FCA Financial Regulation Exam Questions
With Correct Answers
In |which |of |the |following |ways |do |the |powers |of |the |FCA |and |PRA |differ? |- |CORRECT |ANSWER✔✔-
Only |the |FCA |can |make |rules |that |are |legally |binding |on |firms |authorised |by |itself |and |those |
authorised |by |the |PRA.
A |firm |makes |a |personal |recommendation |in |connection |with |a |life |policy, |where |this |cover |is |
required |immediately. |When |must |a |suitability |report |be |provided? |- |CORRECT |ANSWER✔✔-
Immediately |after |the |contract |is |concluded.
A |firm |must |provide |a |client |agreement |prior |to |conducting |MiFID |business |for |which |types |of |client?
|- |CORRECT |ANSWER✔✔-Professional |clients |and |retail |clients |only.
If |Firm |X |communicates |a |financial |promotion |for |non-MiFID |business |which |was |produced |and |
approved |by |Firm |Y, |under |the |financial |promotion |rules: |- |CORRECT |ANSWER✔✔-Firm |X |must |check |
the |promotion |has |not |been |withdrawn |by |Firm |Y.
What |does |MiFID |stand |for? |- |CORRECT |ANSWER✔✔-Markets |in |Financial |Instruments |Directive |- |an |
EU |directive |which |amongst |other |things |allows |firms |authorised |in |one |member |state |to
|provide/offer |financial |services |to |customers |in |another |member |states, |subject |to |some |restrictions.
For |what |MINIMUM |period |must |firms |retain |copies |of |periodic |statements |to |clients |relating |to |non-
Markets |in |Financial |Instruments |Directive |(MiFID) |business? |- |CORRECT |ANSWER✔✔-3 |years.
An |employee |of |a |regulated |business |received |information |that |made |him |suspicious |that |a |breach |of
|the |Proceeds |of |Crime |Act |had |occurred. |Why |may |he |have |been |not |guilty |under |the |"failure |to |
disclose" |conditions? |- |CORRECT |ANSWER✔✔-The |information |was |disclosed |at |a |friend's |birthday |
party.
The |FCA's |regulatory |approach |is |best |described |as: |- |CORRECT |ANSWER✔✔-Outcomes |Focused.
,Firm |X |wishes |to |disclose |sensitive |confidential |information |to |Firm |Y |as |part |of |a |market |sounding. |In
|accordance |with |its |regulatory |obligations, |Firm |X |must: |- |CORRECT |ANSWER✔✔-Obtain |prior |
agreement |from |Firm |Y |to |accept |this |inside |information.
Which |of |the |following |is |one |of |the |six |consumer |outcomes |under |the |Fair |treatment |of |Consumers |
(FTOC) |initiative? |- |CORRECT |ANSWER✔✔-Where |consumers |receive |advice, |the |advice |is |suitable |and
|takes |account |of |their |circumstances.
A |firm |received |an |order |from |Client |X |two |hours |before |it |received |an |order |from |Client |Y. |The |firm |
was |permitted |under |the |regulations |to |execute |Client |Y's |order |first |because: |- |CORRECT |
ANSWER✔✔-To |do |so |was |in |the |interests |of |Clients |X |and |Y.
Which |one |of |the |following |measures |is |most |likely |to |be |used |by |the |FCA |where |a |firm |no |longer |
meets |its |threshold |conditions? |- |CORRECT |ANSWER✔✔-Variation |of |Part |4A |permission.
What |is |the |name |given |to |the |approval |granted |by |the |FCA |for |a |firm |to |undertake |specific |regulated
|activities? |- |CORRECT |ANSWER✔✔-Part |4A |permission.
Which |one |of |the |following |statutory |notices |gives |the |recipient |the |right |to |make |representations |to |
the |FCA |- |CORRECT |ANSWER✔✔-Warning |notice.
The |FCA |handbook |rules |state |that |external |reconciliations |of |client |money |must |take |place |at |what |
minimum |frequency? |- |CORRECT |ANSWER✔✔-Monthly.
Under |the |Financial |Services |Act |2012, |who |may |make |a |super-complaint? |- |CORRECT |ANSWER✔✔-
Certain |consumer |bodies.
If |a |policyholder |complains |to |the |Financial |Ombudsman |Service |about |an |omission |by |a |firm |which |
took |place |in |November, |and |was |referred |to |the |FOS |on |30 |April |2023, |what |is |the |Maximum |
compensation |the |FOS |can |award? |- |CORRECT |ANSWER✔✔-£415,000
Where |firms |provide |product |information |to |accepting |deposits, |this |activity |is: |- |CORRECT |
ANSWER✔✔-Covered |by |the |Conduct |of |Business |Sourcebook |rules.
, Cancellation |records |relating |to |life |policies |must |be |retained |for |what, |if |any, |minimum |period |of |
time? |- |CORRECT |ANSWER✔✔-Five |years.
Although |a |trade |carried |out |on |a |regulated |venue |fell |within |the |definition |of |a |reportable |
transaction, |the |failure |of |a |counterparty |to |undertake |a |transaction |report |was |deemed |compliant |
with |the |rules. |This |was |because: |- |CORRECT |ANSWER✔✔-The |counter-party |was |non-financial.
What |measures |would |the |FCA |consider |using |as |disciplinary |action? |- |CORRECT |ANSWER✔✔-1) |
public |statements |of |misconduct |2) |public |censures |and |3) |financial |penalties.
An |authorised |firm |is |providing |execution-only |services |to |real |clients |in |relation |to |warrants. |
However, |the |firm |has |doubts |as |to |the |appropriateness |of |the |deal |for |a |particular |client. |Which |of |
the |following |best |describes |how |the |firm |should |proceed? |- |CORRECT |ANSWER✔✔-The |firm |must |
warn |the |client |before |proceeding.
SYSC |5 |requires |firms |to |employ |personnel |with |the |relevant |skills, |knowledge |and: |- |CORRECT |
ANSWER✔✔-Expertise.
If |a |firm |has |allowed |a |specified |function |to |be |carried |out |without |prior |approval, |what |redress |does
|a |private |person |have |under |Section |71 |of |FSMA? |- |CORRECT |ANSWER✔✔-They |can |sue |the |firm |for |
damages |if |they |suffer |loss.
What |type |of |communications |are |telephone |cold |calls |classified |as? |- |CORRECT |ANSWER✔✔-
Unsolicited |real-time.
Following |a |retirement |review, |a |firm |intends |to |recommend |to |a |retail |client |that |they |make |income |
withdrawals |from |a |personal |pension |plan. |Under |the |regulations, |the |firm |must: |- |CORRECT |
ANSWER✔✔-Issue |a |suitability |report.
Prior |to |providing |services |to |professional |clients, |firms |carrying |on |MiFID |business |must |normally |
provide |them |with |information |on |the |firm's |policy |relating |to: |- |CORRECT |ANSWER✔✔-Conflicts |of |
Interest.
With Correct Answers
In |which |of |the |following |ways |do |the |powers |of |the |FCA |and |PRA |differ? |- |CORRECT |ANSWER✔✔-
Only |the |FCA |can |make |rules |that |are |legally |binding |on |firms |authorised |by |itself |and |those |
authorised |by |the |PRA.
A |firm |makes |a |personal |recommendation |in |connection |with |a |life |policy, |where |this |cover |is |
required |immediately. |When |must |a |suitability |report |be |provided? |- |CORRECT |ANSWER✔✔-
Immediately |after |the |contract |is |concluded.
A |firm |must |provide |a |client |agreement |prior |to |conducting |MiFID |business |for |which |types |of |client?
|- |CORRECT |ANSWER✔✔-Professional |clients |and |retail |clients |only.
If |Firm |X |communicates |a |financial |promotion |for |non-MiFID |business |which |was |produced |and |
approved |by |Firm |Y, |under |the |financial |promotion |rules: |- |CORRECT |ANSWER✔✔-Firm |X |must |check |
the |promotion |has |not |been |withdrawn |by |Firm |Y.
What |does |MiFID |stand |for? |- |CORRECT |ANSWER✔✔-Markets |in |Financial |Instruments |Directive |- |an |
EU |directive |which |amongst |other |things |allows |firms |authorised |in |one |member |state |to
|provide/offer |financial |services |to |customers |in |another |member |states, |subject |to |some |restrictions.
For |what |MINIMUM |period |must |firms |retain |copies |of |periodic |statements |to |clients |relating |to |non-
Markets |in |Financial |Instruments |Directive |(MiFID) |business? |- |CORRECT |ANSWER✔✔-3 |years.
An |employee |of |a |regulated |business |received |information |that |made |him |suspicious |that |a |breach |of
|the |Proceeds |of |Crime |Act |had |occurred. |Why |may |he |have |been |not |guilty |under |the |"failure |to |
disclose" |conditions? |- |CORRECT |ANSWER✔✔-The |information |was |disclosed |at |a |friend's |birthday |
party.
The |FCA's |regulatory |approach |is |best |described |as: |- |CORRECT |ANSWER✔✔-Outcomes |Focused.
,Firm |X |wishes |to |disclose |sensitive |confidential |information |to |Firm |Y |as |part |of |a |market |sounding. |In
|accordance |with |its |regulatory |obligations, |Firm |X |must: |- |CORRECT |ANSWER✔✔-Obtain |prior |
agreement |from |Firm |Y |to |accept |this |inside |information.
Which |of |the |following |is |one |of |the |six |consumer |outcomes |under |the |Fair |treatment |of |Consumers |
(FTOC) |initiative? |- |CORRECT |ANSWER✔✔-Where |consumers |receive |advice, |the |advice |is |suitable |and
|takes |account |of |their |circumstances.
A |firm |received |an |order |from |Client |X |two |hours |before |it |received |an |order |from |Client |Y. |The |firm |
was |permitted |under |the |regulations |to |execute |Client |Y's |order |first |because: |- |CORRECT |
ANSWER✔✔-To |do |so |was |in |the |interests |of |Clients |X |and |Y.
Which |one |of |the |following |measures |is |most |likely |to |be |used |by |the |FCA |where |a |firm |no |longer |
meets |its |threshold |conditions? |- |CORRECT |ANSWER✔✔-Variation |of |Part |4A |permission.
What |is |the |name |given |to |the |approval |granted |by |the |FCA |for |a |firm |to |undertake |specific |regulated
|activities? |- |CORRECT |ANSWER✔✔-Part |4A |permission.
Which |one |of |the |following |statutory |notices |gives |the |recipient |the |right |to |make |representations |to |
the |FCA |- |CORRECT |ANSWER✔✔-Warning |notice.
The |FCA |handbook |rules |state |that |external |reconciliations |of |client |money |must |take |place |at |what |
minimum |frequency? |- |CORRECT |ANSWER✔✔-Monthly.
Under |the |Financial |Services |Act |2012, |who |may |make |a |super-complaint? |- |CORRECT |ANSWER✔✔-
Certain |consumer |bodies.
If |a |policyholder |complains |to |the |Financial |Ombudsman |Service |about |an |omission |by |a |firm |which |
took |place |in |November, |and |was |referred |to |the |FOS |on |30 |April |2023, |what |is |the |Maximum |
compensation |the |FOS |can |award? |- |CORRECT |ANSWER✔✔-£415,000
Where |firms |provide |product |information |to |accepting |deposits, |this |activity |is: |- |CORRECT |
ANSWER✔✔-Covered |by |the |Conduct |of |Business |Sourcebook |rules.
, Cancellation |records |relating |to |life |policies |must |be |retained |for |what, |if |any, |minimum |period |of |
time? |- |CORRECT |ANSWER✔✔-Five |years.
Although |a |trade |carried |out |on |a |regulated |venue |fell |within |the |definition |of |a |reportable |
transaction, |the |failure |of |a |counterparty |to |undertake |a |transaction |report |was |deemed |compliant |
with |the |rules. |This |was |because: |- |CORRECT |ANSWER✔✔-The |counter-party |was |non-financial.
What |measures |would |the |FCA |consider |using |as |disciplinary |action? |- |CORRECT |ANSWER✔✔-1) |
public |statements |of |misconduct |2) |public |censures |and |3) |financial |penalties.
An |authorised |firm |is |providing |execution-only |services |to |real |clients |in |relation |to |warrants. |
However, |the |firm |has |doubts |as |to |the |appropriateness |of |the |deal |for |a |particular |client. |Which |of |
the |following |best |describes |how |the |firm |should |proceed? |- |CORRECT |ANSWER✔✔-The |firm |must |
warn |the |client |before |proceeding.
SYSC |5 |requires |firms |to |employ |personnel |with |the |relevant |skills, |knowledge |and: |- |CORRECT |
ANSWER✔✔-Expertise.
If |a |firm |has |allowed |a |specified |function |to |be |carried |out |without |prior |approval, |what |redress |does
|a |private |person |have |under |Section |71 |of |FSMA? |- |CORRECT |ANSWER✔✔-They |can |sue |the |firm |for |
damages |if |they |suffer |loss.
What |type |of |communications |are |telephone |cold |calls |classified |as? |- |CORRECT |ANSWER✔✔-
Unsolicited |real-time.
Following |a |retirement |review, |a |firm |intends |to |recommend |to |a |retail |client |that |they |make |income |
withdrawals |from |a |personal |pension |plan. |Under |the |regulations, |the |firm |must: |- |CORRECT |
ANSWER✔✔-Issue |a |suitability |report.
Prior |to |providing |services |to |professional |clients, |firms |carrying |on |MiFID |business |must |normally |
provide |them |with |information |on |the |firm's |policy |relating |to: |- |CORRECT |ANSWER✔✔-Conflicts |of |
Interest.
