R01 Ethics Regulation Financial Services Mock Paper 1

Front 1

Which of the following is NOT a key area of risk management?

Back 1

Insuring the potential loss of a l
key client

Front 2

What is the main difference between banks and building societies?

Back 2

Banks have shareholders wheras building societies do not

Front 3

Which of the following is the method in which the UK Government funds their borrowing requirements by public money?

Back 3

Gilts & National Savings and Investments(NS&I)

Front 4

Which of the following is not a financial services sector authority?

Back 4

Office of Fair Trading

Front 5

What does the Bank of England use to influence short term Interest Rates?

Back 5

The Gilt Repo Market

Front 6

The Financial Action Task Force (FATF) is a regulatory body which is

Back 6

Global

Front 7

Fred's insurance company and bank have recently fallen into 'deafault, Fred wishes to make a claim on his critical illness plan with a sum assured of £90,000 and Fred has £65,000 on deposit. What is MAXIMUM compensation Fred will be entitled to under the FSCS?

Back 7

£131,000

Front 8

Julie has just completed on her first mortgage, which she is being repaid on a capital and interest basis, which of the following products is LEAST likely to be recommended?

Back 8

Private medical insurance

Front 9

Which of the following would not indicate that a client is struggling with debt?

Back 9

Taking advantage of 0% offers

Front 10

Which of the following is NOT a type of lifetime mortgage?

Back 10

Sale and rent back

Front 11

Which of the following is not a feature of PIBS?

Back 11

They have a guaranteed future value

Front 12

When do PIBS become PSBs?

Back 12

When the building society has demutualised

Front 13

Jean died in 2001 when the NRB was £190,000, she left £50,000 to her sister and the rest to John, her husband. How much in total (to the nearest £1,000) will John have as a NRB if he dies on 1st November 2010?

Back 13

£564,000

Front 14

You undertake with your client James, a budgeting exercise and this shows that outgoings exceed his income by a significant amount. What initially is the most suitable course of action for Bob?

Back 14

Approcah the CAB or National Debt helpline

Front 15

Your clients James and Julie are remortgaging with you and wish to know that there will be a maximum mortgage payment they could be asked to make. The mortgage product most suitable for them is

Back 15

Cap

Front 16

Jill and Andrew both wish to take out an income protection plan. Andrew is aged 41 and Jill is 34 but the premiums for Jill are higher than for Andrew. Why?

Back 16

Jill has a higher morbidity risk

Front 17

Which of the following would Ellen NOT need to consider prior to investing money for the long term?

Back 17

Her previous investment experience

Front 18

Mark wishes to build up a lump sum only to fund a 3 month holiday for when he retires in 16 years time, which of the following products would be most appropriate?

Back 18

Stocks & Shares ISA


2.2

Front 19

Which of the following is NOT associated with Bankruptcy

Back 19

The business can continue to trade once made bankrupt

3.1

Front 20

Marie died on 3rd Jan 2010 intestate; she was married to George and had 3 children who were all over the age of 21. Her assets comprised of a holiday home in Devon worth £350,000, a joint owner of the family home worth £300,000 and sole investments of £150,000. What is the maximum lump sum the children would have access to immediately? (ignore IHT)

Back 20

£125,000


3.3

Front 21

Partners or sole traders are unable to pay their debts, they may be made bankrupt if?

Back 21

Their liabilities outweigh their assets

3.2

Front 22

Jean's Will has been declared invalid because?

Back 22

Jean was mentally incapable at the time of attestation

3.3

Front 23

Julie's Power of Attorney can incorporate decisions for her welfare as well as financial decisions. This is possible because

Back 23

Ut was taken out in June 2009


3.1

Front 24

Mark recently died having not made a Will. There are serious consequences for his property because

Back 24

It was held tenants in common with 3 friends

3.3

Front 25

Jason is looking to take a mortgage on a leasehold property for 15 years, in order for this to not affect lending decisions the lender would look for the lease to have how many years remaining as a minimum?

Back 25

40


3.1

Front 26

Paul has a lot more duties than Carol when it comes to being a trustee, this is because

Back 26

Paul is a trustee of a discretionary trust and Carol an absolute trust
3.3

Front 27

Betty and Bernie are the ordianary unsecured creditors of a debtor in bankruptcy. They are respectively owed £3,000 and £6,000. If after all else is settled, £8,000 remains for their total combined settlement and Bernie has been owed the longest, they will respectively receive

Back 27

£2,667 and £5,333


3.2

Front 28

Which one is not part of the Tripartite Authorities?

Back 28

OFT


4.1

Front 29

What contingencies does the Treasury not work on?

Back 29

Implementation of the RDR

Front 30

Which of the following does the Bank of England not have responsibility for?

Back 30

Meeting inflation targets


4.1

Front 31

Which of the following is not a Statutory objective

Back 31

Fair Legislation for firms


4.3

Front 32

When was N2 day?

Back 32

30th November 2001


4.3

Front 33

Which of the following is not a responsibility of the OFT?

Back 33

Complaint handling


4.2

Front 34

The Competition Commission investigate mergers when market share is set to exceed?

Back 34

25%


4.2

Front 35

The Competition Commissioner cannot conduct an investigation without what?

Back 35

A referral from the OFT or other regulating body

4.2

Front 36

How many people make up the board of the FSA?

Back 36

14


5.1

Front 37

What is the brand the FSA use to promote information for consumers?

Back 37

Money made clear


5.1

Front 38

To take disciplinary action against a firm or individual, falls under which scope of the FSA?

Back 38

Enforcement


5.3

Front 39

Financial crime and money laundering falls under which scope of the FSA?

Back 39

Supervision


5.3

Front 40

Which of the following businesses would be regulated by the FSA?

Back 40

A General Insurance Broker


5.1

Front 41

Which of the following does the FSA not FOCUS its attention on?

Back 41

General insurance companies


5.3

Front 42

Free Asset Ratio is an important indicator for which type of institution?

Back 42

Life Offices


5.1

Front 43

When would a cancellation notice be needed?

Back 43

A life policy with a term of 7 months

5.2

Front 44

Which of the following was introduced under FSA rules in 2010?

Back 44

Sale and rent back


5.2

Front 45

Which of the following would CASS apply to?

Back 45

A medium sized IFA


5.2

Front 46

How many business days apart is the maximum an IFA could complete their reconciliation exercise for client funds?

Back 46

25


47

Front 47

A firm of 5 advisers receive a fee invoice from the FSA on 4th July 2010. This is likely to be which form of payment due to the FSA?

Back 47

Periodic fee


5.2

Front 48

Where would you find the T & C requirements in the FSA Handbook?

Back 48

In the Business Standards Sourcebook

5.2

Front 49

What is the FSA stance on the use of the 'Keyfacts' Logo?

Back 49

Only to be used on disclosure documents designed for customers
5.2

Front 50

What, apart from periodic, application and special project collected by the FSA, what other fees are payable?

Back 50

FOS and FSCS fees


5.2

Front 51

Which firms are subject to the Capital Requirements Directive?

Back 51

Larger firms


5.2

Front 52

With regards to capital adequacy which of the following do firms not need to demonstrate an understanding of to the FSA?

Back 52

How much of their capital has been set aside for compliance purposes
5.2

Front 53

Which statement best describes the main purpose of MIPRU?

Back 53

Sets out the professional indemnity insurance and capital requirements for home finance firms
5.2

Front 54

Which of the following would be deemed as an acceptable inducement from a provider to an intermediary?

Back 54

The supply of business card holders at a product provider seminar
5.2

Front 55

Which of the following individuals linked to mortgages does not need FSA authorisation?

Back 55

An individual with introducer status only

5.2

Front 56

Which of the following outcomes was not part of sale and rent back schemes (SRM) being regulated from the 1st July 2010?

Back 56

Having a minimum tenancy agreement of 3 years

5.2

Front 57

In July 2005 the Market Abuse Directive (MAD) was introduced, the main aim was to?

Back 57

Identify specific civil wrongs


5.2

Front 58

As part of the FSA disciplinary powers, they can?

Back 58

Make public announcements
Make firms pay substantial fines
Order compensation payments for customers
5.1

Front 59

What role has the FSA appointed in order to investigate complaints against them?

Back 59

Complaints commissioner


5.2

Front 60

The FSA does not receive?

Back 60

Funds from the Government
Funds from the public
Funds from the EU
5.2

Front 61

The sixth book of the FSA handbook contains details on

Back 61

Specialist sourcebooks


5.2

Front 62

A client wishes a copy of a manual record held on them, what is the maximum fee they will pay?

Back 62

£50


6.2

Front 63

Firms which receive how many complaints within a six month period have to publish their procedures twice a year?

Back 63

500


6.2

Front 64

An individual cools of a lump sum pension contribution and places the funds into an investment bond, this is known as what in reference to money laundering?

Back 64

Layering


6.2

Front 65

The MLRO reports suspicions to who?

Back 65

The Serious Organised Crime Agency (SOCA)

6.2

Front 66

Which of the following would not be classed as sensitive data under the Data Protection Act 1998?

Back 66

Date of birth


6.2

Front 67

FOS recommends that a firm pays an individual £210,000 for his complaint, what is the amount the firm MUST pay?

Back 67

£100,000 plus complainant's costs and interest

6.2

Front 68

TCF involved some deadlines for authorised firms to meet. How can firms evidence their progress in line with FSA requirements?

Back 68

Structured evidence around 6 outcomes
Management Information measures
Compliance checks
7.1

Front 69

Debbie has just been to see you for her review meeting. You have recommended a course of action but there is no need to send her a suitability report. Why would this be?

Back 69

She is increasing her income protection plan by £14 per month

7.2

Front 70

Your long-term client, William, who is very sophisticated has called you to place a further £10,000 into his UK Equity OEIC and does not want a meeting or to go through any further information with you. Which form of service are you providing to him?

Back 70

Execution only


7.2

Front 71

What is the MAXIMUM annual charge for a stakeholder pension after 11 years with a fund value of £150,000?

Back 71

£1,500


7.1

Front 72

Since 6th August 2008, this one combined document replaced the 2 separate documents. The separate documents could be used until when?

Back 72

31st August 2009


7.1

Front 73

John has recently commenced some financial services products via his independent financial adviser. Which of the following ONLY has a 14 day cooling off period?

Back 73

An EIS for £50,000


7.2

Front 74

A leading high street bank has recently finished an advertising campaign for life assurance throughout their national network of branches. How long MUST a record of the advertisement be kept for?

Back 74

6 years


7.1

Front 75

During the fact-finding process you find out that your young clients want to save via Stocks and Shares ISA for their children's future. They do not have adequate life assurance in place so what should you do as their financial adviser?

Back 75

Accept what is important to the clients, but document what their priority is
8.1

Front 76

Suitability will incorporate a variety of factors including which of the following?

Back 76

Any potential disadvantages to the recommended products

8.1

Front 77

Fact-finding is an established aspect of providing advice on regulated products. Which of the following is INCORRECT?

Back 77

A client has to sign a fact-find

Front 78

When an adviser issues a written report comprising all of the recommendations this is known as a suitability report and it is correct to say that

Back 78

Must include affordability and all aspects of suitability

8.1

Front 79

The Turner Report suggests that the FSA will take a different approach to some element of regulation. These include which of the following:

Back 79

Intense supervisory approach to "high-impact" firms

9.1

Front 80

An authorised firm may not be meeting all of the Principle for Businesses.

Back 80

There is a potential conflict of risk to be aware of

9.1

Front 81

Why should firms collect and utilise management information?

Back 81

Helping to demonstrate adherence to TCF outcomes

9.2

Front 82

Individual advisers are more likely to act ethically at all times if

Back 82

They are allowed to have their own interpretation of ethical principles
9.3

Front 83

Successfully managing ethical dilemmas is likely to mean that

Back 83

Lead to lower regulatory costs


10.1

Front 84

The board of management of a large IFA firm are encountering difficulties in sorting out an ethical concern. This is proving almost impossible to settle once and for all. One way to approach this would be to

Back 84

Consider the best and worst case scenarios as part of a questioning process
10.2

Front 85

John overheard a telephone conversation between Gareth, a colleague in the bank, and his wife. Gareth was discussing their current financial difficulties in some depth and made reference to the importance of making his next sale in order to be able to pay his bills. You should

Back 85

Inform your line manager


10.2

Front 86

In order for a firm to be able to demonstrate ethical practice they will not need to have

Back 86

An annual test for employees to complete

10.2

Front 87

Giles has just completed a fact find with his financial adviser, why is it important that the information is accurate?

Back 87

To determine Giles' eligibility to State benefits
To assess Giles' taxation position
To assess Giles' affordability of proposed solutions
It could impact on Giles' attitude to risk
7.1

Front 88

John has a review meeting booked with his financial adviser on the 10th April 2010,which of the following would be classed as an 'opportunity' from a client and adviser perspective with respect to a new tax year?

Back 88

Investing/reinvesting in ISAs
Increasing pension contributions
Changes to tax rates and allowances
7.3

Front 89

Peter has recently visited the 'money made clear' website provided by the FSA, this site will help Peter with the following:

Back 89

Get the most from his budget
Explaining financial jargon
Coping with divorce
7.1

Front 90

As an adviser you have recommended Harry invests a lump sum contribution into a new With-Profits Bond. Prior to completing the app what docs must Harry receive?

Back 90

A consumer friendly Principles and Practices of Financial Management (CFPPFM)
A key features document
7.1

Front 91

With regards to E-Commerce which of the following is needed?

Back 91

Clear info on the services required
A prompt acknowledgement that an order has been placed
Easy identification and rectification procedure for customer mistakes
7.1

Front 92

In the case of advertisements for non real time financial promotions

Back 92

Life and Pensions need to be kept for 6 years
A copy of the advert and the name of the person that checked it
7.1

Front 93

With regards to the Data Protection Act 1998

Back 93

All data must be held securely
The data must be accurate
The data subject has a right to prevent processing for direct marketing purposes
6.2

Front 94

With regards to complaints procedures

Back 94

A final response or letter to explain next steps and FOS within 8 weeks of the complaint being received
Send a copy of the firms complaints procedures within 5 working days
6.3

Front 95

John has a motor insurance, contents insurance and income protection plan, under the FSCS

Back 95

His motor insurance will be covered for 100% of the claim value
His contents insurance will be covered for 90% of the claim value
6.3

Front 96

Gerry is an IFA, this means that

Back 96

He must give the option of paying by fee
He must consider the financial strength of a provider when recommending them to a client
6.1

Front 97

John and Judy are 32 and 34 respectively, they have 3 children Dan age 19, Eve age 17 and Molly age 15. With regards to ISAs

Back 97

As a family they can contribute £35,700
Dan and Eve can contribute £15,300 between them in total into the ISAs
7.1

Front 98

The Consolidate Life Directive must contain the following information

Back 98

Name of the life office
The term of the plan
The premiums payable
How to complain
How the plan can be cancelled
7.1

Front 99

You are considering whether you fully understand TCF since you know that this will be discussed at a training session for financial advisers tomorrow. Which of the following is correct?

Back 99

Emanates from Principle 6 of the FSA Principles for Businesses
The FSA set a deadline for firms to clearly demonstrate to the FSA how they are meeting the 6 TCF outcomes which was Dec 2008
In line with the FSAa principles-based reguation
Should flow from "tone at the top" practice on behalf of leaders within a firm
7.1