R01 Client money, product governance and ESG rules: free practice questions

1. Question 1 of 5

   By when must client money normally be paid into the client bank account?

   Option A: Within one hour of being receivedOption B: Within seven days of being receivedOption C: By the end of the month it was receivedOption D: By close of business the next working day

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   The answer is D: By close of business the next working day

   Unless otherwise permitted, client money must be held separately in a designated client bank account and paid in by close of business the next working day.

   Why the other options are wrong

   A

   One hour isn't the rule.

   B

   Seven days is too long.

   C

   The end of the month is too long.

2. Question 2 of 5

   When must a firm complete a monthly client money and asset return (CMAR)?

   Option A: When it's a CASS medium or large firm (£1m money or £10m assets)Option B: When it holds more than £100 of client money at any timeOption C: Whenever it holds any client money at all, even small sumsOption D: Only when the FCA specifically requests one from the firm

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   The answer is A: When it's a CASS medium or large firm (£1m money or £10m assets)

   CASS small firms don't need to complete a CMAR. Medium or large firms (client money of £1m or more and/or assets of £10m or more) must submit one monthly and have a senior manager responsible for CASS.

   Why the other options are wrong

   B

   £100 is far below the thresholds.

   C

   Small firms are exempt.

   D

   It's a regular requirement for medium and large firms.

3. Question 3 of 5

   Good product governance should result in products that do which of the following? 1. Meet the needs of identifiable target markets 2. Are sold through appropriate distribution channels 3. Deliver appropriate client outcomes

   Option A: 2 and 3 onlyOption B: 1 and 3 onlyOption C: 1 and 2 onlyOption D: 1, 2 and 3

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   The answer is D: 1, 2 and 3

   Product governance should produce products that meet target market needs, are sold through appropriate channels and deliver appropriate outcomes.

   Why the other options are wrong

   A

   Meeting target market needs is also expected.

   B

   Appropriate distribution channels are also expected.

   C

   Appropriate client outcomes are also expected.

4. Question 4 of 5

   Under the SDR labelling rules, at least what proportion of a labelled product's assets must be invested in line with its sustainability objective?

   Option A: 60%Option B: 90%Option C: 70%Option D: 50%

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   The answer is C: 70%

   Labelled products must have at least 70% of the gross value of assets invested in line with the sustainability objective, with some exceptions.

   Why the other options are wrong

   A

   60% is below the requirement.

   B

   90% is higher than required.

   D

   50% is below the requirement.

5. Question 5 of 5

   What is the maximum length of a sustainability product's consumer-facing disclosure?

   Option A: One A4 pageOption B: Five A4 pagesOption C: Two A4 pagesOption D: There is no limit

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   The answer is C: Two A4 pages

   Consumer-facing disclosures must be no more than two A4 pages, including the sustainability objective signposted as the 'sustainability goal'.

   Why the other options are wrong

   A

   The limit is two pages.

   B

   Five pages is too long.

   D

   There is a limit.

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