Friday Five Focus on Regulation – 5 Questions in 5 Minutes – 24 Apr 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 new insurance company must apply to which of the following for authorisation?
   1. HM Revenue & Customs.
   2. The Prudential Regulation Authority.
   3. The Financial Conduct Authority.
   4. The Financial Policy Committee.

2. Authorised firms pay periodic, application and special project fees, as well as
   1. Financial Ombudsman Service, Financial Services Compensation Scheme and Money and Pensions Service fees.
   2. Financial Ombudsman Service and Financial Services Compensation Scheme fees.
   3. a tariff and block rate fee calculated at the end of each financial year.
   4. a flat charge of £250 due at the end of each financial year.

3. Which of the following would be classed as an indirect measure of ethics?
   1. Customer complaints.
   2. Ethical feedback in employee surveys.
   3. Employee engagement with ethic training.
   4. Regulatory guidance.

4. If the financial strength of an insurance company falls below the minimum standard, the Financial Conduct Authority can
   1. stop them accepting new business.
   2. amend their capital adequacy tests.
   3. request they re-perform their capital adequacy test.
   4. guarantee the life office’s financial strength.

5. What are the three different ways in which a mortgage intermediary can operate to bring customers and lenders together?
   1. Execution only, best execution or advised sale.
   2. Through estate agents, through solicitors or through financial advisers.
   3. Paper based applications, interest/web based or via the telephone.
   4. Whole market, limited number of lenders or single lender.

Answers

1. B; See R01 Study Text, Chp 7; Rationale: New insurance companies must apply to the PRA for direct authorisation. The PRA is the regulatory body set up as a result of the FSA 2012 to regulate large financial institutions. The FCA regulates smaller firms such as financial advisers.
2. A; See R01 Study Text, Chp 6; Rationale: Authorised firms are subject to application fees, periodic (annual fees) and special project fees from the FCA. They are also subject to fees from the Financial Ombudsman Service (FOS), Financial Services Compensation Scheme and Money and Pensions Service fees.
3. C; See R01 Study Text, Chp 11; Rationale: There are direct and indirect measures of ethics. An indirect measure is employee engagement with ethics training. Customer complaints and ethical feedback are direct measures. Regulatory guidance is not a measure of a company’s ethics.
4. A; See R01 Study Text, Chp 5; Rationale: If a company’s financial strength fell below the regulatory standard, the FCA could stop them accepting new business.
5. D; See R01 Study Text, Chp 6; Rationale: A mortgage intermediary can operate in one of three ways, offering advice on the whole market, a limited number of lenders or a single lender, and it is important that the adviser makes clear to the customer which way they use. Answer a) relates to the terms between the client and adviser and answer c) is the process used to obtain the mortgage (these answers do not relate to the question of bringing the client and lender together). Answer b) is false.

Grab the resources you need!

R01 can feel straightforward until you see how regulation and ethics topics are tested under exam conditions. If you’d like to preview how our full R01 E-Mocks present these areas, access the free R01 E-Mocks taster to see the question style, layout and level of detail included in the complete set.

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