R01 Ethical versus compliant behaviour: free practice questions

1. Question 1 of 5

   Which phrase best captures the difference between compliance and ethics?

   Option A: Compliance is what you should do; ethics is what you have to doOption B: Compliance is what you have to do; ethics is what you should doOption C: Both mean exactly the same thing in financial servicesOption D: Ethics only applies where there is no regulation

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   The answer is B: Compliance is what you have to do; ethics is what you should do

   Compliance is about the rules you must follow. Ethics goes beyond them, acting on the values of the firm and the profession.

   Why the other options are wrong

   A

   This reverses the two.

   C

   They are linked but not the same.

   D

   Ethics applies alongside regulation too.

2. Question 2 of 5

   Why doesn't the law cover every aspect of business ethics?

   Option A: Regulators are not allowed to deal with ethicsOption B: Public views change faster than the law doesOption C: Ethics is a purely private matter for each personOption D: Ethical issues never affect consumers

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   The answer is B: Public views change faster than the law does

   Some standards are written into law, such as the Bribery Act 2010, but public views of right and wrong change faster than legislation can follow.

   Why the other options are wrong

   A

   Regulators actively address ethical issues, such as through the Consumer Duty.

   C

   Business ethics affects customers and markets, not just individuals.

   D

   Ethical failures often harm consumers.

3. Question 3 of 5

   Which of these is an ethical issue the financial services sector has faced?

   Option A: Insufficient attention to financial inclusionOption B: Complaint handling that is too quick and too generousOption C: Advice that is too closely tailored to clients' needsOption D: Product documents that are too clear and simple to follow

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   The answer is A: Insufficient attention to financial inclusion

   Recognised issues include unclear documents, remuneration and inducements, conflicts of interest and unsuitable sales, poor complaint handling, and insufficient attention to financial inclusion.

   Why the other options are wrong

   B

   Inadequate complaint handling was the problem.

   C

   Unsuitable sales were the problem.

   D

   Unclear and overly technical documents were the problem.

4. Question 4 of 5

   How does the FCA describe a vulnerable consumer?

   Option A: Anyone who has reached State Pension age, whatever their circumstancesOption B: Someone who has made at least one complaint in the past yearOption C: Someone especially susceptible to harm due to their circumstancesOption D: Anyone whose total savings are below the FSCS compensation limit

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   The answer is C: Someone especially susceptible to harm due to their circumstances

   A vulnerable consumer is someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm doesn't act with appropriate care.

   Why the other options are wrong

   A

   Age alone doesn't make someone vulnerable.

   B

   Past complaints don't define vulnerability.

   D

   Vulnerability isn't defined by savings.

5. Question 5 of 5

   Facing a difficult situation, what do employees often find easier to judge?

   Option A: Whether the FCA would fine the firmOption B: Whether it's compliant or non-compliantOption C: Whether it's right or wrongOption D: Whether it would meet their sales target

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   The answer is C: Whether it's right or wrong

   Employees often find it easier to tell right from wrong than to tell what is compliant from what isn't. Going the extra mile because it's the right thing is often easier than people expect.

   Why the other options are wrong

   A

   Predicting fines isn't easier.

   B

   The compliance question is often harder to judge.

   D

   Targets aren't the measure of the right thing to do.

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