CeMAP Module I 2

Question 1

Under the Financial Services and Markets Act 2000, what is a 'regulated activity' in the context of mortgage advice?

Accepted Answer

Advising on, arranging, or administering regulated mortgage contracts as specified in the RAO

Answer

The FSMA 2000 and the Regulated Activities Order define specific activities including advising on, arranging, entering into, and administering regulated mortgage contracts.

Question 2

What is the role of the Monetary Policy Committee (MPC) and how do its decisions affect mortgage borrowers?

Accepted Answer

The MPC sets the Bank of England base rate, which directly influences tracker mortgage rates and indirectly affects other mortgage products

Answer

The MPC sets the Bank of England base rate, which directly determines tracker mortgage rates and influences the rates lenders offer on other products.

Question 3

What is the difference between a building society and a bank in terms of mortgage lending?

Accepted Answer

Building societies are mutual organisations owned by members, with at least 75% of lending secured on residential property, while banks are shareholder-owned with no such restriction

Answer

Building societies are mutually owned by their members and must lend at least 75% of their funds on residential property under the Building Societies Act 1986.

Question 4

What is the purpose of the Money Laundering Regulations 2017 in the mortgage process?

Accepted Answer

To prevent criminals from laundering money through property transactions by requiring identity verification and source of funds checks

Answer

The Money Laundering Regulations 2017 require firms to conduct customer due diligence, verify identity, and check the source of funds to prevent property being used for laundering criminal proceeds.

Question 5

What is the significance of the Consumer Duty (PS22/9) for mortgage firms?

Accepted Answer

It requires firms to deliver good outcomes for retail customers across products, price, understanding, and support

Answer

The Consumer Duty requires firms to act to deliver good outcomes for retail customers, focusing on four outcome areas: products, price and value, consumer understanding, and consumer support.

CeMAP - Certificate in Mortgage Advice and Practice Practice Test

CeMAP - Certificate in Mortgage Advice and Practice Practice Test

CeMAP Module I 2