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FCA Financial Promotions and Communications Flashcards

6 cards from real FCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 FCA Financial Promotions and Communications flashcards as text

  1. What is the core requirement for a financial promotion under Section 21 of FSMA?

    Answer: It must be communicated by or approved by an FCA-authorized person before being issued

    Section 21 FSMA prohibits an unauthorized person from communicating a financial promotion unless the content has been approved by an FCA-authorized person, or an exemption applies.

  2. What does the FCA mean by 'fair, clear, and not misleading' in the context of financial promotions?

    Answer: All communications with clients must be accurate, balanced, and not create a false impression of any product or service

    The FCA's Principle 7 and COBS 4 require that client communications and promotions are fair, clear, and not misleading, meaning they give a balanced view and do not create false impressions about a product's risks or rewards.

  3. Which FCA sourcebook primarily governs financial promotions and communications with clients for investment firms?

    Answer: COBS (Conduct of Business Sourcebook)

    COBS Chapter 4 sets out detailed rules on financial promotions, fair presentation of information, and communications with clients for firms conducting investment business.

  4. What is a 'real-time financial promotion' under FCA rules?

    Answer: A promotion made in the course of a personal visit, telephone call, or other interactive dialogue

    Real-time promotions are those made in the course of interactive, two-way communication such as a phone call or face-to-face meeting, and are subject to different rules than non-real-time promotions like emails or websites.

  5. Under the FCA's financial promotion rules, what specific requirement applies to past performance data included in investment promotions?

    Answer: Past performance must not be a prominent feature and must include a clear statement that it is not a reliable indicator of future results

    COBS 4.6 requires that if past performance is included, it must not be the most prominent feature, must cover a representative time period, and must carry a prominent past performance disclaimer.

  6. Which of the following is an example of a financial promotion exemption under the Financial Promotion Order (FPO)?

    Answer: A promotion communicated only to certified sophisticated investors

    The FPO provides an exemption allowing financial promotions to be communicated to certified sophisticated investors without requiring authorization approval, as these investors are deemed capable of understanding the risks.