CISI: UK Regulation & Professional
Integrity Exam Questions and Answers
What is the punishment of breaching the general prohibition? - Answer- 2 years
and/or unlimited fine
Who is the Regulatory Decisions Committee? - Answer- Rather than allowing the
FCA's enforcement team to make the decisions which are implemented in the
statutory notices, these decisions are made by a relatively independent committee
Who sets UK interest rates? - Answer- The MPC
Who sets monetary policy in the UK? - Answer- The Monetary Policy Committee of
the BoE
What is Narrow money - Answer- used to describe the total sum of all financial
assets which are liquid and available
What is Broad money - Answer- describes the total sum of a wide range of assets,
including money in savings account which was not instant access
Who is in charge of keeping inflation within a certain range? - Answer- The BoE
Three measures of economic activity are - Answer- National income
Gross national product
Gross domestic product
What is fiscal policy? - Answer- Government policy on taxation, public borrowing and
public spending
What is a debtors petition? - Answer- Voluntary bankruptcy to put debts behind you
What is the role of The Federal Reserve? - Answer- Holds cash reserves of
depository institutions and makes loans to them
What does the The Office of Comptroller of the Currency (OCC) do? - Answer-
Regulates and supervises the national banks of the US
The Financial Industry Regulatory authority (FINRA) do? - Answer- Largest
independent regulator for all securities firms doing business in US
What is the aim of COBS - Answer- Aim to move the regulatory approach towards a
better focus on outcomes rather than prescriptive rules
How long must firms hold records of term agreements? - Answer- Whichever is
longer:
For five years
,The duration of the relationship with the client
For pension records, indefinitely
When is dealing as principal not a regulated activity? - Answer- Market maker acting
in the normal course of business
In applying the SM&CR to FCA solo-regulated firms, what are the three categories of
firms? - Answer- Limited, Core, Enhanced
What are the 6 core activities under MiFID? - Answer- 1. Receipt and transmission of
orders
2. Execution of orders
3. Investment advice
4. Managing investments
5. Underwriting and placing
6. Operating an MTF
Who are the main organisations that are exempt in respect of any regulated activity
other than insurance business - Answer- the Bank of England
the central bank of an EEA state
the European Central Bank (ECB)
the European Investment Bank (EIB)
the International Bank for Reconstruction and Development (IBRD)
the International Monetary Fund (IMF)
the European Bank for Reconstruction and Development (EBRD).
Which persons are exempted from the General Prohibition - Answer- members of
Lloyd's insurance market and certain designated professional bodies (DPBs)
Under SM&CR, the PRA requires banks to have what roles filled? - Answer- A CEO,
CFO, Chairperson and a head of key business area and group entity senior manager
What are the significant harm functions? (7) - Answer- 1. CASS oversight
2. Benchmark submission and administration
3. Proprietary trader
4. Significant management
5. Functions requiring qualifications
6. Managers of certification employees
7. Material risk-takers.
How does the Certification regime impact overseas employees of UK firms? -
Answer- 1. affects any individuals who are deemed to be 'material risk takers', no
matter where they are located.
2. affects where an individual overseas is dealing with, has contact with, UK clients.
Who does the Conduct rules apply to? - Answer- For FCA: All UK staff, except
ancillary roles
For PRA: to senior managers and individuals who fall within the PRA Certification
Regime (aka material risk takers)
, What are the First Tier - Individual Conduct Rules and which regulator do they
apply? - Answer- FCA and PRA:
Rule 1: You must act with integrity.
Rule 2: You must act with due skill, care and diligence.
Rule 3: You must be open with the regulators.
What are the Additional Conduct rules - and which regulator do they apply? -
Answer- FCA only:
Rule 4: You must pay due regard to the interests of customers and treat them fairly.
Rule 5: You must observe proper standards of market conduct.
What are the senior manager conduct rules and which regulator do they apply? -
Answer- Both PRA and FCA:
SM1: business is controlled effectively.
SM2: comply with relevant requirements and standards of the regulatory system.
SM3: any delegation of your responsibilities is managed effectively.
SM4: You must disclose information to the FCA or the PRA.
What is the key aim of the Disclosures and Transparency rules? - Answer- To
promote prompt and fair disclosure of relevant info to the market
What are the 3 FCA operational objectives? - Answer- 1. Secure protection for
customers
2. Protect and enhance integrity of financial system
3. Promote effective competition
What best describes the govs role in setting fiscal policy? - Answer- They adjust
taxes and government spending
What are the 5 threshold conditions? - Answer- 1. Location of offices
2. Effective supervision
3. Appropriate resources
4. Suitability
5. Business model
What is monetary policy? - Answer- Measures the influence of the cost of borrowing
or the money supply
What does the capital account measure? - Answer- Flows in capital investment and
foreign currency
What is an interest in possession trust and its key feature? - Answer- The right to
receive an income from the trust fund and the recipient of the trust income is different
from the eventual beneficiary of the underlying assets
A client can only be classed as an ECP for what 3 types of business? - Answer- 1.
Executing orders
2. Dealing on own account
3. Transmitting orders
Integrity Exam Questions and Answers
What is the punishment of breaching the general prohibition? - Answer- 2 years
and/or unlimited fine
Who is the Regulatory Decisions Committee? - Answer- Rather than allowing the
FCA's enforcement team to make the decisions which are implemented in the
statutory notices, these decisions are made by a relatively independent committee
Who sets UK interest rates? - Answer- The MPC
Who sets monetary policy in the UK? - Answer- The Monetary Policy Committee of
the BoE
What is Narrow money - Answer- used to describe the total sum of all financial
assets which are liquid and available
What is Broad money - Answer- describes the total sum of a wide range of assets,
including money in savings account which was not instant access
Who is in charge of keeping inflation within a certain range? - Answer- The BoE
Three measures of economic activity are - Answer- National income
Gross national product
Gross domestic product
What is fiscal policy? - Answer- Government policy on taxation, public borrowing and
public spending
What is a debtors petition? - Answer- Voluntary bankruptcy to put debts behind you
What is the role of The Federal Reserve? - Answer- Holds cash reserves of
depository institutions and makes loans to them
What does the The Office of Comptroller of the Currency (OCC) do? - Answer-
Regulates and supervises the national banks of the US
The Financial Industry Regulatory authority (FINRA) do? - Answer- Largest
independent regulator for all securities firms doing business in US
What is the aim of COBS - Answer- Aim to move the regulatory approach towards a
better focus on outcomes rather than prescriptive rules
How long must firms hold records of term agreements? - Answer- Whichever is
longer:
For five years
,The duration of the relationship with the client
For pension records, indefinitely
When is dealing as principal not a regulated activity? - Answer- Market maker acting
in the normal course of business
In applying the SM&CR to FCA solo-regulated firms, what are the three categories of
firms? - Answer- Limited, Core, Enhanced
What are the 6 core activities under MiFID? - Answer- 1. Receipt and transmission of
orders
2. Execution of orders
3. Investment advice
4. Managing investments
5. Underwriting and placing
6. Operating an MTF
Who are the main organisations that are exempt in respect of any regulated activity
other than insurance business - Answer- the Bank of England
the central bank of an EEA state
the European Central Bank (ECB)
the European Investment Bank (EIB)
the International Bank for Reconstruction and Development (IBRD)
the International Monetary Fund (IMF)
the European Bank for Reconstruction and Development (EBRD).
Which persons are exempted from the General Prohibition - Answer- members of
Lloyd's insurance market and certain designated professional bodies (DPBs)
Under SM&CR, the PRA requires banks to have what roles filled? - Answer- A CEO,
CFO, Chairperson and a head of key business area and group entity senior manager
What are the significant harm functions? (7) - Answer- 1. CASS oversight
2. Benchmark submission and administration
3. Proprietary trader
4. Significant management
5. Functions requiring qualifications
6. Managers of certification employees
7. Material risk-takers.
How does the Certification regime impact overseas employees of UK firms? -
Answer- 1. affects any individuals who are deemed to be 'material risk takers', no
matter where they are located.
2. affects where an individual overseas is dealing with, has contact with, UK clients.
Who does the Conduct rules apply to? - Answer- For FCA: All UK staff, except
ancillary roles
For PRA: to senior managers and individuals who fall within the PRA Certification
Regime (aka material risk takers)
, What are the First Tier - Individual Conduct Rules and which regulator do they
apply? - Answer- FCA and PRA:
Rule 1: You must act with integrity.
Rule 2: You must act with due skill, care and diligence.
Rule 3: You must be open with the regulators.
What are the Additional Conduct rules - and which regulator do they apply? -
Answer- FCA only:
Rule 4: You must pay due regard to the interests of customers and treat them fairly.
Rule 5: You must observe proper standards of market conduct.
What are the senior manager conduct rules and which regulator do they apply? -
Answer- Both PRA and FCA:
SM1: business is controlled effectively.
SM2: comply with relevant requirements and standards of the regulatory system.
SM3: any delegation of your responsibilities is managed effectively.
SM4: You must disclose information to the FCA or the PRA.
What is the key aim of the Disclosures and Transparency rules? - Answer- To
promote prompt and fair disclosure of relevant info to the market
What are the 3 FCA operational objectives? - Answer- 1. Secure protection for
customers
2. Protect and enhance integrity of financial system
3. Promote effective competition
What best describes the govs role in setting fiscal policy? - Answer- They adjust
taxes and government spending
What are the 5 threshold conditions? - Answer- 1. Location of offices
2. Effective supervision
3. Appropriate resources
4. Suitability
5. Business model
What is monetary policy? - Answer- Measures the influence of the cost of borrowing
or the money supply
What does the capital account measure? - Answer- Flows in capital investment and
foreign currency
What is an interest in possession trust and its key feature? - Answer- The right to
receive an income from the trust fund and the recipient of the trust income is different
from the eventual beneficiary of the underlying assets
A client can only be classed as an ECP for what 3 types of business? - Answer- 1.
Executing orders
2. Dealing on own account
3. Transmitting orders
