CISI IAD Regulation and Compliance

Question 1

Under FCA rules, which of the following is a 'retail client'?

Accepted Answer

An individual who does not meet the criteria for professional client or eligible counterparty classification

Answer

A large company with a balance sheet exceeding £12.5 million

Answer

A local authority investing its pension fund assets

Answer

A regulated financial institution

Question 2

What is the primary purpose of the FCA's Conduct of Business Sourcebook (COBS)?

Accepted Answer

To establish rules governing how firms conduct business with clients, including suitability and disclosure

Answer

To set capital adequacy requirements for banks

Answer

To regulate the listing of securities on the London Stock Exchange

Answer

To manage the UK's deposit protection scheme

Question 3

Under MiFID II, what is the maximum period for which a firm must retain records of client suitability assessments?

Accepted Answer

At least 5 years, or the duration of the relationship plus 5 years for ongoing services

Answer

3 years

Answer

5 years

Answer

10 years

Question 4

Which of the following activities would require a firm to conduct a full suitability assessment under FCA rules?

Accepted Answer

Providing a personal recommendation to invest in a specific fund

Answer

Executing a client's unsolicited order to buy shares

Answer

Providing generic market commentary in a newsletter

Answer

Processing a client's instruction to transfer an ISA

Question 5

What is the role of the Financial Ombudsman Service (FOS) in relation to investment advice complaints?

Accepted Answer

To provide an independent dispute resolution service for complaints between consumers and financial firms

Answer

To prosecute firms for regulatory breaches

Answer

To authorise and regulate financial advisers

Answer

To set compensation limits for the FSCS

Question 6

Under the FCA's Senior Managers and Certification Regime (SM&CR), what is the purpose of the 'duty of responsibility'?

Accepted Answer

To hold senior managers personally accountable if they fail to take reasonable steps to prevent regulatory breaches in their area

Answer

To require all staff to hold a Level 4 qualification

Answer

To mandate annual compliance training for all employees

Answer

To require firms to publish the names of all senior managers