R01 FSCS and protection for pensions: free practice questions

1. Question 1 of 5

   How much FSCS deposit protection does a couple with a joint account at one bank have?

   Option A: £120,000 in totalOption B: UnlimitedOption C: £240,000 in totalOption D: £170,000 in total

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   The answer is C: £240,000 in total

   Deposits are protected at 100% of the first £120,000 per person per authorised firm, so £240,000 for a joint account. Temporary high balances can be covered up to £1.4m for six months.

   Why the other options are wrong

   A

   £120,000 is the limit per person, so a joint account has twice that.

   B

   Protection is capped.

   D

   £170,000 was the joint limit before the deposit limit rose to £120,000.

2. Question 2 of 5

   How are temporary high balances, such as house sale proceeds, protected by the FSCS?

   Option A: Up to £120,000 onlyOption B: They aren't protectedOption C: Up to £1.4m for six monthsOption D: Up to £500,000 for one year

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   The answer is C: Up to £1.4m for six months

   Temporary high balances from events such as a house sale, divorce settlement or inheritance are protected up to £1.4m for six months from the date of deposit.

   Why the other options are wrong

   A

   The higher temporary limit applies.

   B

   They are protected, temporarily.

   D

   The limit is £1.4m for six months.

3. Question 3 of 5

   How does FSCS protection differ for long-term insurance claims against a product provider and for non-compulsory general insurance?

   Option A: Provider long-term: 100%, no limit. Non-compulsory GI: 90%, no limitOption B: Neither is protected, as only deposits and investments are coveredOption C: Both are 90% of the claim, up to a limit of £85,000Option D: Provider long-term: 90%, no limit. Non-compulsory GI: 100%, no limit

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   The answer is A: Provider long-term: 100%, no limit. Non-compulsory GI: 90%, no limit

   Long-term insurance claims against providers are covered at 100% with no limit (intermediaries 90%, sometimes 100%). Compulsory GI is 100%; non-compulsory GI is 90%, with no limit.

   Why the other options are wrong

   B

   Both are protected.

   C

   Neither is subject to the £85,000 limit.

   D

   This reverses the percentages.

4. Question 4 of 5

   A saver holds £120,000 in each of two banks that operate under the same banking licence. Both fail. How much FSCS protection applies?

   Option A: £1.4m, as the temporary high balance limitOption B: £120,000, as it's one authorised institutionOption C: Nothing, as one licence covers only one bankOption D: £240,000, as there are two separate banks

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   The answer is B: £120,000, as it's one authorised institution

   Limits apply per person per authorised institution. Brands or trading names under one licence count as one institution, so the limit applies once.

   Why the other options are wrong

   A

   £1.4m is the temporary high balance limit.

   C

   Protection applies, but only once.

   D

   Two brands under one licence count as one institution.

5. Question 5 of 5

   When does the Pension Protection Fund pay compensation?

   Option A: When a member chooses to retire early from their schemeOption B: When the investments in a personal pension fall in valueOption C: When a DB scheme's employer fails and the scheme is shortOption D: When a DC scheme's investment funds perform badly

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   The answer is C: When a DB scheme's employer fails and the scheme is short

   The PPF, set up under the Pensions Act 2004, compensates members of eligible defined benefit schemes when the employer suffers a qualifying insolvency and the scheme's assets are insufficient. It's funded by levies on eligible schemes.

   Why the other options are wrong

   A

   Early retirement isn't a trigger.

   B

   Investment falls in personal pensions aren't covered.

   D

   The PPF covers DB schemes, not DC performance.

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