CISI IAD Regulation and Compliance 2

Question 1

Under MiFID II, what is the purpose of the 'product governance' requirements?

Accepted Answer

To require manufacturers and distributors to identify a target market for each product and ensure it reaches appropriate clients

Answer

To ensure all products are guaranteed by the FSCS

Answer

To mandate that all investment products offer a minimum guaranteed return

Answer

To require all products to be listed on a regulated exchange

Question 2

What is the FCA's approach to 'treating customers fairly' (TCF)?

Accepted Answer

It is a principles-based approach requiring firms to demonstrate fair outcomes for consumers throughout the product lifecycle

Answer

It is a voluntary code with no enforcement powers

Answer

It applies only to insurance companies

Answer

It requires all financial products to charge identical fees

Question 3

Which of the following best describes the FCA's Consumer Duty introduced in 2023?

Accepted Answer

A higher standard of consumer protection requiring firms to act to deliver good outcomes across price, products, understanding, and support

Answer

A requirement for firms to offer the cheapest products available

Answer

A mandatory complaints resolution procedure

Answer

A requirement for all firms to appoint a consumer representative

Question 4

Under anti-money laundering (AML) regulations, what is 'enhanced due diligence' (EDD)?

Accepted Answer

Additional verification measures required for higher-risk clients, such as politically exposed persons (PEPs)

Answer

Standard identity checks required for all clients

Answer

A simplified check for low-risk clients

Answer

An annual audit of all client accounts

Question 5

What is the maximum compensation limit per person per firm under the Financial Services Compensation Scheme (FSCS) for investment claims?

Accepted Answer

Up to £85,000

Answer

£50,000

Answer

£85,000

Answer

There is no fixed limit for investment claims

Question 6

Under FCA rules, what must a firm disclose to a client before providing investment advice?

Accepted Answer

Information about costs, charges, the nature of advice (independent or restricted), and any conflicts of interest

Answer

Only the total fees charged

Answer

Only whether the adviser holds a Level 4 qualification

Answer

The firm's annual financial statements