R01 Treasury, Bank of England, PRA and FCA: free practice questions

1. Question 1 of 5

   Which bodies are the UK's financial authorities?

   Option A: The FCA, the Financial Ombudsman Service and the FSCSOption B: HM Treasury, HMRC, the FCA and the Pensions RegulatorOption C: The Bank of England, the CMA and the Information CommissionerOption D: HM Treasury, the Bank of England (with the PRA and FPC) and the FCA

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   The answer is D: HM Treasury, the Bank of England (with the PRA and FPC) and the FCA

   The UK's financial authorities are HM Treasury, the Bank of England (including the PRA and FPC) and the FCA, working together for a smooth and stable financial sector.

   Why the other options are wrong

   A

   The FOS and FSCS deal with complaints and compensation.

   B

   HMRC isn't one of the financial authorities.

   C

   The CMA and ICO are other regulators, not the financial authorities.

2. Question 2 of 5

   What are the Bank of England's two core purposes?

   Option A: Monetary stability and financial stabilityOption B: Tax collection and public spendingOption C: Consumer protection and market integrityOption D: Competition and innovation

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   The answer is A: Monetary stability and financial stability

   The Bank's two core purposes are monetary stability (stable prices and confidence in the currency) and financial stability (detecting and reducing threats to the system as a whole).

   Why the other options are wrong

   B

   Tax and spending belong to HMRC and the Treasury.

   C

   Consumer protection and market integrity are FCA operational objectives.

   D

   Competition is an FCA objective and a PRA secondary objective.

3. Question 3 of 5

   What is the PRA's approach to firm failure?

   Option A: It aims to let firms fail without bringing down the systemOption B: It aims to prevent any regulated firm from ever failingOption C: It leaves every firm failure entirely to the FSCS to handleOption D: It guarantees every customer's deposits in full on failure

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   The answer is A: It aims to let firms fail without bringing down the system

   The PRA doesn't try to prevent every failure. It aims to ensure firms can fail in an orderly way without destabilising the system, focusing on the firms and issues that pose most risk.

   Why the other options are wrong

   B

   The PRA accepts that some firms will fail.

   C

   The PRA is actively involved in resolvability, not just leaving it to the FSCS.

   D

   The PRA doesn't guarantee deposits; the FSCS protects them up to limits.

4. Question 4 of 5

   Which of these sits on the Prudential Regulation Committee?

   Option A: The Chair of the CMAOption B: The Information CommissionerOption C: The Chief Executive of the FCAOption D: The Chief Executive of the FOS

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   The answer is C: The Chief Executive of the FCA

   The PRC includes the Governor, three Deputy Governors, a member appointed by the Governor with the Chancellor's approval, the FCA's Chief Executive and at least six external members appointed by the Chancellor.

   Why the other options are wrong

   A

   The CMA isn't represented on the PRC.

   B

   The ICO isn't represented on the PRC.

   D

   The FOS isn't represented on the PRC.

5. Question 5 of 5

   Since 2023, what secondary objective has the FCA had?

   Option A: To support the Government's housing and home ownership policyOption B: To help reduce the cost of living for UK consumersOption C: To help the UK economy's international competitiveness and growthOption D: To cut the number of complaints referred to the Ombudsman

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   The answer is C: To help the UK economy's international competitiveness and growth

   Since 2023 the FCA has had a secondary objective to facilitate the international competitiveness and growth of the UK economy in the medium to long term.

   Why the other options are wrong

   A

   Housing policy isn't an FCA objective.

   B

   The cost of living isn't an FCA statutory objective.

   D

   Reducing FOS complaints isn't a statutory objective.

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