CISI Unit 1 - UK Regulation Exam Questions with Correct Answers

CISI Unit 1 - UK Regulation Exam Questions with Correct Answers Who does the FCA report too? - Answer-HMT Who does the PRA report too? - Answer-The BOE Who did the PRA and FCA replace? - Answer-The FSA, as of the FSA2012 FCA's Strategic Objective - Answer-Make sure relevant markets function well FCA's Operational Objectives - Answer-Appropriate protection, integrity of financial system, effective competition PRA Objectives - Answer-Promote safety and soundness of financial system, avoid instability, minimize adverse effect of failure, secure an appropriate degree of protection for policy holders 4 Tools of supervision - Answer-Diagnostic, monitoring, preventative, remedial 6 Outcomes of Fair Treatment - Answer-Fair treatment, need of identified customers, clear information, suitable advice, perform as expected, no unreasonable post-sale carries Principles for Business - Answer-I See Many Fair Maiden's at the 5C's Regatta -Integrity -skill/care/diligence -management and control -financial prudence -market conduct -5C's (customers' interests, communication with clients, conflicts of interest, customers' relationship of trust, client assets) -relationships with regulators The Competition & Markets Authority - Answer-Investigate and block takeovers or mergers Information Commissioner's Office - Answer-All about data and data privacy Pensions Regulator - Answer-Protect member's of work based pension schemes BoE - Answer-Statutory objective = protect and enhance the stability of financial systems FPC (Financial Policy Committee) - Answer-Meets 4 times a year (quarterly) and produces biannual (twice a year) report The General Prohibition (S19) - Answer-"no person may carry on a regulated activity in the UK unless he is an authorized person" 2 years jail & max fine for breaking Specified investments - Answer-any shares, debt (GILTS), CIS, derivatives, pensions, regulated mortgages, repos, benchmarks Specified activities - Answer-dealing, arranging, managing, advising, operating a MLTF or OTF Excluded investments - Answer-Property, tangible assets (oil, metal, antiques), currencies, premium bonds, national savings certificates Appeals - Answer-Within 28 days to Upper Tribunal to decision or supervisory notices Special Defenses - Answer--Market maker acting in good faith -Price stabilization rules -Market information General Defenses - Answer--Didn't expect to profit -Thought information was already public -I would've done this regardless -Did not think they'd act when giving out information MiFID - Answer--Create a common market with harmonized rules -Passporting Bribery Act of 2010 - Answer--Individual = 10 yrs in jail and unlimited fine -Company = unlimited fine Large undertaking (professional client) - Answer--Balance Sheet = 20 mln -Net turnover = 40 mln -Own funds = 2 mln Elective prof. clients (retail client that can choose to be treated as professional) - Answer-Quant. and Qual. Tests MUST MEET 2 of 3 -10 trades per quarter -Portfolio of 500,000 or more -Worked in finance for 1 year Past Performance - Answer--Must not be the prominent feature -Cover at least 5 years -Must be clearly shown -State is NOT an indicator of future performance -Disclose fee