Consumer Protection and Regulatory Compliance Flashcards
7 cards from real CEMAP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Consumer Protection and Regulatory Compliance flashcards as text
How does the FCA define a 'vulnerable customer' in its guidance for mortgage firms?
Answer: A customer whose circumstances make them susceptible to harm
The FCA defines vulnerability as circumstances — whether permanent or temporary — that make a customer significantly less able to represent their own interests or more susceptible to harm.
Which key disclosure document must the Mortgage Credit Directive (MCD) require lenders to provide to borrowers for product comparison?
Answer: The European Standardised Information Sheet (ESIS)
The MCD, implemented in the UK in March 2016, replaced the KFI with the ESIS — a standardised document enabling borrowers to compare mortgage products across European lenders.
What is the purpose of the Annual Percentage Rate of Charge (APRC) in mortgage lending?
Answer: To provide a standardised total cost measure for comparing mortgage products
The APRC provides a standardised measure of the total cost of a mortgage — including interest and mandatory charges — enabling consumers to compare products on a like-for-like basis.
What was the primary purpose of the Mortgage Market Review (MMR) that took effect in April 2014?
Answer: To require lenders to conduct detailed, verified affordability assessments
The MMR fundamentally reformed mortgage lending by requiring lenders to conduct thorough, verified affordability assessments and apply responsible lending standards, replacing the era of self-certified mortgages.
Which of the following must a mortgage adviser provide to a customer at the outset of the sales process?
Answer: The Initial Disclosure Document (IDD) detailing the firm's services
The IDD must be provided at the very start of the adviser-customer relationship, disclosing the firm's FCA status, the range of products it can advise on, and the basis of any fees.
What is the FCA's definition of an 'advised sale' in the context of mortgage selling?
Answer: A sale where a personal recommendation is made based on the customer's individual circumstances
An advised sale occurs when the firm assesses the customer's needs, circumstances, and objectives and makes a personal recommendation — placing suitability obligations on the adviser.
Under FCA responsible lending rules, which of the following is NOT a required component of a standard mortgage affordability assessment?
Answer: A documented employment history covering the past 10 years
FCA responsible lending rules require income verification, interest rate stress testing, and committed expenditure review — but do not mandate a 10-year employment history; typically recent payslips and employment status are sufficient.