IMC Regulation and Ethics (FCA)

Question 1

Which of the following is one of the FCA's three operational objectives?

Accepted Answer

Protecting and enhancing the integrity of the UK financial system

Answer

Maximising returns for investors

Answer

Setting the Bank of England base rate

Answer

Guaranteeing financial product returns

Question 2

Under the FCA's Conduct of Business Sourcebook (COBS), what is the requirement for 'best execution'?

Accepted Answer

To take all sufficient steps to obtain the best possible result for the client when executing orders

Answer

To always obtain the lowest possible commission rate

Answer

To execute all orders within one second

Answer

To only trade on the London Stock Exchange

Question 3

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

Accepted Answer

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

Answer

To set maximum fees that firms can charge

Answer

To eliminate all risk from financial products

Answer

To standardise the prices of all financial products

Question 4

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

Accepted Answer

Senior managers can be held accountable if they fail to take reasonable steps to prevent regulatory breaches in their area

Answer

A requirement for all employees to hold a professional qualification

Answer

A duty to report all trades to the FCA within 24 hours

Answer

An obligation to donate a percentage of profits to charity

Question 5

What constitutes 'insider dealing' under the Criminal Justice Act 1993 and UK Market Abuse Regulation (UK MAR)?

Accepted Answer

Dealing in securities while in possession of material, non-public, price-sensitive information

Answer

Trading based on publicly available research reports

Answer

Selling securities at a loss

Answer

Buying shares in a company where you are employed, regardless of information held

Question 6

Which FCA Principle for Businesses requires a firm to 'pay due regard to the interests of its customers and treat them fairly'?

Accepted Answer

Principle 6 — Customers' Interests

Answer

Principle 1 — Integrity

Answer

Principle 3 — Management and Control

Answer

Principle 11 — Relations with Regulators