CeMAP - Certificate in Mortgage Advice and Practice UK Financial Regulation Questions and Answers

Question 1

Which of the following is the primary body responsible for the prudential regulation of banks, building societies, and investment firms in the UK?

Accepted Answer

The Prudential Regulation Authority (PRA)

Answer

The Prudential Regulation Authority (PRA), which is part of the Bank of England, is responsible for the prudential regulation and supervision of around 1,500 banks, building societies, credit unions, insurers, and major investment firms. Its primary objective is to promote the safety and soundness of these firms.

Question 2

A mortgage adviser is meeting a new client for the first time. Under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, when must the adviser complete identity verification?

Accepted Answer

Before the establishment of a business relationship

Answer

The regulations require firms to apply customer due diligence measures, including identifying and verifying the customer's identity, before the establishment of a business relationship or carrying out an occasional transaction. This is to prevent financial crime from the outset.

Question 3

The FCA's Consumer Duty introduced a new Consumer Principle. What does this principle require firms to do?

Accepted Answer

Act to deliver good outcomes for retail customers.

Answer

The Consumer Principle, Principle 12, requires firms 'to act to deliver good outcomes for retail customers'. This sets a higher standard than the previous principle of 'treating customers fairly' and requires firms to be proactive in ensuring customers receive good outcomes across product design, price, support, and understanding.

Question 4

A client has their mortgage application declined and is unhappy with the advice they received. They raise a formal complaint with the mortgage advice firm, but eight weeks later they have not received a final response. What is the client's next course of action?

Accepted Answer

Refer the complaint to the Financial Ombudsman Service (FOS).

Answer

If a firm does not resolve a complaint within eight weeks, or the client is unhappy with the final response, they have the right to refer their complaint to the Financial Ombudsman Service (FOS). The FOS is an independent body that settles disputes between consumers and financial services firms.

Question 5

The Financial Services Compensation Scheme (FSCS) provides a 'safety net' for customers of authorised financial services firms. What is the maximum level of protection it offers for deposits per person, per authorised firm?

Accepted Answer

£85,000

Answer

The FSCS protects deposits up to £85,000 per person, per authorised firm (or £170,000 for joint accounts). This limit applies if a bank, building society, or credit union were to fail.

CeMAP - Certificate in Mortgage Advice and Practice Practice Test

CeMAP - Certificate in Mortgage Advice and Practice Practice Test

CeMAP - Certificate in Mortgage Advice and Practice UK Financial Regulation Questions and Answers