Free CISI UK Regulation & Professional Integrity practice questions

Not quite. The answer is B.

Sustainable growth — a rise in national income in real terms, with the boom-and-bust swings of the business cycle damped down so that output trends upward — is singled out as the key aim and outcome of economic policy. The 2% inflation objective is the closest runner-up and is genuinely an aim, but it sits alongside employment and the balance of payments as one target among several.

Not quite. The answer is C.

Most firms are supervised as members of a portfolio whose members share a common business model — the FCA analyses each portfolio, agrees a strategy and acts against the firms posing the greatest harm, telling them its expectations, its priorities and what it regards as good and poor practice. Dedicated teams are the alternative model, reserved for firms with the greatest potential impact on consumers and markets, so they are not layered on top of portfolio supervision.

Not quite. The answer is B.

The general application rule bites on designated investment business carried on from an establishment maintained in the UK by the firm or by its appointed representative — the location of the establishment is the trigger, not who owns it. Both offices therefore count. Confining the answer to MiFID business is the near miss: COBS reaches non-MiFID designated investment business too, with certain rules modified or disapplied.

Not quite. The answer is A.

A partnership is the relationship between two or more people carrying on a business together for profit, and it is not a separate legal entity in the way a company is — with an ordinary partnership the partners stay fully liable for the firm's debts. An LLP is the runner-up, but the whole point of an LLP is that a member is not answerable for another member's negligence or misconduct; here the liability is unlimited and shared.

Not quite. The answer is B.

The Guide pulls together the FCA's guidance on countering financial crime, but it contains no rules and its contents are non-binding — it exists to sharpen firms' understanding of FCA expectations and to help them test the adequacy of their systems and controls. Industry guidance approved by HM Treasury describes the JMLSG notes, not this document, so that runner-up fails.

Not quite. The answer is D.

A monetary award is only half of the armoury — DISP also lets an ombudsman issue a direction requiring the firm to take whatever steps in relation to the complainant it considers just and appropriate, and firms must comply promptly. The FSCS is the runner-up here, but it pays compensation out of the levy once a firm has failed; it has no power to order a trading firm to do anything.

Not quite. The answer is B.

Direct taxation captures the incomes of individuals, the profits of companies through corporation tax, and wealth transfers through inheritance tax. Indirect taxation captures the products and services that consumers and companies buy, VAT being the standard illustration. Reversing the pair is the natural error — IHT bites on a transfer of wealth, not on a purchase.

Not quite. The answer is C.

The supervisory principles sit alongside the Principles for Businesses, and it is the culture and governance principle that commits supervisors to assessing what drives behaviour within a firm. Strategy and business models is the closest rival — but that principle is aimed at identifying emerging risk of harm from what a firm sells and how it earns its money, not at the behaviour behind those choices.

Not quite. The answer is C.

General application is a starting point, not a fixed rule — the workbook is explicit that it is modified depending on where the firm is established and what it does. That is why a third country firm's UK branch is caught by the MiFID-derived provisions. Incorporation outside the UK is the tempting wrong turn: what matters is the establishment from which the business is carried on, not the place of incorporation.

Not quite. The answer is A.

In a limited liability partnership some or all of the partners have limited liability, and the defining feature is that one partner is not responsible for another partner's misconduct or negligence — exactly the protection described. An ordinary partnership carries on business for profit in the same way, but it leaves each partner exposed to the acts of the others, so it fails the second half of the scenario.