CII R01 FCA Regulatory Framework 2 — Questions and Answers
Question 1: What is the FCA Handbook?
- A guide for consumers on choosing financial products
- The complete set of FCA rules and guidance for regulated firms (Correct answer)
- A textbook used for FCA examinations only
- An annual report published by the FCA
Correct answer: The complete set of FCA rules and guidance for regulated firms
The FCA Handbook is the comprehensive collection of rules, guidance, and other provisions made by the FCA that regulated firms must follow.
Question 2: Which FCA sourcebook contains the principles for businesses?
- COBS
- SYSC
- PRIN (Correct answer)
- SUP
Correct answer: PRIN
PRIN (Principles for Businesses) contains the eleven fundamental Principles for Businesses that all FCA-authorised firms must observe.
Question 3: How many Principles for Businesses does the FCA set out?
- 6
- 8
- 11
- 12 (Correct answer)
Correct answer: 12
Following the introduction of the Consumer Duty, the FCA now has 12 Principles for Businesses. The 12th principle (Consumer Duty) was added in 2023 and applies to firms dealing with retail customers.
Question 4: What does the FCA's Senior Managers and Certification Regime (SM&CR) replace?
- The Money Laundering Regulations
- The Approved Persons Regime (Correct answer)
- The Conduct of Business Sourcebook
- The Training and Competence requirements
Correct answer: The Approved Persons Regime
The SM&CR replaced the Approved Persons Regime (APR) to improve individual accountability in financial services by making senior managers personally responsible for the areas they oversee.
Question 5: Under the SM&CR, what is a 'Statement of Responsibilities'?
- A firm's annual compliance report to the FCA
- A document setting out what each senior manager is responsible and accountable for (Correct answer)
- A customer-facing document explaining the firm's services
- A training record for all certified staff
Correct answer: A document setting out what each senior manager is responsible and accountable for
A Statement of Responsibilities is a document that clearly sets out the areas of the firm's business for which a senior manager is responsible, ensuring clear lines of accountability.
Question 6: Which of the following activities requires FCA authorisation?
- Providing general information about financial products
- Advising on investments as a regulated activity (Correct answer)
- Writing articles about personal finance
- Teaching financial literacy in schools
Correct answer: Advising on investments as a regulated activity
Advising on investments is a regulated activity under FSMA 2000 and the Regulated Activities Order. Providing personal recommendations on specific investments requires FCA authorisation.
CII R01 FCA Regulatory Framework 2
What is the FCA Handbook?