer: B
13. Which is NOT a usual aim of government economic policy?
A) Sustainable growth
B) Control of inflation
C) Full employment
D) Keeping interest rates low
Answer: D
14. Which best describes the ethical approach to corporate
culture?
A) Strictly rules-driven
B) Compliance-only mindset
C) Principles-driven approach
D) Fear-based control environment
Answer: C
15. A risk-free profit from price differences in dual-listed shares is
known as:
A) Speculation
B) Hedging
C) Arbitrage
D) Arbitration
Answer: C
16. What is churning?
A) Trading derivatives
B) Recommending unsuitable packaged products
C) Trading before publishing research
D) Excessive trading in securities
Answer: D
17. Which body recognises Recognised Investment Exchanges?
A) BEIS
B) HM Treasury
C) The Home Office
D) The Financial Conduct Authority
Answer: D
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, CISI UK Regulation and Professional Integrity
18. Which is NOT part of the FCA’s Enforcement Guide?
A) Assess seriousness of breach
B) Explain regulatory context
C) Ensure firms always follow all guidance
D) Consider retrospective standards
Answer: C
19. Under the Data Protection Act 2018, a registering firm is
known as:
A) Data controller
B) Data manager
C) Data administrator
D) Data inputter
Answer: A
20. If a firm collapses, which body provides compensation to
depositors?
A) FOS
B) FCA
C) PRA
D) FSCS
Answer: D
21. Which stage of the financial lifecycle sees lowest disposable
income?
A) Single young adult
B) Young couple without children
C) Empty-nesters
D) Parents with dependent children
Answer: D
22. Under the Terrorism Act 2000, which statement is FALSE?
A) Terrorism includes interference with electronic systems
B) Terrorist activity is always financed through laundered money
C) Failure to report terrorist financing carries criminal penalty
D) HM Treasury has enhanced direction powers
Answer: B
23. Which of the following is NOT a safe harbour defence against
market abuse?
A) Compliance with FCA remuneration code
B) Company share buy-back rules
C) Takeover Code compliance
D) Stabilisation rules
Answer: A
24. Money laundering relates to:
A) Criminal cash only
B) Criminal cash and assets
4
Multiple Choice Questions
1. Which of the following does NOT form part of the main purpose
of the SYSC requirements?
A) Encouraging directors and senior managers to take responsibility for
areas of the firm likely to be of interest to the FCA
B) Ensuring firms organise and control their affairs responsibly and
effectively with adequate risk management systems
C) Assigning responsibility for effective organisation to specific senior
individuals
D) Ensuring directors and senior managers are able to monitor
transactions specifically from an anti-money laundering perspective
Answer: D
2. Under SYSC, what is a firm required to do in relation to
conflicts of interest?
A) Have its conflicts policy agreed and signed by each retail client
B) Implement effective organisational and administrative arrangements to
prevent conflicts harming the firm
C) Remove information barriers that restrict internal communication
D) Disclose conflicts to clients before trading where they cannot be
effectively managed
Answer: B
3. Which of the following is NOT one of the principles of Treating
Customers Fairly?
A) Consumers can be confident trades are executed at the best possible
price
B) Consumers do not face unreasonable post-sale barriers
C) Products perform as firms have led customers to expect
D) Consumers should receive suitable advice
Answer: A
4. Market abuse involving manipulating devices would most likely
apply to which instrument?
A) Life insurance policies
B) Units in a unit trust
C) Shares in an OEIC
D) Shares in an investment trust
Answer: C
5. An adviser recommends shares based on non-public takeover
information received socially. What is the correct ethical
assessment?
A) No breach as information was obtained outside work
B) No breach as clients benefited
C) Breach because she encouraged dealing on inside information
1
,CISI UK Regulation and Professional Integrity
D) No breach because it concerned a takeover
Answer: C
6. In a distance sale of a cash deposit ISA without advice, which
statement is FALSE?
A) A minimum 14-day reflection period must be provided
B) The client has the right to cancel
C) The maximum reflection period is 30 days
D) A post-sale notice detailing cancellation rights must be sent
Answer: C
7. Which of the following best reflects the risk-based approach to
anti-money laundering under JMLSG guidance?
A) Risk mitigation need not be assigned to specific individuals
B) Firms may remove identification checks if unnecessary
C) Firms must take appropriate steps to verify identity and business
D) Staff may prioritise suspicious reports based on importance
Answer: C
8. A firm wants to lend out client assets under an outdated
agreement. What should it do?
A) Proceed as originally agreed
B) Replace the stock after lending
C) Confirm verbally with the client
D) Issue a new legally binding agreement clearly setting out the terms
Answer: D
9. Under insider dealing legislation, which statement is correct?
Rita, a research analyst, knowingly passes inside information to
her brother and encourages him to deal. Iris, the owner of a fast
food restaurant, looks after criminal property until it appears
legitimate. William, an asset manager, deals on investment
research produced specifically for the firm's clients.
A) Only two individuals could receive unlimited fines
B) Two individuals could face ten years’ imprisonment
C) Only one individual is guilty of insider dealing (Rita)
D) One individual cannot be charged with financial crime
Answer: C
10. Which of the following statements about FCA guidance is
FALSE?
A) It expands on rules
B) It is binding on firms
C) It allows clarification of regulatory expectations
D) It is marked in the Handbook with the letter “G”
Answer: B
11. Which activity is ALWAYS a specified activity under FSMA
2000?
2
,CISI UK Regulation and Professional Integrity
A) Acting as a currency dealer
B) Giving incidental investment advice
C) Operating a stakeholder pension scheme
D) Acting as trustee of a trust
Answer: D
12. Which statement correctly reflects a PRA responsibility?
A) Ensuring firms always maintain market integrity
B) Requiring firms to demonstrate effective resolution planning
C) Supervising AML reporting
D) Preventing any PRA-regulated firm from failing
Answer: B
13. Which is NOT a usual aim of government economic policy?
A) Sustainable growth
B) Control of inflation
C) Full employment
D) Keeping interest rates low
Answer: D
14. Which best describes the ethical approach to corporate
culture?
A) Strictly rules-driven
B) Compliance-only mindset
C) Principles-driven approach
D) Fear-based control environment
Answer: C
15. A risk-free profit from price differences in dual-listed shares is
known as:
A) Speculation
B) Hedging
C) Arbitrage
D) Arbitration
Answer: C
16. What is churning?
A) Trading derivatives
B) Recommending unsuitable packaged products
C) Trading before publishing research
D) Excessive trading in securities
Answer: D
17. Which body recognises Recognised Investment Exchanges?
A) BEIS
B) HM Treasury
C) The Home Office
D) The Financial Conduct Authority
Answer: D
3
, CISI UK Regulation and Professional Integrity
18. Which is NOT part of the FCA’s Enforcement Guide?
A) Assess seriousness of breach
B) Explain regulatory context
C) Ensure firms always follow all guidance
D) Consider retrospective standards
Answer: C
19. Under the Data Protection Act 2018, a registering firm is
known as:
A) Data controller
B) Data manager
C) Data administrator
D) Data inputter
Answer: A
20. If a firm collapses, which body provides compensation to
depositors?
A) FOS
B) FCA
C) PRA
D) FSCS
Answer: D
21. Which stage of the financial lifecycle sees lowest disposable
income?
A) Single young adult
B) Young couple without children
C) Empty-nesters
D) Parents with dependent children
Answer: D
22. Under the Terrorism Act 2000, which statement is FALSE?
A) Terrorism includes interference with electronic systems
B) Terrorist activity is always financed through laundered money
C) Failure to report terrorist financing carries criminal penalty
D) HM Treasury has enhanced direction powers
Answer: B
23. Which of the following is NOT a safe harbour defence against
market abuse?
A) Compliance with FCA remuneration code
B) Company share buy-back rules
C) Takeover Code compliance
D) Stabilisation rules
Answer: A
24. Money laundering relates to:
A) Criminal cash only
B) Criminal cash and assets
4
