Friday Five Focus on Regulation – 7 January – 5 Questions in 5 Minutes

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 2021/22, examinable by the CII until 31 August 2022.

1. What was created by the Banking Act 2009 to provide the tripartite authorities with a framework to deal with failing banks?
   1. The Financial Stability Board
   2. The Prudential Regulation Committee
   3. The Financial Action Taskforce
   4. The Special Resolution Regime

2. On what basis, did the Capital Requirements Directive divide capital into three tiers?
   1. Three tiers based on loss absorbency and permanence of the capital
   2. Capital required for short, medium and long-term use
   3. The capital tiers correspond with the level of risk a firm represents
   4. Three tiers based on liquidity and how accessible that capital is for the firm

3. What are the differences between best execution and execution-only sales? Tick all that apply.
   1. Execution-only cannot happen with stocks and shares, but this is where best execution is most likely to happen
   2. With an execution-only transaction on a complex product, the firm is required to assess the appropriateness, but under best execution, the firm is required to carry out the instruction
   3. Best execution does not apply to life or pension contracts. Although rare, execution-only can apply to this field
   4. Best execution involves financial advice, but execution-only is where the client has received no advice

4. For a non-real-time financial promotion, it must be stated in the main text that past performance:
   1. gives a good indication of future performance.
   2. can be used as a guide to future performance.
   3. should not be seen as an indication of future performance.
   4. does not guarantee future performance.

5. How do the Mortgage Conduct of Business Rules (MCOB) ensure there is uniformity in the market as to the meaning of various terms e.g., the higher lending charge?
   1. The rules give guidance to firms on suggested wordings
   2. Standard terms and meanings must be used in client communications
   3. Regular testing of knowledge is carried out
   4. Individual compliance checks on every form of client communication

Answers

1. D – See R01 Study Text, Chp 5
   Grab our taster mock exam paper for CII R01. Click here to download.

2. A – See R01 Study Text, Chp 6
   Grab our taster mock exam paper for CII R01. Click here to download.

3. BC – See R01 Study Text, Chp 8
   Grab our taster mock exam paper for CII R01. Click here to download.

4. C – See CF1 Study Text, Chp 11
   Grab our taster mock exam paper for CII CF1 Click here to download.

5. B – See CF1 Study Text, Chp 11
   Grab our taster mock exam paper for CII CF1. Click here to download.

How did you find this week’s questions? Did you complete them in 5 minutes? Did you get them all correct? Do you disagree with any?

If you found this quiz useful for your CII exam revision, please do share it with your colleagues.