R01 Ethics in financial services: issues, regulation and culture: free practice questions

1. Question 1 of 5

   In a business setting, ethics is best summed up as:

   Option A: following the regulator's detailed rules to the letterOption B: applying ethical values to business decisionsOption C: selling products that are labelled as ethical investmentsOption D: publishing a values statement on the firm's website

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   The answer is B: applying ethical values to business decisions

   Business ethics is about putting ethical values into practice in the decisions people make at work. It is judged by actions, not words.

   Why the other options are wrong

   A

   Following rules is compliance; ethics goes wider than the rulebook.

   C

   Selling 'ethical' products is a market niche, not the same as being an ethical firm.

   D

   A statement is only words; ethics is measured by what people actually do.

2. Question 2 of 5

   How often does the word 'ethics' appear in the FCA's Principles for Businesses?

   Option A: In every one of the twelve PrinciplesOption B: Only in Principle 12, the Consumer DutyOption C: Once, in Principle 1Option D: It doesn't appear in any of them

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   The answer is D: It doesn't appear in any of them

   The word isn't used in any Principle. Ethics runs through all of them, so the FCA describes the behaviours it expects rather than naming ethics itself.

   Why the other options are wrong

   A

   Ethics is reflected in every Principle, but the word itself isn't used.

   B

   The Consumer Duty doesn't use the word either.

   C

   Principle 1 is about integrity but doesn't use the word 'ethics'.

3. Question 3 of 5

   Which staff in a regulated firm are NOT covered by the SM&CR conduct rules?

   Option A: Investment advisersOption B: Customer service staffOption C: Directors who are not senior managersOption D: Ancillary staff such as cleaners

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   The answer is D: Ancillary staff such as cleaners

   The conduct rules apply to everyone in a regulated firm except ancillary staff, such as cleaners and security personnel.

   Why the other options are wrong

   A

   Advisers are covered.

   B

   Customer service staff are covered.

   C

   Directors are covered too.

4. Question 4 of 5

   Who must a firm subject to the whistle-blowing rules appoint?

   Option A: An FCA-approved whistle-blowing solicitorOption B: A whistle-blowing ombudsmanOption C: A whistle-blowers' championOption D: An external whistle-blowing auditor

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   The answer is C: A whistle-blowers' champion

   Firms covered by the rules must appoint a whistle-blowers' champion with overall responsibility for compliance with them, and must protect staff who raise concerns.

   Why the other options are wrong

   A

   No FCA-approved solicitor is required.

   B

   The ombudsman deals with customer complaints.

   D

   There's no requirement for an external auditor of this kind.

5. Question 5 of 5

   An employee is unwilling to raise a serious concern inside their own firm. What can they do?

   Option A: Raise it only once they've left the firmOption B: Report it direct to the FCA's whistle-blowing teamOption C: Nothing, as concerns can only be raised internallyOption D: Post the details on social media first

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   The answer is B: Report it direct to the FCA's whistle-blowing team

   The FCA has a whistle-blowing team that takes reports direct and has powers to investigate and impose sanctions.

   Why the other options are wrong

   A

   There's no need to wait until leaving.

   C

   Concerns can be raised externally, including with the FCA.

   D

   Going to social media isn't the recognised route.

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