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100 Cards in this Set
- Front
- Back
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What is the impact of EU legislation on the UK financial services industry?
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It influences how the FSA creates its own policies
Ch1 C |
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Why does the return offered by Companies issuing Corporate Bonds tend to be greater than that available on Government-issued stock?
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To compensate for the possibility of non-repayment of interest or capital
Ch1 A4 |
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Government-approved products fall within clearly defined CAT standards. Which three specific areas are covered?
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Charges, Access and Terms
Ch1 B2C p8 |
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Friendly Societies were originally able to offer a very attractive investment proposition to their customers for what reason?
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Investors had complete exemption from taxation on their funds
Ch1 B2C |
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What MAIN tool is used to influence economic activity by the Bank of England?
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The level of the UK base interest rate
Ch1 D2 |
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If an investor has neither the time or expertise to manage a portfolio of investments for themselves, they may be interested in...
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A Portfolio Management Service
Ch1 B2C |
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In October 2003 the State Pension Credit was introduced to replace the Minimum Income Guarantee (MIG). The amount of State Pension payable depends on 3 different criteria. Which one of the following is NOT one of these?
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NI contributions
Ch2 B10H |
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James recently unemployed and aware eligible for Income Support for Mortgage Interest (ISMI). Any benefit payable will be paid direct to his mortgage lender and is limited to interest on first ....of a mortgage?
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£200,000
Ch2 B10F |
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How many weeks must James have been unemployed before he can make a claim for Income Support for Mortgage Interest (ISMI)?
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13 weeks
Ch2 B10F |
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Which one of the following State Benefits is NOT taxed as Earned Income?
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Child Benefit for your first Child
Ch2 B10C |
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Rose & Ken have recently completed a Lifetime Mortgage to help fund their retirement; their application includes a Shared Appreciation element, what does this mean?
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The lender has a share of Rose & Ken's property
Ch2 B10C |
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Peter aged 62, is interested in a Home Reversion scheme and asks you to explain briefly. What is this?
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Peter would sell all or part of his property in return for a cash lump sum or income, the property then belongs to somebody else, but Peter would continue to live in the property until death.
Ch2 B10D |
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When completing a Suitability report for a client it is important to ensure the report is tailored to your client's circumstances. Which statement is INCORRECT?
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The report should explain why other solutions were discounted
Ch2 A6 |
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Which organization would you NOT recommend Dave speak to regarding managing his debts?
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OMPS
Ch2 B1B |
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Mary has recently completed a Capital Repayment mortgage with a local BS, which of the following interest rate options would Mary NOT have been offered?
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Structured
Ch2 B2C |
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What is the main tax difference between a Compulsory Purchase Annuity (CPA) and a Purchased Life Annuity (PLA)?
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A CPA is taxed on the whole of the Income paid at 20% or 40% tax rates
Ch2 B7B |
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A demutualised BS issues a form of fixed interest investment called a ....?
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Perpetual Subordinated Bond
Ch2 B6B |
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Before people save or invest it is important that they consider 3 other priorities before they commit to any long term savings or investment plans. Which is NOT considered a priority?
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Understanding an individual's attitude to risk
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Ivor calls into your office to transact some investments for his elderly mother and produces a Power of Attorney doc on her behalf. What checks should you make before proceeding?
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Exactly what powers are conferred on Ivor
Ch3 B |
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Noel is an employee of Optimum Ins Company and sells their products to the public. When completing a proposal form for a customer he fails to pass some significant health info to his Company. What is the result?
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Noel's duty of care is to the Insurance Company not his customer - the contract will continue if force Ch3 B
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If you are contemplating effecting a life assurance policy on another individual, in which of the following solutions is insurable interest UNLIKELY to exist?
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For a non married partner who is financially independent from you
Ch3 C1 |
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Jon made a Will leaving all his assets to his children. On his death, however, his share of the marital home has passed to his partner, Deborah. Why?
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The house was owned as joint tenants with Deborah
Ch3 E3A |
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Bill has been the subject of a bankruptcy order. He thinks that he can hold on to some of his assets - you tell him that he is unable to retain:
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Family heirloom
Ch3 F2 |
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Fred did not leave a Will and has recently died leaving a wife and 3 children. How much will his wife receive?
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Chattels, £250,000 and a life interest in half the residue
Ch3 G1C |
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What type of Trust arises when there is a failure of an established Trust to fulfil its required distribution of assets?
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Resulting
Ch3 H2 |
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What type of Trust must apply to occupational pension schemes?
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Irrevocable Trust
Ch3 H2 |
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Which of the following is NOT required for a binding contract to be in existence?
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Invitation to treat
Ch3 C1 & C2 |
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Which of these is NOT a statutory objective of the FSA?
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Reviewing Complaints
Ch4 A1C |
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MiFID is a single market directive. To which group does this directive apply?
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EEA member states/Gibralter
Ch4 C |
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The Bank of England has two core purposes, the first of which is to maintain Monetary Stability. What does Monetary Stability mean in this context?
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Confidence in Sterling and Stable Prices
Ch4 A1B |
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Which of these pension schemes does not come under the auspices of The Pensions Regulator (TPR)?
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Dave who is a Self-Employed Painter and has his own Personal Pension
Ch4 D3 |
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WHat is the role of the Financial Action Task Force (FATF)?
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To set international standards against money laundering and terrorist financing
Ch4 C4 |
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The FSA regulates the financial services industry using both principles-based, and more recently, outcomes-based regulation. The FSA also provides full information for firms and consumers about its objectives, plans, policies and rules. How does this describe the FSA as an organisation?
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Open and transparent
Ch5.1A & Ch9 A2 & A3 |
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The FSA has the designated authority under the European single market directives for:
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Banking, Insurance, Investments, Insurance Mediation and other financial services.
Ch5.1 A1 |
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The FSA regulates financial services firms, but some businesses that appear to be offering financial services fall outside the FSA's scope. Which of the following fall outside FSA regulation?
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Buy-to-Let Property Clubs
Compensation Claim Handlers Occupational Pension Schemes Ch5.1 C1A |
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Which of the following would NOT be regulated by the FSA?
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XYZ Limited occupational pension scheme
Ch5.1 C1A |
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To date, Firm ABC has only been authorised for deposit-taking, but has been arranging investments whilst actively seeking FSA approval for this additional regulated activity. WHat is the MOST LIKELY disciplinary action the FSA would take with egards to this breach of general prohibition?
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Imprisonment and other sanctions
Ch5.1 C2 |
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What is the term used to describe the FSA's day-to-day regulatory relationship with authorised firms?
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Supervision
Ch5.1 D |
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The Competition Commission (CC) works to ensure that competition between companies in the UK remains fair for the benefit of business, consumers and he economy as a whole. When CAN'T they initiate an inquiry?
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On a concern referred to them n=by a CC staff member
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The FSA conducts regular inspections of large insurance firms and their associated compliance monitoring processes. When would these firms be expected to comply with suggested remedial work?
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Within particular time limits
Ch5.1 D1A |
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The FSA has advised a regulated firm that it will be checking some of their compliance systems, specifically those related to CUSTOMER MATTERS. Which of the following is MOST likely to be on their list? for checking?
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Suitability Letters/Reports
Ch5.1 D1A (Fig 5.3) |
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What is the main difference in terms of how the FSA monitors 'low-impact' firms compared to 'medium/high impact' firms?
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Low impact firms don't have a specific risk assessment/mitigation programme. Ch5.1 D1
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What area would a firm's compliance with the FSA's Treating Customer Fairly initiative fall within, during an FSA inspection?
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Business Operations Matters
Ch5.1 D1A (Fig 5.3) |
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Which role has primary responsibility for a regulated firm's compliance with FSA rules?
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Compliance Officer
Ch5.1 D1B |
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For which organisation is the following a statutory objective: 'To contribute to enhancing the stability of the financial systems of the UK?
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The Bank of England
Ch5.1 D1B |
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Which of the FSA's 11 Principles of Business 'requires a firm to maintain adequate financial resources?
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Principle 4
Ch5.1 W2 |
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The FSA requires all firms to have sufficient capital and liquidity resources to ensure its liabilities can always be met. How do both the FSA and firms assess these resources?
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Stress and scenario testing, risk identification and management process
Ch5.1 E2 |
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A measure of financial strength is expressed a a firm's Free Asset Ratio. If a firm's total assets were £100M and it had ongoing liabilities of £25M, what is its FAR?
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75%
Ch5.1 E2A (2) |
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Which of the following is an act of Prudential regulation the FSA may take in agreeing to a firm's Part IV permission?
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Impose a higher capital requirement to ensure authorisation is appropriate
Ch5.1 E2 |
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XLI Insurance PLC has been threatened with de-authorisation by the FSA. This is because it has announced it has announced its intention
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To relocate its Head Office and Registered Office to India to reduce costs
Ch5.2 A1A (2) |
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Appropriate remuneration policies must take what into consideration?
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Risk management
Ch5.2 A1C (e) |
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Which of the following loans secured on property is regulated by the FSA?
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Where the loan secured on the property is 50% owner occupied, 50% commercial
Ch5.2 C3A |
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Which type of scheme, covered by the Mortgage and Home Finance: Conduct of Business rules can only be sold on an advised basis and cannot be advertised through cold-calling or promotional leaflets?
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Sale and rent back
Ch5.2 C3C |
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If no agreement exists, who is entitled to the interest on a client money account?
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The client
Ch5.2 C4B |
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The Market Abuse Directive (MAD) has given which name to the offences of providing false and misleading information to the market?
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Market manipulation
Ch5.2 C5 |
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For which of the following offences does the FSA NOT need to notify the person under investigation that the investigation is underway?
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Insider dealing
Ch5.2 D1A |
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Which of the following statements is TRUE regarding payment of fines imposed by the FSA?
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Firms cannot use insurance to pay fines
Ch5.2 A3A |
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The Financial Services and Markets Tribunal is an appeal body which hears appeals against which FSA decisions?
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Those resulting in disciplinary action
Those resulting in authorisation being refused or withdrawn Ch5.2 D1C |
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Which of the folowing indrect benefits is NOT allowable under COBS rules?
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IT hardware NOT linked to a software project
Ch5.2 C1B (Fig 5(2).1) |
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What powers does the FSA hold to challenge under unfair terms in standard form consumer contracts?
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The FSA has the power to tackle unfair terms as a qualifying body under the regulations
Ch5.2 G2B |
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How is an 'unfair' term in a standard consumer contract defined?
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One that causes a significant imbalance between the rights of the firm and the consumer, to the detriment of the consumer
Ch5.2 G2A |
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Which of the following life assurance policy sales does NOT require a cancellation notice to be sent?
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Level term assurance for a non UK resident
Ch5.2 C2A |
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Which of the following fees are the maximum allowable for data controllers to charge for access to individual files?
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£10 for computer records and £50 for manual records
Ch6 F1 |
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Jayne, an IFA has received a letter of complaint from a client. The complaints relates to the poor attitude and service offered by an insurance compnay when the client telephoned to get information on her policy. What are Jayne's obligations regarding this complaint?
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Jayne may refer the complaint to the insurance company as long as she writes to the client and provides the insurance company's contact details
Ch6 G1 |
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The FOS has investigated a complaint made by Eric. They have found Eric's conduct during the complaint to be unreasonable and have not upheld the complaint. What costs, if any, can they charge Eric?
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All costs incurred by the FOS during the course of their investigation
Ch6 G2 |
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Which body is responsible for investigating complaints made about personal pensions and small occupational schemes?
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The Pensions Ombudsman handles complaints about scheme management and the FOS investigates complaints about the sales process
Ch6 G2 |
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Your client has just submitted his completed application for a bond today. However, subsequent to your meeting with him your company has launched a new contract that you feel better suit your client. What should you do?
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Revisit your client as your duty of care to your client exists throughout the sales process
Ch7 A5B |
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Your client has asked you complete the application form on his behalf to speed things up. What should you do?
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Make sure the client reads the form properly after completion
Ch7 A5B |
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You have just completed a sale with one of your clients. A Principles and Practice of Financial Management document was included in the paperwork presented to him. This was because it was for:
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A with-profit regular savings policy
Ch7 A6D |
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Under the stakeholder regime a lighter touch approach is appropriate. This means
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A suitability report is not required
Ch7 A3 |
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You have just completed a case with one of your wealthier clients. The principle of best execution applied. This is because?
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It involved dealing in stocks and shares
Ch7 B3D |
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Which of the following questions would MOST help quantify a need for income protection?
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How much income would you need each month if you were off sick?
Ch8 C1C |
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According to the generally accepted priority order of needs (PIPSI), which of the following has the highest priority?
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Protection
Ch8 C1 |
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When establishing a client's attitude to risk, which of the following questions would be LEAST helpful to the client?
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How would you rate your attitude to risk on a scale of 1 - 10?
Ch8 C1F |
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Which of the following questions would be considered as 'Closed'?
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Can you do that?
Ch8 D1 |
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What is the regulatory approach known as Intensive Supervision designed to deliver?
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Outcomes-based regulation
Ch9 A3 |
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What is not a criteria for the FSA to base its judgement on, when assessing an individual's honesty, integrity and reputation for Fit and Proper status?
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Membership of recognised Professional Bodies
Ch9 C2 |
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In order to adhere to the Management and Control principle of the FSA's Principles of Businesses, an authorised firm should:
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Take care to organise its affairs, with adequate risk management systems
Ch9 A1 |
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Which of the following is NOT a positive indicator of the cultural driver of decision making?
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TCF messages are only delivered by staff who have had relevant training.
Ch9 B1 |
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Which of the following is NOT a principle for an approved person? In carrying out their controlled function, an approved person must:
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Adhere to the formal conflicts policy
Ch9 C1 |
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You discover that one of your advisers has embezzled a client's money. What action/actions would you be expected to take?
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Dismiss the adviser and inform the FSA
Ch9 C2 |
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Which of the following issues did the Turner Review 09 NOT cover?
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It recommends limits on presences of high street banks and building of high street banks and building societies
Ch9 A3 |
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Tara has just advised a customer to invest in an insurance bond. The customer seemed uncertain, however, she agreed to proceed. Due to the customer's hesitance, Tara chose not to explain the customer's cancellation rights, this decision would be regarded as:
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Neither compliant or ethical
Ch10 C2 |
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Pete received a complaint from a client. Peter rang the client to apologise and agree how to put the error right. He confirmed their agreement in writing the same day. Pete's actions would be considered as:
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Compliant and ethical
Ch10 C2 |
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Which of the following principles of the AA1000 series of standards would determine the relevance and significance of an issue to an organisation and its stakeholders?
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The Principle of Materiality
Ch10 D2 |
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The role of compliance changes with different ethical cultrues, how may the relationship be described in a values-led organisation?
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A real partnership with evidence of ownership on the front line
Ch10 D3 |
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Alan, an IFA completes a fact find and his client says she had a critical illness 10 yrs ago but recovered. She admits she did not disclose this in a recent app for CIC, as she feared being denied any cover. Considering only the Code of Ethics, what should Alan do, if anything?
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Inform the client she may be paying for cover for which would not pay out
Ch10 B4D |
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Which of these bodies would be exempt from authorisation under the FSMA?
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An appointed rep of a large insurance company
A local authority Ch6 A3 |
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Which of these would you expect to be registered as an approved person?
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Head of compliance
The company actuary The money laundering reporting officer Ch6 B |
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The Proceeds of Crime Act 2002 covers money laundering. Which of these would be a regulated activity?
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Money changing
Dealing, advising on or managing investments Arranging general insurance Deposit taking Ch6 E1 |
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The FOS combines previous ombudsmen including?
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PIA Ombudsman
Building Society Ombudsman Banking Omudsman Insurance Ombusdman Ch6 G2 |
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Which of these would be regarded as sensitive data under the Data Protection Act?
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Mary's political beliefs
John's religious beliefs Ch6 F1 |
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Polarisation was replaced by Depolarisation. Which of these statements is true?
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Depolarisation was fully effective from June 2005
Depolarisation created three basic types of intermediary Ch7 A2A |
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You are on a real time presentation call with a client, which of these rules apply?
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Your presentation must be fair, clear and not misleading
Ch7 A4B |
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A suitability report is not required for?
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A stakeholder stocks and shares ISA
An increase of £60 per month to a regular premium contract A single premium top up to a single premium contract A stakeholder personal pension Ch7 A5B |
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You are preparing the sales pack for a client regarding a whole life policy you have recommended for IHT protection. What would you expect to find in the key features document?
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The name of the life office
Cancellation rights The premum Ch7 A6A |
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Your investment bond projection must follow certain rules. These are?
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The projection must be based on reasonable assumptions
A risk warning must be included Ch7 A6B |
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Which of these would NOT be regarded automatically as a retail client?
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A government of a country
Another authorised firm A central bank A local authority Ch7 B1 |
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You are meeting a client for the first time. Under the status disclosure rues you must provide the client with?
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Details of how the firm is paid
Complaints procedure Details of the services to be provided Details of ownership of the firm Ch7 B3A |
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Client agreements are NOT required for?
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Life offices selling life products as a principle
Direct offer financial promotions |
