CII R01 Consumer Protection 1 — Questions and Answers
Question 1: What is the FCA's Consumer Duty and when did it come into force?
- A voluntary code of conduct introduced in 2020
- A mandatory standard requiring firms to deliver good outcomes for retail customers, effective July 2023 (Correct answer)
- A EU regulation adopted by the UK in 2019
- An industry-led initiative launched in 2025
Correct answer: A mandatory standard requiring firms to deliver good outcomes for retail customers, effective July 2023
The Consumer Duty (Principle 12) came into force on 31 July 2023 for open products and services, requiring firms to act to deliver good outcomes for retail customers across four key areas.
Question 2: What are the four outcomes the Consumer Duty focuses on?
- Profit, growth, innovation, compliance
- Products and services, price and value, consumer understanding, consumer support (Correct answer)
- Speed, accuracy, transparency, accountability
- Accessibility, affordability, availability, quality
Correct answer: Products and services, price and value, consumer understanding, consumer support
The Consumer Duty focuses on four outcomes: products and services, price and value, consumer understanding, and consumer support, ensuring firms deliver good outcomes across these areas.
Question 3: What is the Financial Ombudsman Service (FOS)?
- A government department that creates financial regulations
- An independent body that resolves disputes between consumers and financial firms (Correct answer)
- A division of the FCA that handles enforcement
- A private company that provides financial advice
Correct answer: An independent body that resolves disputes between consumers and financial firms
The FOS is an independent body set up by Parliament to resolve disputes between consumers and financial businesses. It provides an alternative to the courts and its decisions are binding on firms.
Question 4: What is the current maximum award the Financial Ombudsman Service can make?
- £50,000
- £150,000
- £430,000 (Correct answer)
- Unlimited
Correct answer: £430,000
The FOS can award up to £430,000 for complaints about acts or omissions by firms on or after 1 April 2024. This limit is reviewed periodically.
Question 5: What is the Financial Services Compensation Scheme (FSCS)?
- An insurance policy that firms must purchase
- The UK's statutory deposit insurance and compensation scheme for customers of failed authorised firms (Correct answer)
- A government bailout fund for banks
- A private savings scheme for financial professionals
Correct answer: The UK's statutory deposit insurance and compensation scheme for customers of failed authorised firms
The FSCS is the UK's statutory compensation scheme that protects customers of authorised financial services firms that have failed. It is funded by levies on authorised firms.
Question 6: What is the FSCS protection limit for deposits?
- £50,000 per person per firm
- £85,000 per person per firm (Correct answer)
- £100,000 per person per firm
- £250,000 per person per firm
Correct answer: £85,000 per person per firm
The FSCS protects eligible deposits up to £85,000 per person per authorised firm. For joint accounts, each person is covered up to £85,000.
CII R01 Consumer Protection 1
What is the FCA's Consumer Duty and when did it come into force?