Friday Five Focus on Regulation – 5 Questions in 5 Minutes – 3 Jul 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. They do not relate to tax year 2026/27 which is only examinable by the CII from 1 September 2026.

1. The consumer duty has four outcomes which firms must incorporate into their approach to dealing with customers. Which of the following is one of these outcomes?
   1. Avoid foreseeable harm.
   2. Price and value.
   3. Act in good faith.
   4. Pursue financial objectives.

2. Rachel’s firm’s professional indemnity insurance requirements are set out in Prudential Standards under the sourcebook MIPRU. This means that she must work for
   1. a bank.
   2. an investment business.
   3. a building society.
   4. a home finance firm.

3. Glen runs a small financial advisory firm in Bristol. He prefers to spend time generating income for the firm, rather than completing paperwork. Which of the following is his firm unable to contract out to a compliance consultant?
   1. Remedial work.
   2. Technical support.
   3. Regulatory obligations.
   4. File audits.

4. Which of the following would you expect to find in the revised Remuneration Code within the Financial Conduct Authority Handbook?
   1. The reduction of short-term bonuses and basing bonuses on longer term performance.
   2. Reward risk-taking and outperformance to secure good quality staff.
   3. Ban overtime payments for staff who have a ‘material impact’.
   4. Avoid over-reliance on high salaries, instead promote performance related pay.

5. Which of the following is NOT covered under the Financial Services and Markets Act 2000 (FSMA)?
   1. Home reversion plans.
   2. Life policies.
   3. Electronic money.
   4. Commercial loans.

Answers

1. B; See R01 Study Text, Chp 8; Rationale: The consumer duty four outcomes are: products and services, price and value, customer understanding and customer support. The overarching cross-cutting rules are that firms must act in good faith, avoid causing foreseeable harm and enable and support customers to pursue their financial objectives.
2. D; See R01 Study Text, Chp 6; Rationale: The MIPRU sourcebook relates to Mortgage and Home finance firms. It sets out the rules about professional indemnity insurance (and capital requirements). GENPRU is the sourcebook for banks, building societies and investment firms.
3. C; See R01 Study Text, Chp 4; Rationale: A firm cannot contract out its regulatory obligations. It can seek help from external consultants, but ultimately, the firm is responsible for its own compliance with the regulations.
4. A; See R01 Study Text, Chp 6; Rationale: The remuneration principles in the revised remuneration code, detailed in the FCA handbook, require firms to reduce the amount of short-term bonuses and base bonuses on longer-term performance. Firms should avoid an over-reliance on performance related pay in place of higher salaries, ensuring remuneration packages do not encourage risk-taking and should be encouraged to defer a proportion of bonuses in favour of paid overtime.
5. D; See R01 Study Text, Chp 7; Rationale: Commercial loans are not regulated under the FSMA.

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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