CISI IoI Financial Services Regulation (FCA)

Question 1

What are the three statutory objectives of the Financial Conduct Authority (FCA)?

Accepted Answer

Consumer protection, market integrity, and promoting competition

Answer

Maximising profits, reducing costs, and increasing market share

Answer

Preventing all investment losses, guaranteeing returns, and eliminating risk

Answer

Setting interest rates, controlling inflation, and managing government debt

Question 2

What is the difference between the FCA and the PRA in the UK regulatory framework?

Accepted Answer

The FCA focuses on conduct regulation for all firms, while the PRA is the prudential regulator for systemically important firms

Answer

The FCA regulates banks while the PRA regulates insurance companies

Answer

The PRA is a division within the FCA

Answer

The FCA handles criminal prosecutions while the PRA handles civil cases

Question 3

Under FCA rules, what must a firm do before providing personal investment advice to a retail client?

Accepted Answer

Conduct a suitability assessment including the client's knowledge, experience, financial situation, and investment objectives

Answer

Obtain written permission from the FCA for each recommendation

Answer

Guarantee that the recommended investment will not lose value

Answer

Ensure the client has a minimum net worth of GBP 100,000

Question 4

What is the purpose of the FCA's Treating Customers Fairly (TCF) initiative?

Accepted Answer

To ensure firms deliver fair outcomes for consumers throughout the product lifecycle

Answer

To set maximum prices for all financial products

Answer

To provide free financial advice to all UK residents

Answer

To require all financial products to offer guaranteed returns

Question 5

What is the FCA's approved persons regime (now replaced by SM&CR)?

Accepted Answer

A regime requiring individuals performing certain controlled functions to be assessed and approved by the FCA

Answer

A system where the FCA approves all financial products before they can be sold

Answer

A scheme where only FCA-approved firms can advertise financial services

Answer

A register of all investors who are approved to trade in the UK

Question 6

What is 'market abuse' as defined under UK regulation?

Accepted Answer

Behaviour including insider dealing, market manipulation, and unlawful disclosure of inside information

Answer

Any trading activity that results in a financial loss

Answer

Selling financial products without a licence

Answer

Charging excessive fees for financial advice