R01 Financial Services Regulation & Ethics Flashcards

Practice flashcards covering the core concepts of the R01 Financial Services Regulation & Ethics module 2025/26, including regulatory objectives, consumer needs, legal categories, and ethical standards.

What is the overarching strategic objective of the Financial Conduct Authority (FCA)?

To ensure that the relevant markets function well.

What are the three operational objectives of the FCA?

1. Protection of consumers; 2. Ensure the integrity of the UK financial system; 3. Promote competition.

In the PIMPSI model used for prioritizing financial needs, what does each letter stand for?

P - Protection; I - Income Protection; M - Mortgages; P - Pensions; SI - Savings and Investments.

What is the key difference between a bank and a building society according to the transcript?

Banks are owned by shareholders, while building societies are member-owned mutuals.

Under the Financial Services Compensation Scheme (FSCS), what is the protection limit for deposits per investor, per authorized firm?

$100\%$ of the first $\pounds 120,000$.

How is interest-only mortgage repayment structured?

The borrower makes interest payments throughout the term but must repay the full capital from other sources at the end of the term.

What are the four key elements of the UK financial services industry structure?

1. Firms; 2. Markets; 3. Regulators; 4. Infrastructure.

What is the core responsibility of the Prudential Regulation Authority (PRA)?

The prudential regulation (capital and solvency) of the industry’s largest players, including banks and insurers.

What is the role of the Financial Policy Committee (FPC) within the Bank of England?

It is a macro-level committee tasked with looking at the entire financial system and spotting emerging risks.

Define 'hard facts' and 'soft facts' in the context of financial fact-finding.

Hard facts are objective data (e.g., existing cover or savings); soft facts are subjective (e.g., retirement goals or attitude to risk).

What is the standard Nil Rate Band (NRB) for Inheritance Tax (IHT) in the $2025/26$ tax year?

$\pounds 325,000$.

What is a 'Potentially Exempt Transfer' (PET) in the context of IHT?

An outright gift from one person to another that becomes exempt if the donor survives for $7$ years.

What are the 'three certainties' required to create a valid trust as established in Knight v Knight ($1840$)?

1. Certainty of words (intention); 2. Certainty of subject (property); 3. Certainty of object (beneficiaries).

What is the primary difference between joint tenants and tenants in common regarding property ownership?

Joint tenants own $100\%$ of the property together and it passes automatically on death to the survivor; tenants in common own set percentages that pass via a will or intestacy.

What happens to an Ordinary Power of Attorney if the donor loses mental capacity?

It is automatically revoked.

How many hours of Continuing Professional Development (CPD) must a retail investment adviser complete annually?

$35$ hours, of which at least $21$ hours must be structured.

What is the maximum binding compensation award the Financial Ombudsman Service (FOS) can order for acts or omissions on or after $1/4/19$ for cases referred after $1/4/25$?

$\pounds 445,000$ plus interest and costs.

What are the three stages of the money laundering process?

1. Placement; 2. Layering; 3. Integration.

What is the time limit for a firm to send a final response to a complaint before the customer can refer it to the FOS?

$8$ weeks.

What is the difference between Independent and Restricted financial advice?

Independent advice is unbiased and unrestricted, researching the whole market; Restricted advice is limited to certain providers or product types.

Under the Senior Management and Certification Regime (SM&CR), who are 'Limited Scope' firms?

Usually smaller businesses subject to the baseline requirements.

What is the purpose of an Insurance Product Information Document (IPID)?

To provide a summary of a general insurance product’s key features to customers.

How long must records for a Pensions Transfer Specialist be kept?

Indefinitely.

Define 'fiduciary relationship'.

A relationship based on trust, where a professional is expected to act in the best interests of a client.

What is 'greenwashing' as defined by the FCA?

Where companies exaggerate their green (environmental) credentials.