Friday Five Focus on Regulation – 5 Questions in 5 Minutes – 20 Mar 2026

Friday Five Focus on Regulation – 5 Questions in 5 Minutes Every Friday

What’s this all about?

Each week, we ask questions relating to one of these topics: Investments, Taxation, Pensions, Protection, or Regulation. This week, our Friday Five is relevant to Regulation; this is useful as you prepare for either of the CII’s R01 or CF1 exams. The challenge is for you to answer them in 5 minutes. Answers at the bottom of the page.

Questions

IMPORTANT! These questions relate to examinable tax year 2025/26, examinable by the CII until 31 August 2026.

1. A firm is applying to the Financial Conduct Authority for Part 4A permission as set out by the Financial Services and Markets Act 2000 (FSMA). This means they are
   1. a partnership and they can remain authorised in the event of one partner’s death.
   2. wishing to change its legal status from a partnership to a limited company.
   3. joining the public record of successful authorisation applications.
   4. applying for direct authorisation to allow them to carry out regulated activities.

2. The Financial Conduct Authority is funded through
   1. taxes distributed by the Government.
   2. levies on the financial services industry.
   3. fines and penalties imposed when an authorised firm breaches rules.
   4. charges applied to large firms e.g., banks and building societies.

3. According to a guide published by the regulator, good management information (MI) should be
   1. accurate, timely, relevant, and consistent.
   2. timely, accurate, specific, and consistent.
   3. specific, measurable, accurate, and timely.
   4. measurable, relevant, consistent, and timely.

4. The capital adequacy of an authorised firm is assessed through
   1. risk identification and management processes.
   2. monitoring the value of assets.
   3. assessing the firm’s liabilities.
   4. monitoring the proportion of liquid assets over capital.

5. A firm categorised by the Financial Conduct Authority as a ‘fixed portfolio’ firm will require
   1. the highest level of supervisory attention.
   2. a largely reactive programme of communication.
   3. a proactive combination of thematic work and engagement.
   4. the minimum level of supervisory attention.

Answers

1. D; See R01 Study Text, Chp 7; Rationale: Applying for a Part 4A permission refers to applying to the relevant regulator (the FCA or PRA) for authorisation to carry out the regulated activities they have applied for. If their application is successful, they will be sent a ‘scope of permission’ form, which is the formal part of the Part 4A permission.
2. B; See R01 Study Text, Chp 6; Rationale: The FCA operates independently of the UK Government and is funded through a range of levies on the financial services industry. It does not receive any funding from the Government or the public or through fines or penalties. Whilst large firms would pay a levy, this is not the sole source of funding, as the levies apply to all firms throughout the industry.
3. A; See R01 Study Text, Chp 11; Rationale: In relation to the fair treatment of customers, the regulator had highlighted four principles for MI, which are accuracy, relevant, consistent, and timely.
4. A; See R01 Study Text, Chp 5; Rationale: A capital adequacy test assesses if a company has enough capital, as required by its regulator. This is tested via a risk identification and management process. The capital adequacy test is not just about monitoring capital and assets, although this will be part of the process.
5. A; See R01 Study Text, Chp 5; Rationale: Fixed portfolio firms are a small population of firms (out of the total numbers regulated by the FCA) and will require the highest level of supervision.

Grab the resources you need!

If you’re comfortable with the basics, the next step is practising how R01 topics are actually tested in the exam. Access the free R01 E-Mocks taster to preview the style and depth of our questions and see what you’d get in the full resource.

Know someone else studying for R01? Share this quiz with them and help make their revision a little easier.