Free CISI UK Financial Regulation mock exam

Not quite. The answer is D.

Criminal proceedings are reserved by the Competition and Markets Authority for individuals who commit the cartel offence, and that is the only part of its work which carries a criminal charge against a person. A merger which restricts competition is dealt with by investigation of the merger itself rather than by prosecuting anyone. Abuse of a dominant position, like an anti-competitive agreement, is investigated as a breach of the UK prohibitions and is met with civil enforcement. Breaches of consumer protection legislation are enforced by the Authority to tackle practices and market conditions that make choice difficult for consumers. The distinction to hold is that investigation and enforcement reach businesses, while prosecution reaches the individual who takes part in a cartel.

Not quite. The answer is C.

The money laundering reporting function is a senior management function, so the individual requires regulatory approval before performing it. The individual Conduct Rules apply as well, since they cover all relevant employees based in the United Kingdom or dealing with customers there. Approval and the Conduct Rules therefore operate together rather than as alternatives. A role that needs no approval but carries the Conduct Rules describes a certified or other relevant employee instead. No population of a solo-regulated firm escapes both requirements apart from ancillary staff such as cleaners and catering staff.

Not quite. The answer is B.

Where a firm becomes aware that a client no longer fulfils the conditions for elective professional classification it must take appropriate action, and where that action means recategorising the client as retail it must notify the client of the new categorisation. The trigger is the firm becoming aware, not the arrival of a review date, so professional status does not simply run on until the next annual review. A written statement from the client acknowledging the consequences of losing protections belongs to the entry route into elective professional status. The clear written warning about the protections which will be lost is also part of that entry route and is given by the firm before the change takes effect. Both of those are conditions for electing up rather than results of falling out of the category.

Not quite. The answer is B.

The terms of the agreement and the required information about the firm and its services must reach a retail client in good time before that client is bound by the agreement, or before investment services are provided, whichever is earlier. Provision immediately after the client is bound is allowed only where the client has asked to use distance communications and the firm has followed the rules on voice telephone communications, so it is relief rather than the rule. Material changes to the terms carry their own timing requirement, which is notice in a durable medium in good time before the change takes effect. The moment at which the firm becomes bound has no part in the rule, which is written throughout around the position of the client.

Not quite. The answer is D.

The insider list records all persons who have access to the inside information, including those working under a contract of employment and those otherwise performing tasks that give them access, such as advisers, accountants and credit rating agencies. Legitimately delaying disclosure leaves that obligation untouched, and the list must be updated promptly whenever a person gains or loses access. Issuers and persons acting on their behalf are the parties that compile and maintain the list rather than the population recorded on it. Knowing possession of information from an inside source is the criminal test for an insider under the Criminal Justice Act rather than the test for an entry on the list. Directors form only one category of person with access, and the list extends to employees and external advisers as well.

Not quite. The answer is A.

Market information includes information about a block of securities under consideration and the price at which such a transaction is likely to be completed. The broker holding a client order to buy therefore has unpublished information before dealing, and the market information defence exists so that the broker may execute that order. What matters is the size of the order and whether it is large enough to move the underlying share price. Market makers rely instead on the separate good faith defence covering business carried on as a market maker. Takeover bidders rely on the legitimate behaviour limb for information arising from their own merger conduct, and stabilising managers rely on the price stabilising rules.

Not quite. The answer is B.

Accountability places the burden on the controller to demonstrate compliance, and where processing rests on consent the controller must be able to show that the consent was freely given, specific and informed and that it was an unambiguous indication of the wishes of the client. Keeping complaint records for 5 years is a requirement of the complaint handling rules and evidences nothing about consent. Consent does not have to be in writing or signed, so a file of signed forms is not what the obligation calls for and would not show that the consent was freely given. Details of the categories of data disclosed to third parties belong to the information owed to the data subject rather than to the evidence of consent.

Not quite. The answer is A.

The regulator has two routes open to it against an unfair term and may take either or both. It can seek an undertaking from the firm that the term will be amended or removed from future consumer contracts. It can also apply to the court for an injunction preventing the firm from using or enforcing the term against existing customers. Confining the response to the undertaking leaves existing customers exposed to the term, and confining it to the injunction ignores the route which reaches future contracts. Neither response is closed off where a term is unfair.