R05 Inclusive advice and customer outcomes: free practice questions

1. Question 1 of 5

   Which three cross-cutting rules underpin the FCA's Consumer Duty?

   Option A: Treating customers fairly, disclosing commission and getting signaturesOption B: Acting independently, offering the cheapest product and reviewing yearlyOption C: Good faith, avoiding foreseeable harm, and enabling customers' financial objectivesOption D: Maximising sales, minimising complaints and keeping costs low for customers

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   The answer is C: Good faith, avoiding foreseeable harm, and enabling customers' financial objectives

   Firms must act in good faith towards retail customers, avoid causing foreseeable harm and enable and support customers to pursue their financial objectives.

   Why the other options are wrong

   A

   These aren't the three cross-cutting rules.

   B

   Offering the cheapest product isn't a cross-cutting rule.

   D

   Maximising sales isn't a Consumer Duty rule.

2. Question 2 of 5

   Which of the following is NOT an outcome customers should expect under the Consumer Duty?

   Option A: Products that provide fair valueOption B: A guarantee that every product is the cheapest on the marketOption C: Timely, clear information they can understandOption D: Support that makes it as easy to cancel as it was to buy

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   The answer is B: A guarantee that every product is the cheapest on the market

   Fair value does not mean the best deal, so customers should still shop around. Expected outcomes include accessible support, clear information, suitable products and fair value.

   Why the other options are wrong

   A

   Fair value is an expected Consumer Duty outcome.

   C

   Timely, clear information is an expected Consumer Duty outcome.

   D

   Being able to cancel as easily as you bought is an expected Consumer Duty outcome.

3. Question 3 of 5

   Which statement about customer vulnerability is correct?

   Option A: Once identified, a customer's vulnerability is permanentOption B: Vulnerability is only relevant when advising on investmentsOption C: A customer can be vulnerable in several ways, and it can changeOption D: Only customers above State Pension age can be vulnerable

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   The answer is C: A customer can be vulnerable in several ways, and it can change

   Vulnerabilities are not mutually exclusive or constant. A client may face several at once and become more or less vulnerable over time, so advisers should consider this for each client.

   Why the other options are wrong

   A

   Vulnerability can change over time; it isn't permanent.

   B

   Vulnerability matters for all advice, including protection.

   D

   People of any age can be vulnerable.

4. Question 4 of 5

   Mo's adviser recommends term assurance and income protection, but Mo only wants the term assurance. What should the adviser do?

   Option A: Arrange both policies anyway, as they are clearly in Mo's interestsOption B: Arrange the term assurance and make no further recordOption C: Arrange the term assurance and record in writing that IP was declinedOption D: Refuse to arrange any cover until Mo agrees to both

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   The answer is C: Arrange the term assurance and record in writing that IP was declined

   The adviser can proceed with the agreed cover but should get the client's written confirmation that the IP was declined. They should also explain in writing the consequences of not having it, in case of a later complaint.

   Why the other options are wrong

   A

   Arranging cover the client has refused would go against their instructions.

   B

   The adviser should record that IP was declined, to protect both sides if there's a complaint later.

   D

   The adviser doesn't have to refuse; it's the client's choice to decline IP.

5. Question 5 of 5

   What is required when recommending a fully regulated contract under the FCA rules?

   Option A: A second opinion from another adviserOption B: A signed disclaimer of all liabilityOption C: A written suitability letter, with records keptOption D: A verbal recommendation only, with no records

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   The answer is C: A written suitability letter, with records kept

   Written recommendations in a suitability letter are required for fully regulated contracts. Keeping fact-finds and recommendations also helps if there is a complaint.

   Why the other options are wrong

   A

   A second opinion isn't required.

   B

   A disclaimer of all liability isn't required or appropriate.

   D

   A verbal recommendation isn't enough for fully regulated contracts.

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