UK Regulation & Professional Integrity (Investment Advice Diploma) Quiz 05

Last Updated: June 2024

Table of Contents

UK Regulation & Professional Integrity (Investment Advice Diploma)

-knowthe activities to which Compulsory Jurisdiction applies [DISP
2.3]
-Procedures
-apply the procedures that a firm must implement and follow to handle
customer complaints [DISP 1.1.3, 1.2.1/3, 1.3.4, 1.3.6, 1.3.7, 1.4.1,
1.6.1/2/5, 1.9.1, 1.10.1]
-Financial Services Compensation Scheme
-know the role of the FSCS [COMP 2.2.2, 3.2.1]
-know who can claim and what is a protected claim [FCA COMP
4.2.1/2 and 5.2.1]
-apply the rules of the Financial Services Compensation Scheme in
respect of each category of protected claim [COMP 10.2.1/3
(FCA/PRA)]
-Ethical Standards and Professional Integrity
-apply appropriate ethical standards and professional integrity when
handling customer complaints
Element 10 FCA Conduct of Business and Client Asset Protection
On completion, the candidate will be able to:
-FCA Conduct of Business Sourcebook
-understand the main FCA principles, rules and requirements
relating to conduct of business:
• Firms subject to the FCA Conduct of Business Sourcebook
[COBS 1.1.1-1.1.3, 1 Annex 1, Part 3 section 3 (FCA/PRA)]
• Activities which are subject to the FCA Conduct of Business
Sourcebook including Eligible Counterparty Business and
transactions between regulated market participants [COBS
1.1.1-1.1.3, Annex 1, Part 1(1) (FCA/PRA) & (4)]
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-Electronic Media
-apply the provisions of the FCA Conduct of Business Sourcebook
regarding electronic media [Glossary definitions of ‘Durable
Medium’ and ‘Website Conditions’] and the recording of voice
conversations and electronic communications across all media
[SYSC 10A]
-Rules applying to all firms relating to inducements
-understand the rules on inducements relating to MiFID business
[COBS 2.3A.5/6/8/9/10]; the provision of independent advice,
restricted advice and portfolio management services to retail clients
[COBS 2.3A.15]; the provision of independent advice and portfolio
management services to retail clients outside the UK or to
Professional clients [COBS 2.3A.16], acceptable minor nonmonetary benefits [COBS 2.3A.19] and to Non-MiFID business
[COBS 2.3.1/2]
-understand the regulations in respect of the inducements
requirements in respect of research, and the prohibition of firms
from providing research for free [COBS 2.3B.1]; receiving third party
research without it constituting an inducement [COBS 2.3B.3]; the
application and process for research payment accounts [COBS
2.3B.4/5/7/8/11/12] and disclosure requirements to clients [COBS
2.3B.20/21]
-Communicating with clients, including the requirements of the
Financial Promotion Rules
-understand the purpose and application of the financial promotion
rules and the relationship with Principles 6 and 7 [COBS 4.1]
-apply the financial promotion rules and firms’ responsibilities for
appointed representatives [COBS 3.2.1(4), 4.1]
-apply the types of communication addressed by COBS 4 including
the methods of communication
-understand the main exemptions to the financial promotion rules
and the existence of the Financial Promotions Order [COBS 4.8]
-apply the rules on approving and communicating financial
promotions and compliance with the financial promotion rules
[COBS 4.10 + SYSC 4]
-apply the rules relating to the compilation of direct offer and nonreal time financial promotions including the relationship with FCA
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Principles, and the requirements in relation to past, simulated past
and future performance [COBS 4.1; 4.6; 4.7.1-4]
-understand the ethical implications of issuing misleading financial
promotions
Client Categorisation
-understand the main FCA principles, rules and requirements relating
to:
-Client categorisation (eligible counterparties/professional/retail)
[COBS 3.1-3.6]
-Notification to clients of their categorisation and relevant
protections [COBS 3.3.1A/B]
-Requirements for clients electing to be professional clients and
eligible counterparties, together with those wishing higher level of
protection [COBS 3.5.3, 3.53B/C/E, 3.5.6; 3.6.4, 3.6.4A/B, 3.6.7,
3.7]
-understand the reliance on other requirements [COBS 2.4.3/4/6/7]
-Fair Treatment of Customers
-understand the main FCA principles and requirements relating to the
fair treatment of customers:
• FCA’s Principles for Businesses [PRIN 1.1.1 & 2.1.1]
• vulnerable customers
• Interaction with SYSC and the requirements for senior
management to review Management Information [SYSC 4.1.1]
• Importance of the fiduciary relationship and the responsibilities of
professional advisers towards clients
• Requirements for Fair Agreements and FCA’s ability to enforce
Unfair Contract Terms legislation [UNFCOG 1.1, 1.3 & 1.4]
• FCA requirement for a Conflicts Management Policy [SYSC
10.1.10/11/12]; importance of the FCA conduct risk requirements
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-understand the FCA Conduct of Business Rules relating to fair
treatment of customers;
• Communication to clients and the additional requirements relating
to retail clients in respect of MiFID business [COBS 4.5A.3] and
Non-MiFID business [COBS 4.1, 4.5]
• Provision of dealing confirmations & periodic statements to
customers in respect of MiFID business [COBS 16A.2.1, 16A.3.1,
16A.4.1] and Non-MiFID business [COBS 16.1-16.3]
• Ability to ensure and demonstrate the fair treatment of customer
dealing, taking into account PA Dealing Policy
• Client Order Management Policy
• Concepts of Best & Timely Execution, Churning & Switching for
MiFID business [COBS 9A.2.18, 11.2A, 11.3, 11.4] and NonMiFID business [COBS 9.3, 11.2, 11.2B, 11.3, 11.4]
-understand the application and purpose of the principles and rules on
Conflict of Interest; the rules on identifying conflicts and types of
conflicts; the rules on recording and managing conflicts; and the rule
on disclosure of conflicts [PRIN 2.1.1 – Principle 8, SYSC 10.1.1 –
10.1.9]
-know the rules on managing conflict in connection with investment
research and research recommendations [COBS 12.1.2,
12.2.1/3/5/10, 12.3.1- 4] and the rules on Chinese walls [SYSC
10.2]
-Accepting Customers
– understand the main FCA principles, rules and requirements
relating to client take-on processes, agreements and disclosures:
• Timing, Order and Medium in which client disclosures may be
made, including requirements on electronic media
• Disclosure of service provision, costs and associated charges
and terms of business
• Client agreements for MiFID business [COBS 8A.1.4 – 8A.1.7]
and Non-MiFID business [COBS 8.1.1 – 8.1.3]
• Interpreting the different information requirements and
responsibilities between managing investments and executiononly services for MiFID business [COBS 6.1ZA.2.1/4/10] and
Non-MiFID business [COBS 6.1.6]
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• Requirements of disclosure information – compensation
scheme, complaints eligibility, status information, permanent
place of business, voice recording
-understand the requirements for an adviser to a retail client to be
remunerated only by adviser charges in relation to any personal
recommendation or related service
-Investment Advice and Product Disclosure
-understand the main FCA principles, rules and requirements relating
to the provision of investment advice and product disclosure:
• Assessment of client suitability requirements for MiFID business
[COBS 9A.2.1/4/5/6/7/8/9/10/11/12/13/15] and Non- MiFID
business [COBS 9.1.1 – 9.1.4, 9.2.1-6, 9.3.1]
• The timing of suitability reports for MiFID business [COBS 9A.3.2
and Non-MiFID business [COBS 9.4.1-3]
• Obligations for assessing appropriateness & circumstances not
necessary for MiFID business [COBS 10A.2.1/3/4, 10A.4.1] and
Non-MiFID business [COBS 10.2, 10.4-10.6]
• Cancellation & withdrawal rights [COBS 15.1.1; 15.2.1; 15.2.3;
15.2.5; 15.3.1; 15.3.2]
-understand the requirements for a firm making a personal
recommendation to be independent or restricted
-Product Governance
-understand product governance requirements for investments
[PROD 3.1.1/2]
-understand target market assessment for manufactures [PROD
3.2.8/10/11] and distributors of investment products [PROD
3.3.9/10/11/12]
-understand stress testing and scenario analysis [PROD
3.2.12/13/14/15]
-understand information sharing and disclosure [PROD 3.2.16]

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