CeMAP Consumer Protection and Regulatory Compliance 3

Question 1

How does the FCA define a 'vulnerable customer' in its guidance for mortgage firms?

Accepted Answer

A customer whose circumstances make them susceptible to harm

Answer

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.

Question 2

Which key disclosure document must the Mortgage Credit Directive (MCD) require lenders to provide to borrowers for product comparison?

Accepted Answer

The European Standardised Information Sheet (ESIS)

Answer

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.

Question 3

What is the purpose of the Annual Percentage Rate of Charge (APRC) in mortgage lending?

Accepted Answer

To provide a standardised total cost measure for comparing mortgage products

Answer

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.

Question 4

What was the primary purpose of the Mortgage Market Review (MMR) that took effect in April 2014?

Accepted Answer

To require lenders to conduct detailed, verified affordability assessments

Answer

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.

Question 5

Which of the following must a mortgage adviser provide to a customer at the outset of the sales process?

Accepted Answer

The Initial Disclosure Document (IDD) detailing the firm's services

Answer

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.

CeMAP - Certificate in Mortgage Advice and Practice Practice Test

CeMAP - Certificate in Mortgage Advice and Practice Practice Test

CeMAP Consumer Protection and Regulatory Compliance 3