R01 Risk-based supervision and compliance monitoring: free practice questions

1. Question 1 of 5

   The FCA's forward-looking, risk-based supervision focuses on which three key areas?

   Option A: Handling complaints, paying compensation and arranging redressOption B: Authorising firms, approving individuals and registering productsOption C: Setting interest rates, controlling inflation and supporting growthOption D: Preventing serious harm, testing higher standards, promoting competition

   Show answer

   The answer is D: Preventing serious harm, testing higher standards, promoting competition

   FCA supervision focuses on reducing and preventing serious harm, setting and testing higher standards, and promoting competition and positive change.

   Why the other options are wrong

   A

   Complaints and compensation are handled by the FOS and FSCS.

   B

   Authorisation is a gateway function, not the supervisory focus.

   C

   These are monetary policy concerns.

2. Question 2 of 5

   Which of the following is NOT one of the FCA's supervisory principles?

   Option A: Integrated and coordinatedOption B: Forward-lookingOption C: Outcomes-focusedOption D: Zero failure

   Show answer

   The answer is D: Zero failure

   The FCA's supervisory principles are forward-looking, outcomes-focused, proportionate and evidence-led, transparent, and integrated and coordinated. Neither regulator runs a zero-failure regime.

   Why the other options are wrong

   A

   Integrated and coordinated is one of the principles.

   B

   Forward-looking is one of the principles.

   C

   Outcomes-focused is one of the principles.

3. Question 3 of 5

   Before publishing details of a warning notice, what must the FCA consider?

   Option A: Nothing, because publication of every notice is automaticOption B: Whether the Treasury has given its approval for publicationOption C: Whether the firm's main competitors agree it should be publishedOption D: Factors such as whether publishing would be unfair to the person

   Show answer

   The answer is D: Factors such as whether publishing would be unfair to the person

   Both the FCA and PRA can publish that a warning notice has been issued, with a summary, but must consider factors including whether publication would be unfair to the person concerned.

   Why the other options are wrong

   A

   Publication isn't automatic.

   B

   Treasury approval isn't required.

   C

   Competitors' views aren't a factor.

4. Question 4 of 5

   Roughly how many firms does the FCA regulate prudentially?

   Option A: Around 500Option B: Over 18,000Option C: Around 1,500Option D: Over 100,000

   Show answer

   The answer is B: Over 18,000

   The FCA is the prudential regulator for over 18,000 firms, such as asset managers, advisers and brokers. The PRA prudentially regulates around 1,500 banks, insurers and similar firms.

   Why the other options are wrong

   A

   500 is far too low.

   C

   Around 1,500 is the PRA's figure.

   D

   100,000 is far too high.

5. Question 5 of 5

   Which statement about FCA inspection powers is correct?

   Option A: Firms can lawfully refuse officers access to client filesOption B: Mystery shopping by the FCA isn't permitted under FSMAOption C: Officers must give at least 28 days' notice before any visitOption D: Officers can visit without notice, and staff must cooperate

   Show answer

   The answer is D: Officers can visit without notice, and staff must cooperate

   The FCA can visit without notice, require staff to cooperate, obtain a warrant to search premises and seize documents, and carry out mystery shopping.

   Why the other options are wrong

   A

   Officers must be given access to documents, files and personnel.

   B

   The FCA can use mystery shopping.

   C

   Visits can be made without notice.

R0 Exam Prep is an independent revision tool. It is not produced, endorsed by or affiliated with the Chartered Insurance Institute (CII). Questions and explanations are original. Use it alongside the official study text. About R0 Exam Prep