CISI IoI Financial Services Regulation (FCA) 2

Question 1

Under FCA rules, what is the key difference between 'advised' and 'non-advised' (execution-only) services?

Accepted Answer

In advised services the firm makes a personal recommendation; in non-advised the client makes their own decision

Answer

Advised services are free while non-advised services charge a fee

Answer

Non-advised services are not regulated by the FCA

Answer

Advised services can only be provided to professional clients

Question 2

What is the FCA's Consumer Duty, which came into force in 2023?

Accepted Answer

A higher standard requiring firms to act to deliver good outcomes for retail customers

Answer

A requirement for consumers to report any financial losses to the FCA

Answer

A government programme providing free financial education to all UK adults

Answer

A tax relief scheme for consumers investing in ISAs

Question 3

What is money laundering, and what are the three stages commonly associated with it?

Accepted Answer

The process of making illegally obtained money appear legitimate, through placement, layering, and integration

Answer

Tax evasion involving three different jurisdictions

Answer

A banking process involving deposits, transfers, and withdrawals

Answer

Insurance fraud conducted in three separate transactions

Question 4

What does 'best execution' require of a firm under FCA rules?

Accepted Answer

Taking all sufficient steps to obtain the best possible result for the client, considering price, costs, speed, and other relevant factors

Answer

Always achieving the lowest possible price for the client

Answer

Executing trades only on the London Stock Exchange

Answer

Guaranteeing that no losses will occur on any trade executed

Question 5

Under the FCA's client categorisation rules, which category of client receives the highest level of regulatory protection?

Accepted Answer

Retail clients

Answer

Professional clients

Answer

Eligible counterparties

Answer

Institutional clients

Question 6

What is the role of the Financial Ombudsman Service (FOS)?

Accepted Answer

To resolve disputes between consumers and financial services firms without going to court

Answer

To authorise and regulate financial services firms

Answer

To set interest rates for savings accounts

Answer

To prosecute firms for market abuse offences