Financial Conduct Authority FCA Test Papers | Assessment Quiz and Answers | Marking Sheets and Handbook | Template for FCA Applications and Authorised Firms – FCA Authorisations and Compliance

1 Test Paper Overview

Testing, assessing and training employees in the regulatory compliance rules and standards is an essential business practice to ensure compliance, evidence competency and support your staff. We have designed a range of exclusive compliance assessment quiz and answer documents, with a view to assisting regulated firms in the compliance expectations.

1.1 Assessment Quiz & Answers

Our ready-to-use question and answer assessments come with beginner, intermediate and advanced style questions on the specific compliance areas and through detailed and expertly developed answers sheets, also aim to teach as well as test. The assessments are unique in that they do not just provide yes/no answers to the questions. Our compliance experts have provided detailed, relevant and compliant answers to each question so that gaps and understanding can be filed, and staff supported.

Assessments should be a continual part of any organisation and delivered as part of induction programmes, after training and on a rolling basis as part of a standard compliance regime. These assessments allow you to evidence your compliance to the Training and Competency requirements set by regulators and enable the identification of misunderstood areas, before they become a problem.

1.2 Using the Assessment

You are free to edit and use the document however suits your business type and needs, however we would suggest printing the quiz for hard copy use and then using the answer paper to mark the assessment and discuss the answers with the employee where gaps have been identified. You should also add a copy of the assessment and any marking/evaluation logs to the employees training file for future reference and compliance evidence.

1.3 Marking Sheet

Each of the questions come with a marking guide which can be used by the employee to know how many points/answers should be given, and for the marker to score the answer correctly. At the end of the document, you will find a marking sheet to make scoring the tests easier.

2 Financial Conduct Authority (FCA) Test Paper 1

You have 30 minutes to complete the quiz on the FCA and their regulatory system. This quiz has been designed to test your knowledge and understanding in this compliance area. Please make sure that you read each question carefully – the marks available for each question are noted on the bottom right.

1) How are the FCA funded?

a. By the Government based on the number of firms they regulate ___
b. By the public via a tax levied on all financial & credit products ___
c. By the firms that they regulate via fees charges to carry out financial activities ___
d. By the UK banks through fees based on the volume of financial products sold ___

(1 mark)

2) The FCA has 3 main operational objectives – what are they?

(Multiple answers accepted)

a. Market Integrity ___
b. Raise Awareness about Financial Products & Services ___
c. Protecting Consumers ___
d. Promoting Effective Competition ___
e. Protect Regulated Firms ___
f. Creating New Financial Services for Consumers ___

(3 marks)

3) Fill in the blanks on the below statement about the FCA: –

The FCA operates ________________ of the UK Government and regulates _____________ providing services to _____________.

(3 marks)

4) The largest fine to date was imposed by the FCA on Barclays Bank Plc in May 2015, how much was the fine?

a. £284,432,000.00 ____
b. £284,432.00 ____
c. £289,999.00 ____
d. £244,844,844.00 ____

(1 mark)

5) SYSC is one of the High-Level Standards modules in the FCA handbook. What does SYSC stand for?

a. Systems, Security and Controls ___
b. Senior Management Arrangement, Systems and Controls ___
c. Senior System Regulations and Senior Controls ___
d. System, Senior Management and Compliance ___

(1 mark)

6) “There are six consumer outcomes that firms should strive to achieve, and these remain core to what we expect of firms”. This FCA statement relates to which compliance area?

________________________________________________________

(1 mark)

7) Name 2 of the FCA’s Principles for Business?

________________________________________________________
________________________________________________________
(2 marks)

8) The FCA use the guidance of the JMLSG when considering if a breach in their regulations has occurred with regards to money laundering. What does JMLSG stand for?

a. Joint Money Laundering Supervisory Group ___
b. Jurisdictional Money Laundering Section Group ___
c. Joint Money Laundering Steering Group ___
d. Joint Money Laundering Shared Government ___

(1 mark)

9) What does FCA stand for?

a. Financial Conduct Association ___
b. Financial Control Authority ___
c. Finance Conduct Authorisation ___
d. Financial Conduct Authority ___

(1 mark)

10) In 2012, an Act of Parliament was passed bringing in a new regulatory framework for the financial system and financial services in the UK. What was this Act?

a. Finance & Credit Act 2012 ___
b. Financial Services Act 2012 ___
c. Financial Services and Markets Act 2000 ___

(1 mark)

You have reached the end of test paper 1

3 Financial Conduct Authority (Fca) Test Paper 2

You have 30 minutes to complete the quiz on the FCA and their regulatory system. This quiz has been designed to test your knowledge and understanding in this compliance area. Please make sure that you read each question carefully – the marks available for each question are noted on the bottom right.

1) The above framework saw the launch of the FCA and PRA – when did this framework come into effect?

a. April 1^st 2012 ___
b. April 1^st 2012 ___
c. January 1^st 2013 ___
d. April 1^st 2014 ___

(1 mark)

2) The FCA Handbook sets out their legislative provisions which have been created under the powers given to them by the Financial Services and Markets Act 2000 (FSMA).

a. True ___
b. False ___

(1 mark)

3) The FCA Handbook includes several modules and sourcebooks aimed at different credit and financial sectors. What are the full names of the below sourcebook acronyms?

a. COBS – ______________________________________

b. CONC – ______________________________________

c. SM&CR – _____________________________________

d. FC – ________________________________________
(4 marks)

4) The Consumer Credit Sourcebook is the specialist sourcebook for?

a. Consumer Credit Activities ___
b. Financial Services & Credit Activities ___
c.Credit-Related Regulated Activities ___
d. Commercial Credit-Related Activities ___

(1 mark)

5) The FCA can impose fines on regulated companies?

a. True ___
b. False ___

(1 mark)

6) Which FCA Controlled Function is CF11?

a. Compliance Oversight Function ___
b. Customer Function ___
c. Money Laundering Reporting Function ___
d. Chief Executive Function ___

(1 mark)

7) CONC 3.3.2 of the FCA Handbook specifies the 4 general requirements for Financial Promotions. Which of the below is NOT one of these requirements?

a. Uses plain and intelligible language ___
b. Is clear, concise and easy to understand ___
c. Is easily legible ___
d. Specifies the name of the person making the communication ___

(1 mark)

8) Under the FCA’s risk control guidance, SYSC 7.1.7BC refers to: –

(Fill in the blanks)

In setting the method of determining the _____________ of employees involved in the risk management function, firms will also need to comply with the ______________.

(2 marks)

9) One of the FCA’s Principles for Business is “Communications with Clients”. Describe what this principle means for firms: –

________________________________________________________

(2 marks)

10) In addition to the other FCA Handbook regulation, some firms must also abide by the CONC Sourcebook. What is this?

C____________________ C_____________

(1 mark)

You have reached the end of test paper 2

4 Financial Conduct Authority (FCA) Answer Sheet 1

Below are the answers to the first assessment test paper; the correct answer is provided in red underneath each assessment question. We have then provided detailed information about the question and answer which should be relayed to the assessment taker where any gaps have been identified. Use the mark guidance for scoring each answer.

1) How are the FCA funded?

c. By the firms that they regulate via fees charges to carry out financial activities

The FCA are funded entirely by the firms that they regulate, through charging them fees to carry out their financial activities. How much they pay is determined by what type of business they are and what activities they carry out. The 3 main applications fees are: –

£1,500 – straightforward application
£5,000 – moderately complex application
£25,000 – complex application

As the FCA are a wholly independent body, the do not receive any funding from the Government.

2) The FCA has 3 main operational objectives – what are they?

a. Market Integrity
c. Protecting Consumers
d. Promoting Effective Competition

The FCA has 3 main statutory operational objectives and covered within each objective are their aims.

Protecting Consumers

Ensure customers are treated in a way that is appropriate for their level of financial knowledge and understanding
Be more outward looking, by engaging more with consumers and understanding more about their concerns and behaviour
Set clear expectations for firms and be clear about what firms can expect from us
Intervene early to tackle potential risks to consumers before they take shape
Be tougher and bolder, following a strategy of credible deterrence, using new powers of intervention and enforcement.

Market Integrity

The soundness, stability and resilience of the financial markets
The transparency of the price information process in those markets
Combating market abuse
The orderly operation of the financial markets
Reducing financial crime in the UK financial system

Promoting Effective Competition

To promote effective competition in the interests of consumers in the markets we regulate
To promote effective competition when addressing our consumer protection or market integrity objectives

3) Fill in the blanks on the below statement about the FCA: –

The FCA operates independently of the UK Government and regulates financial firms providing services to consumers.

The Financial Conduct Authority (FCA) is a financial regulatory body based in the UK but operating independently of the UK government. They are financed by charging members of the financial services industry an annual fee; how much they pay is determined by what type of business they are and what activities they carry out. The FCA regulates financial and credit firms who provide services to consumers and help to maintain the integrity of the UK’s financial markets.

4) The largest fine to date, was imposed by the FCA on Barclays Bank Plc in May 2015, how much was the fine?

a. £284,432,000.00

The Financial Conduct Authority (FCA) imposed a financial penalty of £284,432,000 on Barclays Bank Plc (Barclays) in May 2015 for failing to control business practices in its foreign exchange (FX) business in London. This is the largest financial penalty ever imposed by the FCA, or its predecessor the Financial Services Authority (FSA).

5) SYSC is one of the High-Level Standards modules in the FCA handbook. What does SYSC stand for

b. Senior Management Arrangement, Systems and Controls

SYSC (Senior Management Arrangement, Systems and Controls) is an FCA Handbook module that forms part of the High-Level Standards section. SYSC focusses on the regulations and practical responsibility of firms and their directors and/or senior managers. It provides rules, regulations and guidelines for firms on the systems, measures, procedures and controls that should be in place to meet the FCA regulatory standards.

6) “There are six consumer outcomes that firms should strive to achieve, and these remain core to what we expect of firms”. This FCA statement relates to which compliance area?

Treating Customers Fairly

Treating Customers Fairly (TCF) remains one of the central expectations of the firms regulated by the FCA, whereby they are expected to put customers at the foundation of their business processes and activities and adopt the TCF principles and ethos.

Under the FCA Handbook Regulatory Guides is section entitled The Responsibilities of Providers and Distributors for the Fair Treatment of Customers (RPPD), which provides guidance for TCF.

7) Name 2 of the FCA’s Principles for Business?

Integrity – A firm must conduct its business with integrity.
Skill, Care and Diligence – A firm must conduct its business with due skill, care and diligence.
Management and Control – A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.
Financial Prudence – A firm must maintain adequate financial resources.
Market Conduct – A firm must observe proper standards of market conduct.
Customers’ Interests – A firm must pay due regard to the interests of its customers and treat them fairly.
Communications with Clients – A firm must pay due regard to the information needs of its clients and communicate information to them in a way which is clear, fair and not misleading.
Conflicts of Interest – A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.
Customers: Relationships of Trust – A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgement.
Clients’ Assets – A firm must arrange adequate protection for clients’ assets when it is responsible for them.
Relations with Regulators – A firm must deal with its regulators in an open and cooperative way, and must disclose to the appropriate regulator appropriately anything relating to the firm of which that regulator would reasonably expect notice.

8) The FCA use the guidance of the JMLSG when considering if a breach in their regulations has occurred with regards to money laundering. What does JMLSG stand for?

c. Joint Money Laundering Steering Group

Section SYSC 6.3 of the FCA Handbook relates to financial crime and advices that “The FCA, when considering whether a breach of its rules on systems and controls against money laundering has occurred, will have regard to whether a firm has followed relevant provisions in the guidance for the United Kingdom financial sector issued by the Joint Money Laundering Steering Group.”

The JMLSG is made up of the leading UK Trade Associations in the Financial Services Industry. Its aim is to promulgate good practice in countering money laundering and to give practical assistance in interpreting the UK Money Laundering Regulations.

9) What does FCA stand for?

d. Financial Conduct Authority

The Financial Conduct Authority (FCA) is a financial regulatory body who regulate financial firms who provide services, products and consumer credit to customers within the United Kingdom. They took over the regulation of Financial Firms on 1^st April 2013, after the disbandment of the Financial Services Authority (FSA) and began regulating Consumer Credit firms on 1^st April 2014, taking over the role from the Office of Fair Trading (OFT).

The overall aim of the FCA is to ensure that consumers get a fair and relevant product or service and that the regulatory rules are complied with by any such provider. However, the FCA have many tiers to their regulatory system, most of which are encompassed in their objectives.

The FCA aims to make financial firms transparent and accountable so that consumer trust can be restored in buying financial products and services and those firms not putting the customer first or adhering to the strict rules and guidelines can be held accountable and penalised accordingly.

10) In 2012, an Act of Parliament was passed bringing in a new regulatory framework for the financial system and financial services in the UK. What was this Act?

b. Financial Services Act 2012

The Financial Services Act 2012 is an Act of the Parliament which implemented a new regulatory framework for the financial system and financial services in the UK. It replaced the Financial Services Authority (FSA) with two new regulators (Financial Conduct Authority (FCA) & Prudential Regulation Authority (PRA), and created the Financial Policy Committee of the Bank of England.

The Act: –

makes the Bank of England responsible for financial stability
provides for focussed prudential and conduct of business regulators
creates a macro-prudential authority, the Financial Policy Committee (FPC), within the Bank of England
places the judgement of expert supervisors at the heart of regulation
allows the inclusion of activities in respect of benchmarks as regulated activities and creates three criminal offences related to market manipulation

This is the end of the test 1 answer paper. Where you have identified any gaps or misunderstandings in an assessment, you should use the additional answers provided to teach and support the respondent. You should also scan/save a copy of the completed quiz and marking sheet and complete any assessment/evaluations forms that you use for training and development and record these in the employees training file.

5 Financial Conduct Authority (FCA) Answer Sheet 2

Below are the answers to the second assessment test paper; the correct answer is provided in red underneath each assessment question. We have then provided detailed information about the question and answer which should be relayed to the assessment taker where any gaps have been identified. Use the mark guidance for scoring each answer.

1) The above framework saw the launch of the FCA and PRA – when did this framework come into effect?

b. April 1^st 2013

They took over the regulation of Financial Firms on 1^st April 2013, after the disbandment of the Financial Services Authority (FSA) and began regulating Consumer Credit firms on 1^st April 2014, taking over the role from the Office of Fair Trading (OFT).

2) The FCA Handbook sets out their legislative provisions which have been created under the powers given to them by the Financial Services and Markets Act 2000 (FSMA).

a. True

The Financial Services and Markets Act 2000 is an Act of the Parliament that initially created the Financial Services Authority (now replaced by the FCA and PRA) as a regulator for insurance, investment business and banking, and the Financial Ombudsman Service to resolve disputes as a free alternative to the courts.

The FCA Handbook sets out the regulators legislative and other provisions made under powers given to them by the Financial Services and Markets Act 2000.

3) The FCA Handbook includes several modules and sourcebooks aimed at different credit and financial sectors. What are the full names of the below sourcebook acronyms?

a. COBS – Conduct of Business Sourcebook
b. CONC – Consumer Credit Sourcebook
c. SM&CR – Senior Management & Certification Regime
d. FC – Financial Crime

4) The Consumer Credit Sourcebook is the specialist sourcebook for?

c. Credit-Related Regulated Activities

The Consumer Credit Sourcebook (CONC) is a supplementary FCA handbook which sets out the requirements and guidance for firms who carry out credit-related regulated activities. This sourcebook and its contents are to be read and followed in addition to and alongside the main FCA Handbook modules.

The obligations set out in CONC, build on and add to the high-level obligations, for example, in PRIN, COND and SYSC, and the requirements in or under the CCA.

5) The FCA can impose fines on regulated companies and Approved Persons?

a. True

The Financial Conduct Authority (FCA) have a wide range of enforcement powers, including the ability to impose fines for breaches and misconduct on both regulated. Actions that the FCA can take for not meeting their standards are: –

Withdrawing a firm’s authorization
Prohibiting individuals from carrying on regulated activities
Suspending firms or individuals from undertaking regulated activities
Fining firms or individuals who breach the rules or commit market abuse
Applying to the Court for injunctions and restitution orders
Bringing criminal prosecutions to tackle financial crime, such as insider dealing or unauthorised business

6) Which FCA Controlled Function is CF11?

c. Money Laundering Reporting Function

CF1 – Director Function
CF2 – Non-executive director function
CF3 – Chief executive function
CF4 – Partner function
CF5 – Directors of an unincorporated association
CF6 – Small friendly society function
CF8 – Apportionment and oversight function (Non-MiFID business only)
CF10 – Compliance oversight function
CF10a – CASS Oversight Operation Function
CF11 – Money laundering reporting function
CF12 – Actuarial function
CF12a – With-profits actuary function
CF12b – Lloyd’s Actuary function
CF28 – System and controls function
CF29 – Significant management function
CF30 – Customer function
CF40 – Benchmark submission function
CF50 – Benchmark administration function

7) CONC 3.3.2 of the FCA Handbook specifies the 4 general requirements for Financial Promotions. Which of the below is NOT one of these requirements?

b. Is clear, concise and easy to understand

The full General Requirements section of CONC 3.3.2 of the FCA Handbook says: –

A firm must ensure that a communication or a financial promotion:

(1) uses plain and intelligible language
(2) is easily legible (or, in the case of any information given orally, clearly audible)
(3) specifies the name of the person making the communication or communicating the financial promotion or the person on whose behalf the financial promotion is made; and
(4) in the case of a communication or financial promotion in relation to credit broking, specifies the name of the lender (where it is known)

8) Under the FCA’s risk control guidance, SYSC 7.1.7BC refer to: –

In setting the method of determining the remuneration of employees involved in the risk management function, firms will also need to comply with the Remuneration Code.

9) One of the FCA’s Principles for Business is “Communications with Clients”. Describe what this principle means for firms: –

Communications with Clients means a firm must pay due regard to the information needs of its clients and communicate information to them in a way which is clear, fair and not misleading.

10) In addition to the other FCA Handbook regulation, some firms must also abide by the CONC Sourcebook. What is this?

Consumer Credit

The Consumer Credit Sourcebook (CONC) is a supplementary FCA handbook which sets out the requirements and guidance for firms who carry out credit-related regulated activities. This sourcebook and its contents are to be read and followed in addition to the main FCA Handbook.

The obligations set out in CONC, build on and add to the high-level obligations, for example, in PRIN, COND and SYSC, and the requirements in or under the CCA.

This is the end of the second assessment answer paper. Where you have identified any gaps or misunderstandings in an assessment, you should use the additional answers provided to teach and support the respondent. You should also scan/save a copy of the completed quiz and marking sheet and complete any assessment/evaluations forms that you use for training and development and record these in the employees training file.

6 Test Marking Sheets

Employee Name:			Date:		Test Paper 1

Question	Available Mark	Mark Awarded		Notes
#1	1
#2	3
#3	3
#4	1
#5	1
#6	1
#7	2
#8	1
#9	1
#10	1
TOTAL	15

Employee Name:			Date:		Test Paper 2

Question	Available Mark	Mark Awarded		Notes
#1	1
#2	1
#3	4
#4	1
#5	1
#6	1
#7	1
#8	2
#9	2
#10	1
TOTAL	15