CII R01 Consumer Protection 4

Question 1

What protection does the Consumer Rights Act 2015 provide in financial services?

Accepted Answer

It provides rights regarding unfair contract terms and requires services to be performed with reasonable care and skill

Answer

The Consumer Rights Act 2015 provides protections against unfair contract terms and requires that services (including financial services) are performed with reasonable care and skill.

Question 2

What is a 'client money' account?

Accepted Answer

A segregated account holding money that belongs to clients, separate from the firm's own money

Answer

Client money must be held in segregated accounts separate from the firm's own money, as required by the FCA's Client Assets Sourcebook (CASS), to protect clients if the firm fails.

Question 3

What is the purpose of FCA's Client Assets Sourcebook (CASS)?

Accepted Answer

To protect client money and assets held by firms through segregation and other safeguarding rules

Answer

CASS sets out detailed requirements for how firms must safeguard client money and assets, including segregation requirements, reconciliation, and reporting obligations.

Question 4

What is an 'appropriateness assessment'?

Accepted Answer

An assessment of whether a client has the knowledge and experience to understand the risks of a non-advised product

Answer

An appropriateness assessment is required for non-advised sales of complex products. It checks whether the client has sufficient knowledge and experience to understand the risks of the product.

Question 5

What rights does a consumer have when a financial firm becomes insolvent?

Accepted Answer

The right to claim compensation from the FSCS up to applicable limits

Answer

When an authorised financial firm becomes insolvent, eligible consumers can claim compensation from the FSCS up to the applicable limits for their type of claim (e.g., £85,000 for deposits).

CII R01 Practice Test

CII R01 Practice Test

CII R01 Consumer Protection 4