R01 Passporting and key EU directives: free practice questions

1. Question 1 of 5

   What did passporting rights allow a UK firm to do before Brexit?

   Option A: Move its head office to any EEA State without approvalOption B: Do business in another EEA State under its home State's rulesOption C: Offer services worldwide without any local authorisationOption D: Operate in other EEA States without being regulated anywhere

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   The answer is B: Do business in another EEA State under its home State's rules

   Under the EU single market directives, a firm authorised in its home EEA State could establish a branch or provide cross-border services in another EEA State after notification, with home State rules applying.

   Why the other options are wrong

   A

   Passporting didn't allow head office moves without approval.

   C

   Passporting applied within the EEA, not worldwide.

   D

   Firms remained regulated by their home State.

2. Question 2 of 5

   Which statement about MiFID I is correct?

   Option A: It came into effect on 1 November 2007 and was a maximum harmonisation directiveOption B: It applied only to insurersOption C: It came into effect in 2018 and allowed member States to gold-plate its rulesOption D: It was never applied in the UK

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   The answer is A: It came into effect on 1 November 2007 and was a maximum harmonisation directive

   MiFID I took effect on 1 November 2007 and was a maximum harmonisation directive, so States couldn't introduce stricter rules. It covered firms providing services in financial instruments.

   Why the other options are wrong

   B

   MiFID covers investment firms, not insurers.

   C

   MiFID II took effect in 2018, and MiFID I didn't allow gold-plating.

   D

   MiFID was adopted into the FCA Handbook.

3. Question 3 of 5

   What did the FCA's PS25/21 (December 2025) change about CPD for insurance distribution staff?

   Option A: It extended the 15-hour minimum to cover ancillary staff tooOption B: It raised the minimum to 35 hours, at least 21 of them structuredOption C: It scrapped the 15-hour minimum and left competence to firmsOption D: It replaced yearly CPD with a re-sit exam every three years

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   The answer is C: It scrapped the 15-hour minimum and left competence to firms

   PS25/21 removed the 15-hour annual minimum for insurance staff. Firms stay responsible for competence on an outcomes basis and decide the level, type and amount of CPD needed. The 35-hour requirement for retail investment advisers is unaffected.

   Why the other options are wrong

   A

   Ancillary staff weren't brought in; the minimum was removed.

   B

   35 hours, 21 structured, is the retail investment adviser requirement, which didn't change.

   D

   No re-sit exam was introduced.

4. Question 4 of 5

   What was the aim of CRD IV, effective from 1 January 2014?

   Option A: To create the FSCS as the single compensation schemeOption B: To introduce the Consumer Duty for banks and investment firmsOption C: To implement Basel III so firms hold enough capital for their risksOption D: To abolish capital requirements for smaller banks and lenders

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   The answer is C: To implement Basel III so firms hold enough capital for their risks

   CRD IV implemented Basel III in the EU, with rules on capital quality and quantity, liquidity and leverage, counterparty risk and extra buffers for systemically important firms.

   Why the other options are wrong

   A

   The FSCS was created under FSMA.

   B

   The Consumer Duty is an FCA initiative, not CRD IV.

   D

   CRD IV strengthened capital requirements.

5. Question 5 of 5

   Under the PRIIPs Regulation, what must be given to a retail investor before they buy a PRIIP?

   Option A: A full prospectus of at least 50 pages, after the saleOption B: A copy of the firm's FCA permissions and complaints policyOption C: An Insurance Product Information Document for the productOption D: A Key Information Document, in good time before the sale

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   The answer is D: A Key Information Document, in good time before the sale

   A person advising on or selling a PRIIP to a retail investor must provide a short, consumer-friendly Key Information Document in good time before the transaction.

   Why the other options are wrong

   A

   The KID is a short document, not a long prospectus.

   B

   Showing FCA permissions isn't the PRIIPs requirement.

   C

   IPIDs are for general insurance under the IDD.

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