Financial Services, Regulation and Ethics (R01 2026-27)

Flashcards covering essential concepts, regulations, legal principles, and ethics for the CII R01 examination (2026-27 syllabus).

What four essential functions do financial services perform within the wider economy?

1. Provide a vehicle to protect savings and channel them into capital management; 2. Match savers' desire for ready access to capital with borrowers' requirements for long-term funds; 3. Allow individuals and companies to insure against risks; 4. Allow investors to disperse risk across different investment products.

What is the total cumulative amount of quantitative easing committed by the Bank of England by October 2021?

$£895\text{bn}$ (combining $£435\text{bn}$ from the 2007/08 financial crisis and additional commitments made during the COVID-19 pandemic).

What target rate of inflation is the Monetary Policy Committee (MPC) tasked with achieving?

A consumer price inflation (CPI) target of $2\%$, set by the Chancellor of the Exchequer.

What is the key functional difference between a lifetime mortgage and a home reversion plan?

With a lifetime mortgage, the client retains ownership of their home and borrows money secured against it. With a home reversion plan, the client sells all or part of the home (typically receiving between $20\%$ and $60\%$ of market value) in exchange for cash or income, remaining as a tenant under a lease.

What are the key rules governing Statutory Sick Pay (SSP) eligibility and payment starting 6 April 2026?

The lower earnings limit and three waiting days are removed, making SSP payable from the first qualifying day of absence at the lower of $80\%$ of average weekly earnings or the statutory flat weekly rate for up to $28$ weeks.

How many qualifying National Insurance contribution years are needed to receive the full new State Pension of $£241.30$ per week in 2026/27?

$35$ qualifying years (with a minimum of $10$ qualifying years required to receive any new State Pension).

What are the subscription limits for a standard ISA, a Lifetime ISA, and a Junior ISA in 2026/27?

Standard ISA limit: $£20,000$; Lifetime ISA limit: $£4,000$ (included within the $£20,000$ overall limit); Junior ISA limit: $£9,000$.

What is the value of the Residence Nil Rate Band (RNRB) for Inheritance Tax purposes?

$£175,000$ per individual when leaving a qualifying interest in a main residence to a direct descendant.

When must an Enduring Power of Attorney (EPA) established prior to 1 October 2007 be registered?

An Enduring Power of Attorney must be registered with the Office of the Public Guardian (OPG) upon the mental incapacity of the donor.

How does divorce or civil partnership dissolution affect an existing will?

It revokes the will in part: the former spouse or civil partner is treated as having predeceased the testator (cancelling gifts to them and their appointment as executor), but the remainder of the will remains valid.

Under the English intestacy rules, what is the statutory legacy received by a surviving spouse/civil partner if the deceased leaves surviving issue?

The surviving spouse or civil partner receives personal chattels, a statutory legacy of $£322,000$, and half of any remaining estate balance outright.

What 'three certainties' are required for a valid trust under Knight v. Knight (1840)?

1. Certainty of words (imperative language showing clear intent to create a trust); 2. Certainty of subject matter (clearly identified property); 3. Certainty of objects (identifiable beneficiaries).

What are the three operational objectives of the Financial Conduct Authority (FCA)?

1. Protecting consumers; 2. Enhancing market integrity; 3. Promoting competition (plus a secondary objective to facilitate international competitiveness and medium-to-long term economic growth).

What is FCA Principle 12 under the Principles for Businesses (PRIN)?

Principle 12 (the Consumer Duty) states: "A firm must act to deliver good outcomes for retail customers."

What are the standard retention periods for records under FCA COBS rules for pension transfers, life policies, and general MiFID business?

Pension transfers, opt-outs, and FSAVCs: Indefinitely; Life policies and pension contracts: $5$ years ($6$ years for financial promotions); General MiFID business: $5$ years.

What are the annual Continuous Professional Development (CPD) requirements for a retail investment adviser?

$35$ hours of appropriate CPD per year, of which at least $21$ hours must be structured.

What is the Financial Ombudsman Service (FOS) maximum monetary award limit for complaints referred on or after 1 April 2026 concerning acts/omissions on or after 1 April 2019?

$£455,000$.

What is the Financial Services Compensation Scheme (FSCS) protection limit for eligible deposit accounts?

$100\%$ of the first $£120,000$ per person per authorised firm ($£240,000$ for joint accounts), with temporary high balances protected up to $£1.4\text{ million}$ for up to $6$ months.

Which financial products carry a 30-day statutory cancellation period?

Life policies, personal and stakeholder pension contracts, pension transfers, pension annuities, and elections for income withdrawals.

What does the mnemonic 'PIPSI' represent in client financial planning priorities?

Protection, Income protection, Pensions, Savings, Investment.

What three main criteria are evaluated under the FCA Fit and Proper Test (FIT)?

1. Honesty, integrity, and reputation; 2. Competence and capability; 3. Financial soundness.