9 - Multiple Choices

• Section 32 of the Finance Act 1981 attempted to give flexibility to pension arrangements in the light of what underlying change?
• Options for the underlying change

  • Employers closing or changing their defined benefit schemes
  • The Retail Distribution Review (RDR) banning commission payments
  • The introduction of automatic enrolment to workplace pensions
  • The introduction of pension drawdown
• Mr Smith is 43 years old and wishes to open a Lifetime ISA. Which of the following best describes the position?
• Options for Mr Smith's position

  • Mr Smith simply needs to apply to a LISA manager
  • Mr Smith can save using a LISA, but cannot use the savings to purchase a house
  • Mr Smith can save using a LISA, but will not receive any government bonus
  • Mr Smith cannot open a LISA
• The process of consolidating a large number of relatively low-value buy or sell orders from retail clients into a single order that can be serviced by the destination firm is called:
• Options for the process of consolidation

  • Modelling
  • Settlement netting
  • Order netting
  • Aggregation
• The HMRC rules concerning PAIFs require these funds to:
• Requirements for PAIFs

  • Pay their income as a dividend distribution
  • Split their income into three types of source for tax reporting purposes
  • Offer income accumulation rather than income units
  • Gain reporting fund status
• In respect of STP transactions, what does ‘API’ stand for?
• Meaning of 'API'

  • Automated Processing Initiative
  • Accelerated Parameter Identification
  • Assisted Portfolio Index
  • Application Programming Interface
• Which of the following best describes the implications of fund suspension on a platform?
• Implications of fund suspension

  • All orders already submitted to the AFM will be accepted, but no further trades can be instructed
  • The platform is allowed to submit further trade orders to the AFM, and the AFM must store these in a queue
  • The AFM will decide whether or not it stores trade orders in a queue while the fund is suspended
  • Regulations prevent a platform from accepting and issuing trade orders for a fund that has been suspended
• Which of the following would NOT form part of a firm’s ‘value assessment’ under the Consumer Duty?
• Exclusions from 'value assessment'

  • The costs incurred by the firm in providing its products/services
  • Whether the firm’s price would be considered an outlier if compared with general rates and charges available in the market
  • Whether the charges applied for one of the firm’s products differ from those of a similar product offered by the firm
  • A regular customer satisfaction survey
• The FCA requires firms to provide retail clients with which set of general information about the firm?
• Information required by the FCA

  • The name and address of the firm, the name of the individual who is responsible for managing this client’s business and the name of the body that regulates the firm
  • The name and address of the firm, the contact details necessary to enable a client to communicate effectively with the firm and the name of the body that regulates the firm
  • The name and address of the firm, the contact details necessary to enable a client to communicate effectively with the firm and a statement that telephone calls may be recorded
  • The name and address of the firm, the name of the individual who is responsible for managing this client’s business and a statement that telephone calls may be recorded
• The CASS rules require a platform that never holds assets on its own premises to perform which of the following checks and reconciliations of customers’ assets?
• Checks and reconciliations required by CASS rules

  • Internal custody record check and physical asset reconciliation
  • Internal custody record check and external custody reconciliation
  • External custody reconciliation and physical asset reconciliation
  • Internal custody record check and ‘total count’ check
• Which of the following would be described as ‘rebalancing’?
• Examples of 'rebalancing'

  • Exercising a right under a corporate action
  • Re-registering assets between spouses to benefit from tax allowances
  • Selling assets and buying others in order to benefit from lower costs
  • Performing
• When investors purchase CIS units via a platform, whose name would appear on the fund register?
• Options for whose name appears on the fund register

  • CREST
  • The platform operator’s nominee
  • The investor in all cases
  • The investor, if the platform is performing aggregated trades
• COLL rules require CIS redemptions to be settled by which date (assuming all necessary documentation has been provided)?
• Options for CIS redemptions settlement date

  • Trade date + three business days
  • Trade date + three calendar days
  • Trade date + four business days
  • Trade date + four calendar days
• What is the maximum value of a trade that can be settled by the Faster Payments Service?
• Maximum value of a trade for Faster Payments Service

  • £100,000
  • £250,000
  • £1 million
  • No limit applies
• What is the purpose of TeX?
• Purposes of TeX


  • It carries order and fulfilment messages between platforms and fund managers
  • It carries reregistration messages between platforms and fund managers
  • It mandates common standards for processing reregistration instructions
  • It mandates common standards for processing and settlement of buy/sell instructions
• Which statement most accurately describes the income that is distributed to holders of accumulation units or shares in a CIS?
• Descriptions of income distribution to holders of accumulation units or shares in a CIS

  • The income is automatically reinvested in the fund and, as a result, the price of the units does not fall. The income is still, however, subject to income tax in the tax year when it was distributed
  • The income is automatically reinvested in the fund and, as a result, the price of the units rises. The income is not subject to income tax but is added to the cost of the units/shares for CGT calculation purposes
  • The income is automatically reinvested in the fund and, as a result, the investor is allocated further units/shares. The income is still, however, subject to income tax in the tax year when it was distributed
  • The income is automatically reinvested in the fund and, as a result, the investor is allocated further units/shares. The income is not subject to income tax but is added to the cost of the units/shares for CGT calculation purposes
• What is ‘equalisation’?
• Definitions of 'equalisation'

  • A mechanism to re-align a portfolio with the investor’s original asset allocation
  • The mechanism that resolves safe custody reconciliation differences
  • A mechanism to recognise part of a distribution as being a return of capital rather than income
  • An obligation under RDR to replace commission payments
• An authorised CIS has been experiencing a high volume of redemptions, and the AFM needs to cancel units due to today’s unit dealing activity. If the investment manager confirms to the AFM that the fund’s assets are not sufficiently liquid to complete the cancellation (without selling at a substantial loss), which of the following techniques might the AFM apply?
• Techniques for handling high volume of redemptions

  • Implement soft closure
  • Implement a queued redemption policy
  • Implement hard closure
  • Implement a deferred redemption policy
• A customer holds a life assurance policy on your platform, and the insurer has become insolvent. What is the maximum amount that the investor could claim from the FSCS?
• Maximum claimable amount from FSCS for an insolvent insurer

  • 100% of the first £50,000 of the loss
  • 90% of the actual loss with no upper limit
  • 90% of the first £50,000 of the loss
  • 100% of the actual loss with no upper limit
• Which of the following investors does NOT qualify for compensation from the FSCS?
• Investors not qualifying for compensation from FSCS


  • Charity A, which has assets of £3.18m, 44 employees and a turnover of £6.15m pa
  • Private investor B who is a UK citizen and resident, who has an annual income of £6.7m
  • Company C, which has assets of £3.22m, 40 employees and a turnover of £6.25m pa
  • Charity D, which has assets of £5.2m, 49 employees and a turnover of £10.3m pa
• Which of the following types of instruction would NOT be carried via an STP message?
• Types of instruction not carried via an STP message

  • Notification of an investor’s death
  • Reregistration
  • Holdings and/or valuation information
  • Buy/sell orders